The Matthew Effect: how fame and fortune are the key to loyalty
Why is it that agencies or brands with momentum seem to be more successful? Christopher Ott explains the Matthew Effect.
When an ad achieves success at one award show it generally goes on to receive more success at other shows. As though its fame feeds its future success, ad infinitum. There’s an unfair advantage, right? The same unfair advantage big brands enjoy over small ones.
It’s called the Mathew Effect – named after a verse in the Matthew Gospel, which goes: “For whoever has will be given more, and they will have an abundance”.
And, because every action has an equal and opposite reaction, the inverse is also true. In other words, the rich get richer and the poor poorer.
The Effect was first observed within the scientific community. They noticed that the more famous a scientist was, based on past success, the more credit they’d receive for other work, even when that other work was the same as an unknown scientist.
Andrew Ehrenberg, the godfather of evidence-based marketing discovered an uncannily similar finding in marketing, too. He coined it The Double Jeopardy Law, and found:
Brands with a larger market share benefit twice. They have more buyers, and those buyers are more loyal. Conversely, brands with smaller market shares suffer doubly. They have fewer buyers, and these fewer buyers are also less loyal.”
It only takes a moment’s thought to get why: Buyers of small brands will also buy big brands as they’re mentally and physically available to them (they do more advertising and can be purchased in more places). But buyers of big brands, conversely, may not even know the small brands exist.
The implications are groundbreaking. The Matthew Effect or Double Jeopardy Law (whatever you call it) means: The size of your brand can only ever be proportionate to its market share. Wholly bankrupting the concept of niche marketing.
If you want your brand to be big, you need lots of customers. Not a few heavy loyal ones. You simply can’t have a small brand that’s big through its buyers being more loyal if its buyers are inherently less loyal because the brand is small.
Which means the popular practice of growing a brand through loyalty is utterly fictitious.
Yet, how many agencies and marketers create campaigns that try and do just that?
If this is hard for you to digest, take heart knowing that Columbus’ peers would have felt a similar indignation finding out the world was round. Science has a way of doing that.
The good news is if you’re quick to understand it, you have an extraordinarily rare opportunity.
While your competitors remain spellbound by the over-promise of loyalty programs and over-invested in targeting a niche few, you can focus on getting more customers by talking to your whole category, getting famous, and increasing your market share to grow your brand.
And then get richer.
- Christopher Ott is a freelance copywriter and strategist
Facile proposition.
Even wikipedia cites exceptions to the rule;
Supermarket ‘home’ brands which are killing ‘real’ brands, and are in turn about to be killed by Aldi-type ‘lookalike’ brands. When the product category has been commodified to this extent, there’s no amount of advertising that’ll save you unless you can find similar-sized channels of distribution. The internet provides that opportunity, but also lets little brands look big because the size of the screen is but a mere morsel of the entire landscape feast.
Hispanic TV Channels in the US. I’d personally cite boutique beer brands, or even something like Crumpler. Not, by far, the largest members of their categories, but with careful management its possible to sustain a critical mass without having to take over the world. How big do you really need to be? Have a look at the recent interview with Dan Wieden where he talks of quarantining the agency from the possibility from being subsumed into a larger entity. His brand stays strong. And desirable.
https://mumbrella.com.au/dan-wieden-creative-need-to-rethink-advertising-business-282657
There is certainly something to be said for the benefits of generating the largest market share, but its not the only way. Your premise appears to exclude any other pathway to brand success. And feels just a tad self-congratulatory when you share with us the hitherto ‘unused’ analogy that the world is not flat.
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I totally agree with you – there are always exceptions to the rule. W+K, still pitch don’t they? But, maybe you’re onto something. In our industry it’s far more sensible to try and get more business out of the clients we have, rather than pitching all the time. But, then again, our industry is probably one of those exceptions.
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i had never heard of the Matthew effect before today, and suddenly i see it twice within the hour. are you reading The Black Swan as well, Christopher?
this argument seems mostly based around big v small: how about all the agencies that brand themselves as really good at advertising to a specific market? ie agencies that advertise to women, or pensioners, or millionaires. those agencies are by definition niche marketing yet i know a few that are flying at the moment – any room for them?
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Just going to leave this here.
http://www.slideshare.net/mwei.....l-16647530
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dude, that is indeed a classic presentation. It lost me at Anthony Robbins but the point is very well made.
However, there’s soft lovemarky, facebooklikey loyalty, and there’s hard metricised, repeat-purchase-inducing loyalty…
http://www.smh.com.au/executiv.....0bcvr.html
And before the (valid) point is made that QFF succeeds based on its parent’s massive market share, consider how many times you’ve seen someone hand over a card for stamping at that coffee shop surrounded by those other coffee shops.
Leverage it correctly and loyalty plays its part.
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Cheers for the link. But just think about the use of coffee shop loyalty cards. You generally have a card to the coffee shop that you frequent anyway – and not because you have the card, but probably because it’s the one that’s closest or most physically available to you. Essentially they reward you for behaviour you were going to do anyway (and sacrifice profit).
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If you work in a CBD, you’ll have a stack of coffee shops to choose from. Even outer suburban business parks might have more than one. Your decision to purchase will be made upon a couple of criteria; proximity (or car parking), quality of coffee, how well you get on with the staff, those mainly. The card will help your decision to return to same coffee shop; in W+K parlance it has that element of ‘give’ about it. Looking at your article, I notice you talk about the difficulties of growing a brand around loyalty, which I have to agree with (especially if you’re in a hurry). But I also think there is something to be said for using loyalty (properly) to help sustain a brand.
As to sacrificing profit, that’s known in business circles as one of the quickest way to gain market share.
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As to whether loyalty programs actually increase behavioural loyalty, empirical research exists to help answer that question. There’s a good chapter in Byron Sharp’s ‘How Brands Grow’ concerning this. From memory, it concludes that they largely have a very weak effect. And when you take into account the cost of running the programs (i.e. IT systems, the discounts you give away and/or gifts, etc), you really need to consider carefully whether they’re worth it.
Regarding the coffee shop example, I imagine the loyal behaviour that consumers exhibit is largely due to habit over anything else. Would love to see this specific example researched!
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Great work Chris! Very interesting.
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