use statistics for success

Bill James is famous for his use of Sabermetrics in Baseball. He uncovered unused statistical probabilities in a sport drowning in numbers.

Traditional baseball scouts evaluated prospects based on the five tools: running, catching, throwing, hitting for contact, and hitting for power.

They failed more often than they succeeded.
James and later Billy Beane from the Oakland Athletics found that success (winning) came from an overlooked statistic called “On-Base Percentage”.

On-base percentage included hits and home runs, but also included walks, hit by pitch, and passed balls allowing the batter to get to first base.
The scouts didn’t put value on walks.
They only put value on hits and home runs.
In fact, a walk and a hit give the same result: a player is on first base.

Billy Beane had a problem. As General Manager of the Oakland A’s, his payroll costs were one-third of the New York Yankees. He couldn’t compete with them as they would spend more money getting the best talent in baseball.

Beane knew if he was going to beat the Yankees, he couldn’t act like them.
He studied Sabermetrics. He hired Paul DePodesta, a Harvard grad in Economics.
Together, they changed the game.
Oakland has had 3 losing seasons since incorporating this philosophy.
Teams across all professional sports now use some version of Sabermetrics.

They changed the game by changing the way they look at it.

DePodesta is now working for The Cleveland Browns.
They made the playoffs last year for the first time in 17 years.

Baseball is not different from Advertising.

Advertising sellers will fancy you with Reach campaigns, Branding campaigns, Social Media impressions, engagement metrics, and other weasel numbers that don’t matter.

The numbers look sexy.
Just like home runs.
But it’s a low percentage swing.
If you don’t hit a home run, the probability increases exponentially you’ll strike-out.
Despite what some say, home runs are hard.

In 2016, Mark Trumbo was the home run king in Major League Baseball.
He hit 47 home runs in 613 at-bats.
He struck out 4 times for every longball he smashed.
He was also the league’s strike-out leader.

In business, you can hit home runs too.
High risk, high reward, low probability.
It’s like going to the roulette wheel in Vegas.

We know the house always wins.
Unless you cheat.
Or if you play a different game.

Wizard of Ads uses a version of Sabermetrics in advertising.
Instead of using numbers that don’t matter, like Reach, we use Frequency.
Instead of writing how great a company is, we craft stories using character diamonds.
Instead of writing to increase impressions, we write to create connections.
We play the long game.

The General Manager cares who wins in baseball.
The Business owner cares about sales.

Many get enchanted by the short-term euphoria of a homerun.
That’s dopamine.
It’s highly addictive and makes you desire instant gratification.

As a business owner, you want results.
If you’re trying for a home run, you’re taking a massive risk.
That swing will strike you out 80% of the time.
Spent money, disjointed messages, and lost opportunity comes from striking out.

I hate strike-outs.
They can be avoided.
The long-term approach is to hit singles… a lot of them…
It gets better results.

If you and your competitors want to play the homerun game,
He who spends the most will be the winner, just like the New York Yankees.
So go spend your ad budget with the advertising sales weasels.
Waste handfuls of cash and hope a young Billy Beane in your category doesn’t change the game while you aren’t looking.

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