Is Allocating and Advertising Budget as Simple as Rock, Paper, Scissors?

Yes, but who said that Rock, Paper, Scissors (RPS) is simple? It is easy to learn, but playing RPS competitively demands gathering substantial information to devise a winning strategy.

In the fiercely competitive business terrain, devising a victorious strategy echoes the dynamics of RPS. If you've read my previous articles, you'll know I advocate applying game theory to any game that holds your interest.

Understanding Rock, Paper, Scissors

While many readers may be familiar with RPS, it is essential to note that this simple yet strategic game goes by different names across various cultures - "Chifoumi" in France, "Jan-Ken" or "Sansukumi-ken" in Japan, to name a few.

There exist entertaining variants of the game, my favorite being "Rock, Paper, Scissors, Lizard, Spock" popularized by the TV show Big Bang Theory, but generally RPS is played between two individuals who simultaneously form one of three shapes with an outstretched hand. These shapes correspond to a rock (a fist), paper (an open hand), and scissors (a fist with the index and middle fingers extended, forming a V).

The possible outcomes include a draw (where both players choose the same shape) or a win for one player determined by the rules: rock crushes scissors (rock wins), scissors cuts paper (scissors wins), and paper covers rock (paper wins).

It's a universal game that transcends language and geographical boundaries, offering a light-hearted way to make decisions.

Understanding Zero-Sum Games

Through the analytical lens of game theory, RPS is a zero-sum game where a "win" is assigned a value of +1 point, a “loss” -1 point, and a “draw” 0 points. After each round, the combined score of both players will always sum up to zero; for instance, if Player A wins (+1) then Player B necessarily loses (-1), and vice versa, maintaining a total sum of zero.

This mathematical balance illustrates the competitive dynamics of a zero-sum game, wherein the total amount of value or wealth remains constant while being redistributed amongst the players. It is a representation of a closed system where the gain (or loss) of one participant is exactly balanced by the loss (or gain) of another, emphasizing a scenario where one’s gain is accrued through another’s equivalent loss.

This property makes RPS a perfect playground to explore strategic interactions where individual decisions have direct repercussions on others, a phenomenon regularly encountered in competitive business landscapes.

Understanding the Minimax Principle

A pivotal concept in game theory is the minimax principle. This principle guides players to formulate strategies that minimize their maximum possible loss ("min" from minimize and "max" from maximum is where we get the term "minimax") essentially aiming to carve out the optimal route in adversarial settings.

In the context of RPS, employing the minimax principle could look something like this: a player would assume that their opponent is playing optimally and would therefore randomize their own choices to prevent any predictable pattern that could be exploited, hence minimizing their maximum potential loss.

Understanding Mixed Strategies

In game theory, a mixed strategy involves alternating between various strategies according to predetermined probabilities, fostering unpredictability and deterring opponents from foreseeing your moves.

In RPS, where we assign values to the outcomes (+1 for a win, -1 for a loss, and 0 for a draw) the goal (from the standpoint of employing the minimax principle) becomes to maintain an average score as close to zero as possible. A player employing a mixed strategy might randomly opt for each choice one-third of the time, avoiding discernible patterns and nearing an optimal strategy in symmetric zero-sum games.

RPS and Advertising

In business settings, the Minimax principle can guide companies to develop strategies that shield themselves from the most severe repercussions while still positioning themselves to seize the most fruitful opportunities. It fosters a careful balance between risk and reward, encouraging a rational, statistically grounded approach to competition.

So, how does all this tie back to advertising and, more specifically, to the strategies employed at Havas Edge ?

Drawing parallels from RPS, we have mastered the art of unpredictability and strategic thinking in crafting advertising strategies.

We leverage mixed strategies to keep our campaigns adaptable and fluid, adept at minimizing risks while maximizing opportunities. While our strategies aren't grounded in the randomness intrinsic to RPS, we prioritize unpredictability to outperform competitors. It involves a meticulous allocation of advertising budgets across diverse platforms, echoing the dynamic principles of game theory in real-time applications.

Maintaining confidentiality about our campaign victories ensures our strategies remain undecipherable, preserving our competitive edge. It's akin to not revealing your consistent choice of ‘rock’ in a game of RPS, maintaining the element of surprise.

Building a Winning Strategy with Havas Edge

We invite you to reassess your advertising strategies through the lens of the RPS game and the Minimax principle. Entrusting us with your strategy means taking game theory seriously, promising you a strategy that is both fun and grounded in mathematical precision. Contact T.P. McCabe to learn more about how we can help you . . . or just to challenge him to a game of Rock, Paper, Scissors.