In this closing episode of Know your Audience Series 2, Paul and James dive right into the burning question: how much does AI market research have to cost you? When budgets are trimmed, market research spend is often the first to be chucked out. This episode looks at how researching consumer behaviour should be an investment in the future of your business.

Can technology, AI and audience sentiment research be a more efficient and cost-effective tool in getting to know your consumer?

Listen to the full recording below or on your favorite podcast platform.


Dr James Piecowye: Hi, I’m James Piecowye.

Paul Kelly: I’m Paul Kelly.

James: And welcome to Know your Audience, the micro mini podcast. I look forward to these podcasts, the stuff we talked about it’s it literally is, I think, a masterclass in marketing and research in AI and it brings everything together. But there is a burning question. There is a burning question.

Paul: There is?

James: You ready?

Paul: What is it, James?

James: Do I get a drumroll.

Paul: You get a beat.. There’s no soundtrack budget for this podcast..

James: You can really see where this is going on a serious note as serious as we can be. The question is, or it’s really more of an observation. And the observation is, as we start thinking about everything we’ve been talking about, and this whole idea of doing audience sentiment research to obviously understand your audience and understand what they’re thinking about things. This has a cost, there is a cost now.

Paul: Yes.

James: So there’s two, two parts of the question. What are we thinking in terms of how much we might actually spend on doing research? And where’s it? Where’s the sweet spot? And to? How do you address this whole idea that budgets are getting tight, and you know, oh, it’s that time of year and we didn’t hit the mark? We’ve got to do we’ve got to trim some fat from things. Marketing and research often are where we start trimming. Where do you want to kick off? Where do you want to jump in? Paul?

Paul: Oh, yeah, I mean, an average rule of thumb should be that about 5% of marketing spend, and it should be marketing spend. Because it should be in terms of research here, what we’re talking about is consumer understanding, or even customer understanding. We’re not talking about r&d, that would be separate. So things like product development, new product, testing, you know, all that sort of stuff,

James: that’s all in a different, that’s all in a different envelope of the marketing research that’s out there.

Paul: Yeah, that’s capital, that’s a that’s a capital sort of stuff, where you’re investing in the future of knowing your audience and knowing your consumer is something that you’re really willing. You know, it sounds what you’ve got now, basically. And to that extent, 5% of a marketing spend is roughly where you want to be, give or take, and it might vary depending on a sector, you know, consumer heavy sector, you might, you might adjust that slightly up, but five percents a good number, and you’re talking there about, you know, the first thing to get cut is marketing, when budgets and the economy sort of starts to contract and consumers stop spending. There’s been a lot of research particularly done by Professor Byron sharp and others at the Ehrenberg bass Institute. And if you haven’t read the book, how brands grow, when you’re listening to this, it really is a fantastic book on exactly that, how brands grow and the concept of mental and physical availability, and just what that means to how people buy your product, and the fact all sorts of great things in there that you just don’t think of as a marketer, you know.

Marketing our own business, but also helping others. You can be stuck in a certain frame of mind from a lot of the time and think that everybody’s gonna buy your thing that you talk to, or who walks past your product on the shelf. But the truth, and this is what gets into this book is that 98% of people in that area, and I never actually in that market to buy your thing. So all of these guys have done a lot of work saying you got to invest when there’s a downturn and keep investing. And you shouldn’t really cut these areas because it makes sales more efficient when you know more about your product and things like that.

James: Okay, I want to jump in for just a second, Paul, because if I’m hiring the best marketers, and this is something that Mark Ritson talks about in in an article that he has written, but if I’m hiring the best marketers, can I sort of chip away at some of my research budget, because these men and women, they know the market of selling my, my shoelaces, so I don’t need to do more research, because they already know is that’s what you’re telling me? That’s faulty thinking.

Paul: As a research person, then yes, but there’s two ways to answer that question. Actually, there is that thinking is a valid form of thinking because you do want to experience what you find more often than not that someone experienced, the very first thing they’ll do will be to firstly dismantle probably what’s been done before. It’s not just human nature. It’s like the same as if it’s a new CFO or a new or CEO or any of the C suite or any senior position. You know, what’s come before you might not necessarily be the right way to do it. That could be different in some organizations, maybe not, but it’s not it’s not just the human trait. It’s just looking at okay, this is been done before, but actually, there’s a better way. And most senior people may understand that. So, to an extent they’ll know what to do, they might not necessarily know who that customer is straightaway. And that’s a folly, I guess the thinking that we’re all guilty of is that we often use our own biases to what we think or our own social circles, for example, so we might think, or be at a barbecue or something, and you’re sitting around and somebody talks, as you know, your brand of shoes, I love them, you know, and they have, you know, this is real, and then they say this, but, you know, gold, yellow shoe laces are a trend. Did you know that? And how can we not doing allegedly laces, everybody’s doing it.

