Marketing and the Search for Aliens

In my spare time, I like to read non-fiction, and one of my favorite genres is astrophysics. Within that subject, I have read a couple of books and articles on S.E.T.I. – the Search for Extraterrestrial Intelligence.

What do “little green men” have to with marketing and advertising? In very basic terms, the folks at S.E.T.I. use data and mathematical equations to search for other intelligent life in the universe that might be interested in our planet; at our Scottsdale advertising agency, we also crunch the numbers in our search for life forms who will be interested in the products and services we are promoting.

THE DRAKE EQUATION

Scientist Frank Drake – one of the founders of S.E.T.I. and its former chairman – created a mathematical principle that became known as the Drake Equation. This is used as a method to illustrate the vastness of the universe and to demonstrate just how many intelligent civilizations should exist beyond our solar system.

If I haven’t lost you by now, thanks for hanging in there. So, what could that equation ever have to do with marketing? Read on!

MARKETING, PLEASE

The potential insight for marketing is the way the Drake Equation is used. You enter estimates for all the variables in the equation and then get the answer N, which is the number of civilizations that we could possibly communicate with. If applied to marketing, it gives us the scope of a potential marketing audience.

The Drake Equation in Action

Let’s take a hypothetical Premium Golf Club Manufacturer as an example. For this experiment, I applied the Drake Equation logic to determine the actual number of potential customers that this manufacturer could reasonably expect to sell its products in a month. The outcome of this equation will help illustrate the challenges in this client reaching its target audience.

We begin our “Golf Co.” equation with the most readily available data – the population of the U.S. – and work down from there:

C = P * P25 * T10 * G * LG * LgM * MS

  • C = The number of potential customers that we could expect to be very interested in our product and ready to purchase
  • P = Population of the U.S.
  • P25 = Population age 25 and older
  • T10 = Top 10% of income
  • G = Percentage of the population that is interested in golf
  • Lg = Percentage of golfers that are looking for new clubs
  • LgM = Percentage of golfers looking for clubs in each month
  • MS = Market share (the estimated market share your brand can reasonably expect)

WHAT IS THE ANSWER?

Let’s start assigning values to the variables and see what we get as an end product:

  • P = 327,000,000 (That was the population of the US from the information source I used)
  • P25 = 223,341,000 (25 and older population)
  • T10 = .10 (Top 10% of income by population)
  • G = .08 (Percentage of the U.S. population that are golfers)
  • Lg = .10 (Percentage of golfers looking for new clubs. This is the first variable that is really a guess, and you can change it to whatever you think is the correct value)
  • LgM = Lg/12 (Just assuming an even distribution over the year)
  • MS = .10 (Here we are assuming a 10% market share, again substitute whatever value you think is correct)

If you use the values above in the equation, the value for C calculates to 1,489 customers a month.

SO, IS THAT THE RIGHT ANSWER?

Yes … and No. The chance that the Golf Client would have exactly 1,489 customers in any given month is unlikely. But it does give an indication of the general size of the potential pool of likely customers.

The goal of the exercise is to know more about your market and its potential size. The number is not intended to be exact but more of an indication of magnitude. The 1,500 customer estimate is not exact, but the equation indicates that the 1,500 number is much closer to what could be reality than 150 or 15,000 would be.

HOW CAN I USE THIS?

The number from this equation (or discussion process) gives you a starting point for advertising and marketing planning.

For example, if we look at just the first four variables in the equation, we have a population of golfers that we think are our potential customers. Some quick math tells you that this population is about 1.8M golfers. This equation illustrates why market segmentation is so vital.

Even with market segmentation in place, we still need to advertise to over 1,000 golfers to get one customer. That is why we need to resist the temptation to throw a wide net when we advertise if your product is not really a mass market item. It is far better to work on narrowing your focus.
Stay tuned for more on market segmentation in a future article. In the meantime, I invite you to take a deep dive into other digital marketing topics on our blog.