THE LAW OF DIMINISHING MARGINAL UTILITY

 

 

Chris Wilkins told me the moment he knew Sian was the woman for him.

Chris was the Creative Director of Y&R and Sian was Head of Art, they were trying to pull a huge pitch together the night before the presentation.

All the work was done, all the pitch decks were collated: strategy, marketing, media, everyone was just waiting for a particular art director to finish making some detailed changes for the umpteenth time.

Everyone was tense, everything was held up while this one art director fiddled with the minutiae of the type.

He wouldn’t let it go until it satisfied him.

Sian eventually marched into the art director’s office and Chris heard her say, in cut-class tones sounding just like the queen: “You do realise there’s a difference between being a perfectionist and being a cunt.”

What Chris and Sian were experiencing was the Law of Diminishing Marginal Utility.

The point at which additional units of anything become counter-productive.

At the beginning of any process, the original units will be hugely important and contribute greatly to the outcome.

But as it progresses, successive units will become less important.

Each additional unit will add less than the preceding one, until you eventually reach a point where additional units are having a negative effect.

This is The Law of Diminishing Marginal Utility and it’s generally depicted with a parabolic curve on a graph.

At the beginning, the curve climbs sharply as the return on effort is magnified but, as we go further along, the curve gets shallower and each additional unit of effort yields less and less return.

When we reach the peak of the curve it begins its downturn, and each additional unit of effort has negative results.

In the case of Chris and Sian’s pitch, all the work at the front-end was being undone by the details at the back-end, which might even cause them to miss the pitch entirely.

The Law of Diminishing Marginal Utility works with anything in life.

Take beer drinking: the first pint is great, the third pint not quite as good, by the eighth pint you’re probably so pissed you spill it.

At present, an obvious comparison is billionaires like Musk, Bezos, and Zuckerberg: the first billion dollars makes you feel fantastic, the second billion is also very good, but the ninety-ninth billion makes very little difference.

In advertising, The Law of Diminishing Marginal Utility applies particularly to media.

I hear punters say “Why must they keep playing the same adverts over-and-over again, night-after-night, in every break?”

This is because media companies spend all their money on repetition, a perfect example of The Law of Diminishing Marginal Utility.

Instead of creating an interest in the ad, this constant repetition makes consumers sick to death of it.

But there is a way to spend that money to get massive coverage without boring people to death.

Make lots of different ads.

Instead of repeating the same ad until people are sick to death of it, why not make a campaign of 3 or 4 ads and rotate them?

That way you can put your brand in front of the audience as many times as you want, but it will be fresh each time instead of irritating.

Always use The Law of Diminishing Marginal Utility to put your money and effort where the returns are biggest.

Put your effort into the first part of the parabolic curve where it will deliver most return.

Don’t put your time and effort into the later part of the curve where it’s wasted.