Why Wanamaker’s Advertising Paradox No Longer Holds Up

Why Wanamaker’s Advertising Paradox No Longer Holds Up

wanamaker's advertising paradox

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” – John Wanamaker (Attributed, 1838-1922)

But is that still the case? Roughly a century ago, John Wanamaker (to whom many attribute the quote) made this claim. This has been a longstanding reality. Sure, there have been studies, and focus groups, and surveys, and reports, and market analyses and a whole host of other techniques implemented to try and do away with this reality. The problem is that for every one person you talk to, no matter how well they fit one of your intended demographics, or societal paradigms, there are tens of thousands if not millions (depending on your scale) whom you will never hear from. Thus, you will never truly know just how effective every dollar is, and how your operation can be running at optimal efficiency. Well, until now.

A lot of people claim that the Golden Age for advertising was the 60s. After all, they wouldn’t have made a (fantastic) TV show about the worst years of an industry. (I don’t see a made-for-TV movie about the housing bubble burst coming out any time soon.) I have to disagree. Maybe from a drink-all-night-do-nothing-all-day-and-fall-into-a-pile-money perspective the 60s were the bee’s knees for advertisers, but from a business perspective, we’ve just entered the Golden Age of Marketing and Advertising.

Unlimited Data

And when I say unlimited, I don’t mean ‘virtually’ unlimited. I mean it literally. A recent MIT study concluded that the average American office worker produces roughly 1.8 million megabytes of data every year. That’s roughly five gigabytes per day. And that’s personal data. There is also corporate data, amalgamated data, and much more. And all that can be used in order to optimize modern advertising campaigns.

Big data concept in word tag cloud on black background

While working with t2, I and other members of my team have devised the concept of ResponsiveBranding. Essentially, it is the idea of leveraging personal and amalgamated data in order to create branding initiatives that are geared towards the tastes and preferences of your audience. Thus, when a campaign is launched, ad spends are entirely optimized to ensure that it resonates with the exact audience you hoped to capture. This is an entirely new opportunity made possible by this major paradigm shift.

Real-Time Optimization

Let’s say, for the sake of argument that you are not using any of the data that is available to you (though, for the record, I wouldn’t recommend it). You start a digital ad campaign – whether it be an AdWords campaign, banner ad campaign or social ad campaign – and set a budget for yourself. Admittedly, this is a case where, initially, Wanamaker’s paradox would hold up. At the outset you have no idea what will work and what part of your investment will disappear. The difference is that now this is a short-term dilemma.

Modern marketing and advertising capabilities make it possible to optimize your campaign as it is taking place. The responsiveness to your campaign by your audience is indicative of how well it is optimized. As you make changes (before too much of your investment is lost) you can begin to see increased results and get more bang for your buck, so to speak.

New Age of Ad Spend (Sort Of)

The cost-per-acquisition (CPA) model has been in place for a long time; long before the age of digital advertising. But now, your CPA (or even your CPC) means that the budget you assign to a campaign (digital) will only be spent as you reach goals or acquire prospects.

In traditional advertising, you are casting out a net and hoping a few fish with disposable income are dragged in. What’s spent is spent and you simply have to hope your investment is recouped in the form of new customers. With digital, however, you’re simply showing your product to the fish and seeing if any bite. (I figured I’d keep with the fish metaphor.) Only then is any of your budget being spent.

There is a reason why we are seeing the slow disappearance of the CPM model – it is not very attractive nor effective. Numbers are superficially a nice measurement. But if you’re looking to get away from that trap in which Wanamaker found himself – where he didn’t know what half of his ad dollars were wasted – you’ll have to look far beyond the top-level numbers.


Was John Wanamaker wrong? No – not entirely. He had a point, and that point still holds up with traditional forms of advertising. Even with all of the relevant information in your hands, and even after running all of the surveys and studies on the statistically significant, randomly selected populations you can think of, there is still no way to know what will work and what will not.

With new forms of advertising, this simply is not the case. There are several ways to go about optimizing your budgets. Whether it is by leveraging big data or making real-time modifications, you can rest assured that if half of your money is being wasted on advertising, you’ll be sure to know exactly which half it is and how to fix it.

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Corey Padveen is a data-oriented marketing professional with a focus on statistical analyses of human behavior. This specialization has led him to speak and present at dozens of conferences around the world, to write for a variety of reputable online and print publications, and recently, to publish ‘Marketing to Millennials For Dummies’ as part of the world-renowned ‘For Dummies’ series. He regularly shares real world examples and findings from his research, and discusses how members of society are evolving as consumers, communicators, and a global network as a whole.
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