And you might take it with, you know, a less experienced person, but we all fall into it from time to time might take that experience and go, Okay, that’s a trend and use those data points to perhaps make those decisions. And that that’s just the folly of human nature is just getting, taking our own biases, or our own social circles, our own validation and looking, you know, to reaffirm our own thoughts, rather than taking a step back and going, okay, you know, what, actually, I need to know what’s going on in this marketplace. I need to know what’s going on with the sales, I need to know what’s going on with consumer trends. And I need to know what’s going on in the economy and things like that, depending on what your product is. So the way to answer that question, I guess it’s complicated. That expectation is probably a fair expectation, but it’s not not so much they should know the customer, they should know what to do.

James: Well, that’s it. I think that’s the key point, Paul, and I think you’ve nailed it is sure I’ve hired the best. And they know the tools. And they know they have a general look at at the field. But things change and environments change. And hey, I might be the greatest researcher coming from Canada, I draw up here in the in the UAE, or in Saudi Arabia. Those are two very different markets, okay, shoelaces or shoelaces. But the way they’re being sold or used or disposed of in Saudi is going to be way different than it is in Canada. And that’s where research becomes important.

Paul: Yeah. And if you’re if you’re a great marketer, then you know what that you would know that, you’d know that that’s the difference and things like that. If you’re not, we’re all guilty of perhaps bringing our own experiences in our own worldview, to our jobs. What we’re paid to do a lot of the time, but what the risk of that obviously becomes is that you can be stuck in your own biases and things like that. So yeah, I think the expectations on marketers, and research departments and insights department are that, yes, we should know who our customer is. But that customer constantly changes and evolves. You know, whether it’s a customer is in your direct customer or consumer.

So if you’re a big FMCG company, or you’re sort of removed from the everyday consumer because you’re selling to the supermarket’s or you’re selling to the hypermarkets and things like that it’s a different it’s a slightly different relationship that you have with the end user and understanding that knowing that is part of what makes, I think a marketer great, and understanding the fundamentals that not everybody’s interested in your product all the time, and to understand how you can get them more interested and get them to think about you a lot more is about knowing who they are, and then going and then once you know who they are you then you’re either internal experts or your agencies to be able to then execute on that. And with great creative and great strategies and things like that, but until you get to that point, you kind of just wasting money. And that’s what you know, this is where it gets back to budgets, you know, if you’re going to slash budgets, you’ll slash marketing because it doesn’t it’s very hard to demonstrate a direct return from any kind of marketing even people who tell you performance marketing and pay per click and all that crap.

James: Crap bread and butter for many people.

Paul: Yeah, it is. But yeah, and it’s not I don’t mean crap. But I mean, the reporting is what I mean, like, you know, always directly attributed really, it’s not possible because people don’t behave and think rationally like nobody does nobody. There’s a number of different touch points along your journey which impacts your decision to buy something or to impact something.

James: Well I want you to pause for a second Paul because let’s stay with these touch points but let I want to add something into the equation so Let’s hypothetically say that everyone listening has said okay, Golden Rule, Paul Kelly has said it we’re going to make sure we maintain five solid percent of our marketing budget is going to be researched Paul said it we’re putting it on the wall anyone as we’re gonna we’re gonna give him his email and if you got a problem with it, Mr. CEO, go talk to Paul Kelly. So 5% is the golden number. Within that, that golden number of 5% for our research, this becomes another interesting thing I’d love to get your take on. What are the different types of research that might fit into that 5%, you see where I’m going with this,

Paul: it’s a very wide array of things, you know, across the spectrum of research and dividing that up efficiently depends on need and purpose, you know, you don’t want to, you might be very much looking to arrest a sales declined, for example, you losing relevance among your key consumers, you know, you’re losing relevance because declining sales, but you’ve done some research to also find out that other brands are doing a better job, that’s part of the research that you need to do, you know, so that’s part of that 5%. So really, what you’re doing is taking 5%. And, you know, you might be and then on top of that you’re taking another 10 or 15%, for it for agency, creative fees, and things like that. And then you’re actually utilizing the rest on media that what that 5% does is make that the rest of that 95%, far more efficient, far more effective, because you are understanding, either understanding your customer a lot better, and what they might want, or what they might expect of you or your competitors. But secondarily, you’re also pushing the envelope of I guess, of defining an audience a lot better. So perhaps, if you’re taking that, you know, like I said, anywhere in that 95%, you’re spending money on digital, for example, making that a little bit more effective.

