Does Marketing Involve Maths? (With Examples)

Maths and Marketing

Wondering if Marketing and Maths are related? Marketing definitely requires basic maths for analyzing large data that are previously unavailable in traditional media like TV and billboard. Not to worry, not a lot of maths is required for marketing as we will provide some examples.

We break the math in marketing into 3 sections

  1. What kind of maths is used in marketing?
  2. Formulas Used in Digital Marketing
  3. Mathematics and Art

What Kind of Maths is used in Marketing

From Bain's report, a marketer needs to report on return on investment (ROI) for every campaign that makes mathematics looks important.

In their 2014 survey of 609 marketers who were spending on social media, dabblers (companies spending less than 20% of their digital budget on social media advertising) said ROI was the most important criteria for deciding where to spend besides effective communication.

You are also expected to make use of past data to increase ROAS (Return on Ads Spent) in campaigns. However, those are more AI and art rather than mathematics.

A prominent U.S. marketing executive who has held top marketing jobs at Procter & Gamble and other companies said, at its core, marketing is 70% math.

If you are great in Maths, you should be in Finance instead and making use of creative maths. Goldman Sachs once reported a big profit for the year by changing its reporting calendar, erasing the impact of a $1.5 billion loss in December.

Formulas Used in Digital Marketing

Here are some common formulas for digital marketing

  • Return on Investment = (Revenue - Investment) / Investment 

An example of how you can calculate selling 800 of a product from an advertisement campaign: (Tip: Remember to bracket the top)

  • Revenue from selling =(800 * $10 products sold) - (800 * $1 cost for the product) = $7,200
  • Investment on campaign = $1,000
  • ROI = ($7,200-$1,000) / $1,000 * 100% = 620%

Another popular metric is the Net Promoter Score, developed by Fred Reichheld to find your customer satisfaction using a simple survey question on how satisfied they are from 1 to 10.

  • Net Promoter Score = % of Promoters - % of Detractors 

A promoter is one who is 9-10 while detractors are 0-6. Therefore an example is

  • Total Survey = 100,
    • 10 person voted 10
    • 1 person voted 9
    • 10 person voted 8
    • 9 person voted 7
    • 65 person voted 5
    • 5 person voted 1
  • % of Promoter = (10+1) / 100 = 11%
  • % of Detractors = (65+5) / 100 = 70%
  • NPS = 11% - 70% = -59% 

Lastly, another common metric is Cost per Impression (CPM) to compare the advertising cost across different platforms. 

  • CPM = cost/impressions x 1000

An example is you advertised on Google Adwords. This number is usually given already in the ads platform but you can still understand and used it in your comparison

  • 5000 impressions spent over $100 campaign
  • CPM = $100/5,000 * 1,000 = $20 / thousand impression

In our view, the Maths in Marketing is definitely not rocket science. You don't need to be an Einstein who knows E=mc2 to succeed in marketing. It is just basic mathematics.

Mathematics and Art

The truth is that many people, especially those that intend delving into the marketing world for a degree are often scared that they might end up dealing with as much math as people in the science field would. As a matter of fact, when they are told the obvious truth that marketing requires math, they are simply turned off and this is why this question came up in this article for some clarification.

Whenever you go to a top-notch company, how would it sound if you ask the manager of such a company if they are top-notch? It would most likely sound like you do not know what you are in for or you are not informed. The truth also is that while we talk about math and marketing, we talk about fields that deal with a bulk load of data and this is the reason why they are in a way intertwined. When you go out of your office and you need to get as many prospective customers for a product, you would need to get a lot of data and this is so because you want to analyze how people related to the said product that you intend selling to them. As a marketer also, there are times in your field when you might need to deal with a large sum of money while you sell off products, if you do not have any knowledge of mathematics, it might end up affecting your balancing of accounts when you eventually get back to your workplace. The world of math and marketing have come a long way and there is no means at all that you can remove one from the other.

As it stands today, there are lots of CEOs who depend largely on the marketing officer in their office when it comes to dealing with large budgets. It is the dynamics of the new world. Sometimes in large organizations, Marketers do the job of accountants and if they are not capable of doing this, they might end up losing their jobs. It is the way that the world is wired. As a matter of fact, if marketers have to rely solely on their marketing knowledge, they would realize that when they get too large organizations, they might not be able to function well. Hence the need for math in the marketing world.

The major facts to understand about marketing and math

The world that we live in is gradually becoming wholly dependent on technology. This accrues also to the marketing field. It is said that the world of Google metrics deals with a large pool of data and the Google metrics could be used in the marketing world to calculate the turnout of people to a particular product. If marketers do not understand this use of the data stored on Google metrics, they might not be able to relate those data to their field. The best way to analyze this data is with the use of their knowledge of math and this is why they need math.

Even more, when marketers go out, whenever it is that they come back to work, they might need to make reports. As a matter of facts, if they do not have the knowledge of math, it would be hard to do the reports and this is another major reason why they need math. When they do such a report, from time to time, they might need to make sure that money and income are measured and this is again is an aspect of math that the typical marketer should know about.

While marketers are in the act of complaining about too much math while in school, it should be noted that the importance of the math that they learn in school is not while they are in school but rather on the practical aspect of what they learned in school. The ability to analyze what they might have learned in school, through the use of the knowledge of math is what qualifies them best as accountants.

Also, a lot of people feel that marketing is more about their creativity in words and their craftiness in the use of their knowledge of the art line, but it is a known fact that when a new creation is brought into the corporate environment where a marketer is, and the sole purpose of such creation is to make sure that the corporate world makes more sales, the marketer would be called upon to make analysis from time to time as regards how that creation is helping to achieve the goals of its creation. When a marketer does not understand how to make use of the knowledge of math in this wise, it would be hard to analyze such development.

Conclusion

The hallmark of every business is the fact that such a business makes profit and profit involve money. The profit in this wise is not just about what you get inside as revenue but rather the difference between the cost price of your products and the expenditures of your business. It is when you have subtracted this from the revenue of the business that you end up having your gain. Now, all of these analyses would not be properly defined if you do not have intrinsic knowledge of math. The world that we live in now, is beyond what you can do with words and rough data, it is more about how you can analyze your business growth and profit rate. All of these would not be perfectly done if the knowledge of math is not incline.

A lot of people wonder why so many marketers find it hard to get good jobs on the go, it is because they have lost a touch with the application of knowledge in practice and this is where math proves its worthiness.


Efforts have been made to get the information as accurate and updated as possible. If you found any incorrect information with credible source, please send it via the contact us form

Sky Hoon
Website Builder. He has a Bachelor Degree in Computer Science and loved to use technology to solve the world's issue, one at a time. For now, trying to blog for a living.
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