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There is also one agent problem : manager status is linked to headcount or/and budget. As a head of marketing, you have no interested at all at reducing your ad

There is also one agent problem : manager status is linked to headcount or/and budget. As a head of marketing, you have no interested at all at reducing your ad budget, quite the opposite !

seg_lol 6y ago
Right, if you do science and it turns out your department has a smaller effect on revenue you just lost power/status. So these experiments won't be done at most orgs.
objclxt 6y ago
That’s a rather naive way of looking at how corporations work. If you’re the head of marketing and go to the CFO and say “hey, we found a way to get the exact same results we currently get but at half the cost” you can bet you will be rewarded for it.
- tehlike 6y ago
  Headcount is a sad driver for promotions, so managers are not really incentivize to do it. Only the good ones would try to keep the team lean and fast.
- MattGaiser 6y ago
  Depends. Are you sticking with that company or do you want to shop your resume around?
  - Nextgrid 6y ago
    And given the terrible career advancement options in our industry it makes total sense to optimise for "resume value" as opposed to "business value" since your resume will compensate you much more (in the next company you're going to end up at) than contributing to your current company where you'll end up with a pitiful statutory raise.
- one2know 6y ago
  No one is going to half the cost, and executives don't in general do any sort of cost reduction activities for two reasons. First, they would be fighting diminishing returns since there is only so much reduce-able cost. Second, they might in reality only be able to do a small cost reduction, then they are doubly screwed as they will reach diminishing returns faster. If the company mandates cost reduction executives will just fire a few hundred or thousand employees because that is deterministic, easy, and instant savings. They will just restaff when the cost reduction campaign is over.
strictnein 6y ago
A smart manager won't just let their budget be cut, because that won't be good for the company. If they find that marketing approach X doesn't work as well as Y or Z, they will simply move funds to do more of Y and Z. By doing so they will increase revenue and profits all the while keeping ad spending at the same level.

There is also one agent problem : manager status is linked to headcount or/and budget. As a head of marketing, you have no interested at all at reducing your ad budget, quite the opposite !

seg_lol 6y ago

Right, if you do science and it turns out your department has a smaller effect on revenue you just lost power/status. So these experiments won't be done at most orgs.

objclxt 6y ago

That’s a rather naive way of looking at how corporations work. If you’re the head of marketing and go to the CFO and say “hey, we found a way to get the exact same results we currently get but at half the cost” you can bet you will be rewarded for it.

tehlike 6y ago
Headcount is a sad driver for promotions, so managers are not really incentivize to do it. Only the good ones would try to keep the team lean and fast.
MattGaiser 6y ago
Depends. Are you sticking with that company or do you want to shop your resume around?
- Nextgrid 6y ago
  And given the terrible career advancement options in our industry it makes total sense to optimise for "resume value" as opposed to "business value" since your resume will compensate you much more (in the next company you're going to end up at) than contributing to your current company where you'll end up with a pitiful statutory raise.
one2know 6y ago
No one is going to half the cost, and executives don't in general do any sort of cost reduction activities for two reasons. First, they would be fighting diminishing returns since there is only so much reduce-able cost. Second, they might in reality only be able to do a small cost reduction, then they are doubly screwed as they will reach diminishing returns faster. If the company mandates cost reduction executives will just fire a few hundred or thousand employees because that is deterministic, easy, and instant savings. They will just restaff when the cost reduction campaign is over.

strictnein 6y ago

A smart manager won't just let their budget be cut, because that won't be good for the company. If they find that marketing approach X doesn't work as well as Y or Z, they will simply move funds to do more of Y and Z. By doing so they will increase revenue and profits all the while keeping ad spending at the same level.