[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2017\/08\/11\/game-theory-for-marketing\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2017\/08\/11\/game-theory-for-marketing\/","headline":"Game theory: The Nobel Prize-winning idea that\u2019s changing marketing","name":"Game theory: The Nobel Prize-winning idea that\u2019s changing marketing","description":"Game theory has influenced how organ donation works, made dating more successful, and helped match foster parents to children. Now it\u2019s marketing\u2019s turn.","datePublished":"2017-08-11","dateModified":"2021-08-31","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/dan-stevens\/#Person","name":"Dan Stevens","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/dan-stevens\/","identifier":208,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/a80fa19c51af94fe710a8086643d06d72dd4df6998101b5a6aca7c717e2fcdf0?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/a80fa19c51af94fe710a8086643d06d72dd4df6998101b5a6aca7c717e2fcdf0?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Commerce","logo":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","width":172,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/08\/thumbnail-a610f3913405fce2058bc72a4150c986.jpeg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/08\/thumbnail-a610f3913405fce2058bc72a4150c986.jpeg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2017\/08\/11\/game-theory-for-marketing\/","about":[{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/marketing\/","name":"Marketing","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Marketing","http:\/\/www.wikidata.org\/entity\/Q39809"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/marketing\/marketing-general\/","name":"Marketing","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Marketing","http:\/\/www.wikidata.org\/entity\/Q39809"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/trends-commerce\/","name":"Trends","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Fad","http:\/\/www.wikidata.org\/entity\/Q787045"]}],"wordCount":937,"keywords":["Big Data","Customer Engagement","E-commerce","Marketing"],"articleBody":"It\u2019s not immediately obvious what three people sitting around a card table has to do with getting a better understanding of how effective your marketing tactics are. Or how it can help you speak to the people who need persuading, not those who have already been persuaded.But this is the world of collaborative game theory, an idea whose versatility has influenced the way organ donation works, made dating more successful, and helped match foster parents to children in need of families. And now it\u2019s marketing\u2019s turn.At this point you\u2019d be forgiven if your internal monologue was sounding something like this: \u201cNot another Very Important Big Idea. Please. We\u2019re still trying to work out what to do with the last Very Important Big Idea. If only we could remember what it was\u2026\u201d\u00a0 But game theory itself is not the Very Important Big Idea.It\u2019s the principle that underpins the ability to attribute true value to each touchpoint in the customer journey, from channels to the content you put on them. It\u2019s been around since 1953. Oh, and it won its inventor, Lloyd Shapley, the Nobel Prize for economics. So it has longevity and credibility.Two\u2019s company, three\u2019s the winning numberBack to the card players. Two players are at the table, playing against the house for money. They\u2019re breaking even, not losing, but not really winning much. A third joins them and together they clean up. Question is, how do you fairly allocate the winnings? This is where collaborative game theory helps. It applies a value, called the Shapley Value after its inventor, to each player based on the value they bring to the game. That value determines what each gets. It\u2019s recognized as the fairest, most equitable and logical way to ascribe value. And we can use this to ascribe value to what we do as marketers.It\u2019s done using attribution software \u2013 SAP Hybris Customer Attribution (formerly known as Abakus), to call it by its proper name \u2013 that can measure the true impact of your marketing activities. True impact here means generation of incremental sales, those sales that would have only ever happened because the customer saw an ad or watched a video or read a testimonial.Now it’s possible to know which part of what you do influences and appeals to the incremental prospects. And that, of course, is where the growth lies.The most promising thing about this prospect is that, unlike last click and first click attribution, you can look at the whole customer journey. Each channel can be assessed to see how effective it is at attracting incremental sales, and how well it works. For instance, you\u2019re running a campaign across Facebook, YouTube and Instagram. You can measure the impact of each of these based on the metrics you want to use \u2013 engagement, likes, click throughs \u2013 to see if it\u2019s doing what you want it to. Clever, accurate, and true.      Modern marketing: The fundamentals have changed – have you?                The definition of marketing is moving goods and services from the source of tools, channels, and mechanics to the consumer, but most marketers haven't adapted for digital - and that's a BIG problem.      It\u2019s about the data AND what you do with itYour internal monologue will, no doubt, have something to say about this. \u201cNot more data,\u201d it says. \u201cWe\u2019ve got as much data we don\u2019t know what to do with as we have Very Important Big Ideas and Next Big Things. We\u2019re drowning in the stuff. Please don\u2019t make us collect any more. There won\u2019t be any room for actual people in here.\u201dOkay, okay \u2013 having the data and the knowledge is one thing. It\u2019s what you do with the knowledge that will make the difference.And there\u2019s no point in just acquiring the knowledge for the sake of having it. So let\u2019s look at how jet.com used attribution software to change the way its business operated. The online retailer, acquired by WalMart just a year after it was launched in 2015, is one of the fastest growing and most successful retail launches ever, and has established itself at the forefront of innovation. It knew that it wanted to increase new customers and reduce the cost of activating each one. So it looked closely at the true incremental value of its campaigns, publishers and platforms to build a picture of what attracted new customers, and then restructured its marketing plans to do more of it.With a clear understanding of which campaigns delivered new customers, jet.com enjoyed a 23% increase in new customers and a 24% decrease in the cost of activating them. \u201cWe are able to better attribute the true credit to each of our marketing initiatives using SAP Hybris Customer Attribution, resulting in more efficient marketing spend and greater scale,\u201d says Micah Moreau, jet.com\u2019s senior director of marketing.This is the application of cooperative game theory to help solve today\u2019s marketing challenges. It\u2019s real, dependable and, most significantly, gives us the most complete picture yet of how effective our activities are.Whereas before that picture has only been partially visible under the dim light of first and last click attribution, game theory ups the wattage and reveals what\u2019s really going on. Not bad for three card players round a table.  Every digital moment matters.Are you making the most of them?1,000 business leaders dish on how to stand out from the crowd with a great CX. Get the details\u00a0HERE.\u00a0"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2017","item":"https:\/\/www.the-future-of-commerce.com\/2017\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"08","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/08\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"11","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/08\/\/11\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Game theory: The Nobel Prize-winning idea that\u2019s changing marketing","item":"https:\/\/www.the-future-of-commerce.com\/2017\/08\/11\/game-theory-for-marketing\/#breadcrumbitem"}]}]