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Chaos Theory in Marketing

What do you think of when you hear the phrase, “chaos theory?” Butterfly Effect? A crowd tipping cars after their team has won the championship? Or maybe the chaos theorist from Jurassic Park, Dr. Malcom, saying, “They believed that prediction was just a function of keeping track of things. If you knew enough, you could predict anything. That’s been cherished scientific belief since Newton.’

And?

“Chaos theory throws it right out the window.”

Chaos theory is typically associated with the fields of physics, astronomy, biology, engineering or sociology.  However, chaos theory fits in with marketing. As the world gets more complex, the field of marketing deals with more target audiences, more avenues to reach them, growing data sets to work with, complicated marketing funnels and so on. The field grows more complex by the day. Marketing is no longer hanging a poster at the local grocery store. Marketing is a complex system of messaging directed at certain consumers, at certain times, in certain ways, on certain devices, with just the right message for their stage in the purchase cycle.

Chaos theory is a mathematical way to deal with complex systems. The name is misleading because chaos theory is really looking for order in the chaos. It typically takes a super computer or, for a marketing company, a data scientist! The field of marketing has to find a pattern in its own chaos, so this field of study can be quite applicable.

Chaos theory was born with the study of weather systems. A man named Edward Lorenz made a weather model, and one day he ran it using a certain set of parameters to create a particular weather pattern. Later he wanted to run it again, but cheated a bit, and started the simulation half way through by inputting values from the earlier run rounded off. The outcome was completely different. How does that relate to marketing? Well, just because someone begins to interact with a brand on a channel that is traditionally in the middle of the purchase path, it does not mean they are now in the middle, and will have the same final result as someone that went down the traditional funnel.

Complex systems, such as the motion of planets, got scientists thinking about how to solve non-linear systems. Not every system can be described by a summation of their parts.

Consider a complex marketing plan for a product launch. Each media buy has a job, and is put in place to get a certain number of impressions, clicks, buys, or a multiple set of other key performance indicators. Summing those KPIs individually as if you had run each one by itself for each piece of media across each channel (tv, radio, print, paid search, social media, online banners, etc.) will not show the possible success for the entire campaign. That would make this a linear problem. Other variables such as the number of impressions before conversions, change of messaging through the funnel, and how the pieces of media work together in general, leads to results that are different from a summation of what each piece of media could do on its own. Marketing is a non-linear problem! Welcome to chaos theory.

Here at Warren Douglas, we thrive on complex problems and complex solutions. We use layers of data, scientific thinking, proprietary tools and the newest approaches to continue to give clients solutions as elaborate as their problems.

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*Photo: Fractint/Wikimedia

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