"In God we trust; all others must bring data." ~ W. E. Demming

Logic professors call it the base-rate fallacy.  It’s the logical blunder that occurs when we use irrelevant information to form our judgments, especially when objective data exists.  A common base-rate fallacy is to assume your personal experience mirrors the masses.   A current example, “I don’t use social media, so neither does anyone else.”  If this sounds like you please read a study published by the University of Maryland that found social media adoption by small businesses doubled in 2009.

Now consider argumentum ad populum, or the “if many do it, it is so” fallacy.  Just like our personal experiences doesn’t always mirror the masses, mass perception doesn’t always mirror our own experience.

When pay-per-click marketing first started catching on it was possible to sponsor popular keywords for five cents per click.  The early adopters made a killing, but as word of their success spread the price of keywords grew exponentially.  The people on the tail end of the craze lost a lot of money.  In this case, timing determined your success more than anything else.

To find opportunities online you have to be willing to test early, test often, and be prepared to invest in the things that show promise.  Relying too much on personal experience or popular perceptions will  lead to failure more often times than success.

Dr. Demming said it best, “In God we trust; all others must bring data.”

"Half the money I spend on advertising is wasted; the trouble is I don't know what half."~ John Wanamaker

John Wanamaker is the man most credit for having said, “Half  the money I spend on advertising is wasted; the trouble is I don’t know what half.”

For generations advertising sales reps have been using Wanamaker’s quote to scare advertisers into renewing their ad agreements.  They twisted Wanamaker’s words to mean that it was impossible to eliminate bad advertising without taking out the good stuff too.  In other words,  if you decide to throw out the bath water you have effectively decided to toss the baby too.

Wanamaker would have disagreed.  What he was actually saying  is that with better analytical tools he could weed out even more wasteful ad spend.  The mere fact that in the year 1919 Wanamaker wasn’t satisfied with a 50% conversion rate is telling.

Today we have the tools that Wanamaker dreamed about.  Of course, media reps misrepresenting Wanamaker’s words 90 years later might not be aware of such things.  Keep that in mind and resolve never to do business with anyone who thinks wasting 50% of your ad budget is an acceptable loss.