When Roy H. Williams wrote his ground-breaking Wizard Of Ads trilogy, he included what he called the Advertising Performance Equation.  It has been at the root of myriad marketing successes that the Wizard and his partners (and disciples) have achieved  through the years.

I am going to boil it down stupid simple so a third-grader could understand it, but it you want to drill deeper you can always go here and there...and elsewhere.  And when in doubt, go buy the freakin' book for chrissakes.  The A.P.E. is chapter 47 in Secret Formulas Of The Wizard Of Ads. Failing that, you can just download the Wizard's whitepaper here.

It breaks down like this:  four variables will determine the success of your marketing (notice that I am not saying "advertising" anymore, and we'll come back to that later).

1) Impact Quotient: Does your message possess salience?
2) Share Of Voice: Is the word getting out relative to your competition?  What percentage of the discussion do you own in your category?
3) Personal Experience Factor: Not merely customer service (though the cornerstone of this), this exists in the mind of consumers, it is the degree to which you meet, exceed, or fall short of their expectations.  In a word: reputation.
4) Market Potential: how big is the pie from which you cut your slice?

Now that's about as much as you can distill each of these.  We did a full two-day seminar with some of the most electric minds in the Wizard of Ads Group--two. full. days.--and we still could've covered more territory.  So I can't solve all the world's problems, or give you absolute clarity about all this in a single blog post.  But I do want to plant two seeds today in my monthly column (and by the way I apologize for its tardiness;  I have found in this last week that with my wife resuming her career in health care, running a business and a household is one helluva juggling act, and I applaud all the men and women who make it work).

So anyway, before I plant the two seeds, I want to encourage you to drill deeper on this, because upon grasping its fundamentals, I guarantee you that you will sleep better at night.  Then again I am a chronic insomniac, and am writing this at 4:22am...on a Saturday morning no less.

So let's take market potential out of the equation and just focus on the first three.  It's pretty simple really:  say something that resonates (IQ), budget to get the word out and get your fair share of voice (or greater than if possible) and then back it up with what Seth Godin (almost called him Rogen) would call remarkable as in "remark-able," not just good but so good that people will remark about it to their friends...not to help you, but their friends.

Now that's all cut and dried in a premillenial world, simple algebra boiled down to handy pocket-sized algorithm (which, come to find out, doesn't have a "y" in it).  Nice and nifty in the '99.

But what about facebook and twitter and all the other social media out there?  In tweaking your A.P.E., do these fall under Share Of Voice or Personal Experience Factor?

I believe the answer is, drumroll please:  "yes."

For the record, I've never claimed to have all the answers, but I'm better than the average bear at identifying the questions. This explains why I ask an either/or question and then answer it in yes/no fashion.

Here's my take, and I offer this up just as an encapsulation of what I learned from the other partners in Denver and having pondered the question since.

I was always taught that Share of Voice was something you budgeted for.  In the old school, with a one way pipeline of info, even average businesses with mediocre advertising could be successful if they bought enough advertising.  I believe those days are long gone.  At the very least, a more enlightened definition of Share Of Voice has to include the millions of discussion occuring on blogs and Twitter, et al.

But PEF was always something that required budget and architecture as well.  And the point was always this: advertising won't fix a broken business.  The crummy restaurant with good ads won't like build repeat customers much less evangelists.  If anything, I believe Personal Experience Factor (which was always the hardest to measure objectively) is now the lynchpin, the single most important part of the equation.

Here's how I explained it in Denver when we did the two-day seminar.  PEF creates this intimidating feedback loop back into your Share Of Voice.  PEF always qualified Share Of Voice (it's a fundamental component of the equation), but it used to be that this occured one-to-one.  Now with the ability post things on facebook walls and convey thoughts to thousands of followers...not to mention the staggering SEO power of the blog...now more than ever it is imperative that you exceed expectations. If that feels like a leap, start by just doing what you say.

For what it's worth, I think all this is really good. As a consultant whose job it is to bring my clients into step with this microwave world, life's pretty good right about now, and at the risk of sounding immodest (not my intention) this recession has been good for my line of work. But the thing I'm really excited about is that the conmen and hucksters are going to find it harder to stick with the ways of old (many of them are already going belly up) and honesty and transparency will be rewarded.

For a change, these fevered egos, run amok, will get what's coming to them.  And good honest folk, empowered by this crazy technology, get more equity just for doing the right thing.  Now that's a breath of fresh air, don't you agree.

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