Sometimes the right answer is just to blanket everybody, you know, that’s how some brands need that kind of awareness. So you don’t know any of that unless you do the research. So yeah, so it’s that whole spectrum of consumer understanding from I guess, a market through to James or Paul, wanting to be a customer in mind.

James: So if I’m, if I’m trying to understand my market a little bit better, Reacher’s research helps me if I’m trying to serve my audience a little bit better, my market a little bit better. Research is going to help me if I’m trying to grow my, my, my business research is going to help me, within all of the varieties of research tools that I have available, we’ve been talking about AI and audience sentiment research. How does that position in, in your thoughts in that 5%, on top of the fact that we’re going to have as we’ve spoken about a lot of people who are senior in these marketplaces, in fact, I’ve heard this come from, from a number of social media people, that a lot of the people who are in the senior positions in these marketing departments have gray hair than me. And when we start talking to AI and audience sentiment research, they glaze over, because that was not in the textbook that they had, you know, 40 years ago. So how do we position what we’ve been talking about, into that? 5%?

Paul: Well, yeah, two things in that, and I might might forget the second thing, so get me back on track. But the first thing is, with the gray hair and stuff, like marketing hasn’t changed, it hasn’t, nothing has changed.

James: I think that I think that’s a really big point, though, we need to underline that, that marketing, fundamentally, is marketing, and it’s your funnels, it’s the four Ps are there.

Paul: It hasn’t, it hasn’t changed, and it shouldn’t. And the problem is that we get blinded by social media platforms, particularly themselves, you know, I’m suffocating processes and making things more complex than they need to be and hyper targeting and things like that, which is perfectly fine for a certain type of customer when they’re in a need state, but you’ve got a whole bunch of other people out there who are ready who aren’t necessarily ready to buy your product right now. So you know, that was why coming back to the how brands grow type that book, other other Bibles, I guess, of marketing, things things don’t change, they just need to be focused differently. And so, the same principles apply but what happens is our context changes of course, we have technological tools now at our disposal that for instance, might have taken six months and a panel of 150 or 1000 people for instance in the past to do to do some baseline research and you know, cost hundreds of 1000s of dollars and things like that which can be done now within a matter of a week with with technology and so you know, becomes a becomes a I guess a game of dollars and cents and most senior marketers from from bigger brands and it’s a challenge for smaller brands because you can’t afford to do the kind of tactics that a big brand does you know, like you’re not splitting TV, radio, outdoor and all that sort of thing you’re not you’re not mixing all of that and that’s you know, able to do that sorry.

Whereas a bigger brand as smaller brands, you know, they have to be more focused on tactics of course, but you’ll find that most smaller brands will have younger chief marketers CMOS had heads of marketing, that type of thing and CEOs and things like that. Other organizations know the role that digital took enormously effective channel obviously, it’s an enormously effective medium, and so is TV. TV still reach is like 10s of millions of people. And it’s still the most in multiple studies, the most effective way of spending money to advertise, still, and that’s coming from a digital person, but digital has a role in that marketing mix. And that’s why, you know, a lot of brands, yeah, they focus heavily on digital. But that’s when there’s already a certain amount of salience. You know, there’s already a brand recognition. But if you’re launching something, if you can afford it, TV is still a great option in a lot of parts of the world.

James: So what you’re really talking about is, is making sense of some of the newer tools that are available, and realizing within my four Ps of Marketing, which have not changed, and they are not changing, we don’t want them to change, there are just newer tools to help augment some of the ways that we’ve been collecting insights, to start making better decisions. And we need to, we need to know that they’re out there, and we need to try them. And they are going to be great for some folks. And they’re going to be something that others will need to think about. And think about how they’re going to use them within their organization.

Paul: Precisely. And I think there’s a challenge out there in the world where we tend to take, yes, it’s our nature to we see what’s shiny and new, and we gravitate towards it and things like that. This is just the employment of technology to do a job that potentially was done in an inefficient way before and it’s the same with digital advertising, it’s the same with, you know, pay per click, and things like that, you know, replaces a lot of direct mail, that’s because pay per click and that type of thing. performance marketing is the old direct mail, it’s the same thing. It’s just opportunistically getting someone to, you know, to go straight there. And it’s still one of the most effective ways of advertising. So there’s, there’s a lot of, you know, traditional methods that have a different technological context in 2022. And they’ll change again next year, and they’ll keep changing and platforms will keep coming and platforms will go and wax and wane and all that sort of stuff. But the fundamental makeup of our behavior doesn’t change. And that’s something like that we just need to remember all the time is that as humans, it takes 1000s of years for us to change fundamentally, who we are.

