Emergence is a term for changes that occur from large-scale complexity. Once a certain scale is reached, new properties emerge that weren’t present at the smaller scale.

Water particles are simple, but when enough are put together, the advanced properties of waves develop. Brain cells, too, are simple, but when a few billion are assembled, the complexity of consciousness emerges. Fish move in very different ways when swimming in large groups as opposed to alone.

Emergence is why physics has two streams: modern and classical. Similarly, economics has both macro and microeconomics. There's a whole field of humour about economists, much of it based on applying micro-economic simplicity to the complexity of the macro scale. One of the more common jokes is “economists have predicted nine out of the last five recessions.” It’s pretty easy to understand money in and out at the individual or household level, but at a global scale, there are emergent properties that are impossible to know or accurately observe, creating a backdrop for armchair economists to laugh when predictions are wrong.

Big Brands Shouldn’t Mimic Small Ones

At a certain size, emergence also occurs in business. This means the properties of business change, and the tactics, processes, and optimisations that worked at small scale no longer apply as well – or at all – to the complexities of large scale.

In the TV show Flight of the Conchords, Murray, the band’s hapless manager, starts every band meeting with a roll call. The humour, of course, comes from the fact that it’s completely unnecessary in a group of only three people.

We all understand this scale error. However, in marketing, complexities of scale – and the subsequent changes they bring – aren’t often considered as much as they probably should be.

Over the past decade, numerous marketing mistakes have been made by not considering scale and emergent differences, leading to marketing tactics that are effective for small businesses being applied to large institutions, with the assumption that they would be equally effective. These errors aren’t as obvious as a roll call for three, but they have occurred often enough that marketing, like economics, now has its own humour genre (see ‘The Marketoonist’).

Small businesses have limited resources and can’t afford waste. Targeting specific people, audiences, times, or locations is a requirement to help maximise limited budgets. Large businesses must ‘target’ their whole category if they want to stay large, though targeting tactics are still useful.

Measuring marketing impact is far easier for small businesses than for large ones, just like measuring a household economy versus a national or global one. Analytical approaches designed for small businesses, like digital attribution, aren’t appropriate for the complexities of large businesses. They require more holistic solutions, such as marketing-mix modelling (borrowed from macroeconomics), longer timeframes, and much wider datasets – including non-marketing variables.

Digital platforms and marketplaces have been amazing for smaller businesses, creating more accessible ways to sell, affordable advertising, and free optimisation tools. However, we must remember these innovations solved problems specific to small businesses.

Startups Can’t Afford TV

Every small business would love the marketing budgets and customer bases of large businesses. It’s extremely hard for small businesses to become large – few succeed. It’s also hard for large businesses to become small, but it’s possible. The marketing mistakes alluded to earlier resulted in millions of dollars of lost revenue, with the most expensive one resulting in billions of dollars in share write-downs. These mistakes were a direct result of applying small business tactics to large businesses.

Avoiding such mistakes requires understanding (and remembering) the impact of scale. Maximising efficiency (good for small businesses) is inversely proportional to maximising sales (good for big business) – almost all categories have small numbers of frequent, ‘efficient’ customers and large numbers of infrequent, ‘less efficient’ customers. Optimisation techniques designed for small businesses don’t work the same at scale.

‘As seen on TV’ was a claim used in the 90s by smaller brands (and Dennis Denuto) because being on TV conveyed trust and credibility. TV reach isn’t as high as it was in the 90s, but the reduction in ad spend has been far larger than the reduction in eyeballs. There are good reasons why some spend has moved, but some reduction is likely due to scale error. Large brands are wrong to conclude that newer, smaller brands are innovative because they don’t advertise on TV, or to overvalue the targeting options available in other channels – forgetting broad reach is mandatory for large brands to maintain sales, let alone grow (a mistake made by a few big brands over the last decade).

Today’s version of ‘as seen on TV’ would be something like ‘as seen on a mass-reach large screen where everyone sees the same ads.’ TV isn’t the only advertising game in town, as it lacks some tactical options that online channels offer. But, in most categories, it remains a very effective medium. It’s still a competitive advantage for larger brands, and it’s a channel many startup companies would probably use if they could, not just to say ‘as seen on TV.’

The concept of ‘TV’ should now include all professional-grade content on a big screen.

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