How to apply the Pareto Principle in Digital Marketing » Portal Insights

The Pareto Principle is an idea conceived by the Italian economist Vilfredo Pareto, who observed that 80% of the country's income distribution was concentrated in 20% of the population based on a test with pea production. Nowadays the Principle is known as a kind of “formula” that establishes a relationship between effort and results, where 80% of the results come from 20% of the efforts.

This century-old strategy – first observed in 1906 – has strength and relevance today. It is essential, for example, to enhance results and promote marketing actions with more focus on actions that bring the greatest return.

Therefore, applying the Pareto Principle in digital marketing is not only natural but also essential for anyone who wants to achieve maximum results with the lowest possible effort and cost.

It is based on this correlation between effort and reward that marketing planning can be done more accurately.

For example, with the immense variety of social networks and content dissemination channels that exist today, it is essential to establish the 80-20 “rule” in your daily life. Otherwise, you run the risk of putting a lot of effort into something that won't yield a return, while what needs more attention will, mistakenly, be placed in the background.

Imagine, for example, a clothing store for teenagers that has R$1,000 per month to invest in ads on Facebook, Instagram, Google and Linkedin. A professional who is not familiar with the Pareto Principle may suggest that this budget be invested equally across media:

• R$250 on Facebook
• R$250 on Instagram
• R$250 on Linkedin
• R$250 on Google

For a layman, this strategy may make perfect sense, but considering that the majority of teenagers' clothing consumers are present on Instagram, from an efficiency point of view, this is a bad idea.

After all, if the majority of sales will probably come from Instagram, why not invest all (or at least most) of the budget in this medium?

Practically, from the perspective of the Pareto Principle, this division of budget for advertisements would be divided according to the efficiency of each channel:

• R$800 on Instagram;
• R$200 on Facebook;
• R$0 on Linkedin;
• R$0 on Google.

Obviously this is an example that we are using to explain how the Pareto Principle can be used in Marketing. We are not recommending that anyone do this before a deeper analysis of the business and, importantly, a few rounds of testing.

Practical examples of the Pareto Principle in digital marketing

The concept of the Pareto Principle applies in various marketing management situations, including digital. In this context, the 80-20 ratio can relate to situations that associate the tools used with what each of them can promote.

Here are some examples:

• 20% of social media generates 80% of results;
• 20% of posts generate 80% of engagement;
• 20% of customers are responsible for 80% of revenue.

The items of speech tend to vary according to the strategies, but, in the vast majority of cases, it is the relationship established in the Pareto Principle that dictates the real rules of the game. In summary, what you must consider to correctly apply this concept in your communication management is the fact that a small sample is responsible for achieving most of the results.

What is the big advantage of applying the Pareto Principle in this context? Optimizing team work and, consequently, the gains obtained at the end of each stage.

With the 80/20 relationship you will be able to see which platforms, tools, actions and campaigns, in smaller quantities (20%) can deliver more robust feedback (80%).

For example: why post every day on LinkedIn if it is the two posts per week on your Instagram that have the biggest impact on revenue? When the manager uses the Pareto Principle to read his own demands, he ends up seeing opportunities – and even threats – that, before, seemed not to be present.

From there, the tip is to focus production on digital marketing platforms where engagement is profitable, or in places that generate qualified leads for the company. Also remember to apply the Pareto Principle to your audience: 20% of the topics you will cover will be of most interest to the majority of your audience.

Pareto principle for productivity

At the end of the day, you should apply this principle to digital marketing because it is precisely what will help you increase your productivity.

From the moment you realize, through this logic, that 20% of your time corresponds to 80% of the results, the need to prioritize, in your marketing action schedule, becomes evident, which is, in fact, more effective.

This also means stopping using enormous efforts on what does not bring value to the company, even when it comes to items that the board likes to approve.

After all, if 20% of posts generate 80% of engagement, it is essential to identify the key characteristics of these posts, and what makes them so interesting to the audience. It is with this information that teams will establish routines in which they can dedicate more time to what generates results in a more significant way.

To start applying the Pareto Principle in this marketing analysis, rely on questions such as:

• What do these posts have in common?
• What type of content was most popular?
• Which topic covered revolves around the 20% most engaging materials?
• What audience does it reach?

Once again, the questions must follow their specific strategies so that the answers are assertive and clarifying. One way to avoid errors is to consolidate an internal monitoring scheme, in which the most important variables will be detailed.

Here's an example to start from today: first, identify which platforms offer you the best return, based on past numbers. Once this is done, create content production focusing on your audience's interests, that is, on the themes, times, platforms or design elements to which they responded best, with the most engagement.

To better identify this issue, an interesting option is to create a persona for your business. From there you can plan strategies specifically to optimize results.

Finally, use the Pareto Principle in digital marketing to improve your product offering, get the right investment and even choose your team of communicators. Yes: even between teams it is possible to identify where most efforts are concentrated. By appropriately valuing these few people who make the most effort, your productivity and sales capacity are enhanced.

And all this because, one day, an Italian decided to look more closely at the production of peas inside pod stalks – proving that, 20% of the time, 80% of the things we look for are where we least expect them.