Evolution is a really slow thing. It doesn’t happen. You know, it doesn’t happen today, because Facebook has launched a new, I don’t know, scrolling feature or something, you know, like things grab our attention, our mind is wired in certain ways to be attentive to certain things, but we don’t change our behavior. But our context changes rapidly and constantly, constantly in but previously, traditional research methods, traditional understanding traditional advertising, traditional marketing, has not, you know, has hasn’t had the tools available to sort of adapt, and we’re lucky now, you know, the last 5, 10 15 years, that we’ve had these tools available to make our life a lot better to make our marketing, you know, a bit more effective. Now, the money spent more effective grow revenues of companies. But from a consumer point of view, as well, it means I’m getting more relevant things given to me, Paul, and to you, James, than we ever have before. And, you know, there’s arguments around where people say, you know, like, Oh, it’s a bit creepy. I was in the supermarket. And you know, I’m interested in this product and really resonated with me great. It takes away all the hassle of doing research and everything that product bam, gotcha. You know, like if I’m shopping online. Yeah, I am interested in a pair of shoes. Great, thank you. They look great. They look exactly like what I’ve been searching for. Thanks, internet for like remembering. That’s what I’m interested in. And that’s a great deal. And then the next day, I’m wearing those pair of shoes. Concepts unimaginable in even in the 90s. I think context changes a lot our behavior doesn’t technology helps us. And in the case of marketing and research, it’s all about being able to sort of use that technology for a more efficient and more effective outcome.

James: One of the points that I want to jump back to and I think we’ve we’ve really done a great job of talking about this. But you just mentioned it, when we start talking about I’m going to bring the audience sentiment research back in here is that is that this is another tool in our marketing research budget. But it’s also it can be a very affordable tool for what it does. And I and what you were just talking about this, the fact that we are being a little bit more focused. We are we’re able to get better results because we’re able to zero in on the right questions. This makes our 5% If we’re investing that 5% Of course everyone’s now got that on their wall. This makes that 5% more intelligently spent if we put a little bit of this type of research into that mix which is just going to augment all the other research

Paul: It goes, but it goes further and it makes the other 95% work harder. That’s like, that’s the takeaway. And technology has a role in the world. So does it say to other methods, everything has its place. And I’m not, I’m not going to be I know, our company is data driven stuff, you know, it’s AI, consumer intelligence. But outside of that, it’s still it’s still very relevant, you know, traditional methods still have a role in the stuff that we can’t do that they can do, like, you know, like taste tests, and how people react to stimuli and stuff like that is best served by actually watching somebody don’t listen to what people say, watch what they do, for better insight. And that’s really getting down to the crux of what we can do, and where we step in, and there’s still rolls in there. But yeah, it makes it work harder, makes it more efficient. And then as in totality, what it helps with, is for us to have just a stronger understanding of who at the end of the day is buying what I want to sell.

James: The bottom line here is, this is a better way to spend a piece of that 5%, that’s going to strengthen the rest of what you’re spending that 5% of research on. And I mean, at that point, who doesn’t want to do that, like this is this is a no brainer, yeah.

Paul: And not to be in a sales fight, because I think focus on the 5%. You know, if we’re educating people as part of this series, it’s not about what what that 5% gets spent on. It’s that, so trying to protect that so that the rest can work harder. And I think that’s a really important takeaway. And if, as we sort of wrap up, I guess, this season, so to speak, and look to bring in some special guests next season, I think it’s the sort of perfect time to remind people that, you know, going back to the basics, and then applying the technology that we’ve taken you through in this series, particularly to those basics can can have an outsized impact on what you’re trying to do, compared to perhaps what you’re potentially used to doing,

James: I think being informed about what the research tools are, how they work, how they can work for you, so that you can make the better decisions on which tools you want to put into your marketing research. I think that’s super important and that’s exactly what we’ve been doing in this series is helping people understand these tools, and how they fit into their equation.

Paul: Yep. And I’m looking forward to next series and talking to a number of experts from around the world who worked both in this field and other fields to talk about how they use insight in their creative endeavors, how they, how they use it in their everyday life, it’d be great to sort of hear other people as well. Can’t wait for the next next installment. But this one’s been great.

James: Micro Mini case studies. That’s what we’re talking about. The next series micro mini case studies on on market research. It’s gonna be it’s gonna be fantastic. Paul, this has been excellent. And I encourage everyone to scroll back and listen to all of the previous episodes in this season. And go back to season one because this is a must share Micro Mini podcast series that is informative, educational, and ultimately entertaining as well. It’s all the boxes.

Paul: Now for my next day. Thanks, James. It’s been a pleasure.

James: Thank you very much, Paul. My name is James Piecowye.

Paul: I’m Paul Kelly

James: And you’ve been listening to “The Know Your Audience Micro Mini Podcast.”