What Are The Odds?

A coin toss decides our future

Imagine if you could toss more coins...

One of the great truisms of marketing is that it’s not a cost, but an investment.

And yes, done properly, with accurate tracking and reporting, this should be the case.

But not everyone sees it that way.

For some people, arguably the glass-half-full people, everything that goes out of their pocket is a cost, with little hope of ever turning from red to black. Others just can’t find a way past their fear of making a loss, to see that sometimes you have to overcome the fear of falling before you can fly. We might say they are risk averse to marketing.

It’s this risk of making a loss that I’m addressing here today. And it was prompted by a piece that I read that outlined a very good case study to illustrate the point.

The example – a person is offered a simple bet – a coin toss. Heads you win $10 – tails, you give me $2. Most people felt this was a good bet, and would take it. But if they were offered $10 for heads, and say a loss of $6 for tails, they shied away. The odds were still strongly in their favour, but they were more focussed on the size of the potential loss.

The reason people feel this way is that our brains feel losses and gains unevenly: Losing feels worse than winning feels good. Of course, there are people who feel no pain when losing…you can find them at Gamblers Anonymous, after they’ve finally seen the light.

Most people lost sight of what they stood to gain by risking a little of their money, when confronted by the size of their possible losses. If you only had $6, and there was only one toss, then yes, you are indeed risking it all.

But if you have a reasonable pool of money (oh, I don’t know, let’s call it a marketing budget) and you applied it to a proven strategy with a reasonable ROI, then you should make money.

Because marketing is not a cost, it’s an investment in growth. It’s a calculated risk with money that you have allocated for just such a purpose. It might be said that as you have already set aside these funds, in essence you have nothing to lose.

Try the experiment yourself. Bet you win.

 

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About Jeff Polley

I'm interested in life and making the most of it. I have a fondness for good coffee and scintillating conversation. I don't act my age. For more you can follow me on Twitter - @xmpieman
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