It’s a question worth asking in light of a revelation made by Gary Friedman, the CEO of home furnishings retailer Restoration Hardware. 

At the Goldman Sachs 24th Annual Global Retailing Conference held earlier this month in New York City, Friedman told attendees that several years ago, his online marketing team requested a doubling of its budget. Such a significant request was met with some skepticism, but the online marketing team was confident and for a seemingly good reason: their customer acquisition and ad costs were the lowest in the company.

Intrigued, Friedman asked them for the details. “Tell me about the data, show me how,” he requested.

Eventually, the conversation turned to the company’s AdWords buys and Friedman asked a simple question: “how many [keywords] do you buy?” The answer: 3,200. 

To which Friedman followed up:

I said, well, what are the top words? How are they ranked, the ranking of the words? Oh, we don’t have that, right. And I was getting the look at like, oh, Gary is kind of one these old brick-and-mortar guys. He just doesn’t get it.

And I said, well, what are the top 10 words? And they didn’t have the information. I said, why don’t we cancel the meeting and come back next week when you have the data? I’m sure that Google sales representatives who are taking you to the expensive lunches and selling you the 3,200 words have that data. So why don’t we get the data and then let’s review the data?

When the group reconvened, the online marketing team had the data, and it was quite surprising. 22 keywords were driving 98% of the business. And what were those keywords? “Restoration Hardware” and 21 ways to spell “Restoration Hardware” wrong.

According to Friedman, Restoration Hardware canceled its buys for all keywords, including its name, the next day.

The online marketing team at first objected, pointing out that a competitor like Pottery Barn could “squat” on the company’s name, but Friedman, who to this day is dismayed by the number of companies that pay Google millions of dollars a year “for their own name”, wasn’t having any of it:

I said, “excuse me?” I said, if someone goes to a mall or a shopping center and they’re going to Restoration Hardware and there’s a Pottery Barn there, they’re already squatting, okay? It doesn’t mean they’re going to go into their store. If somebody wanted to buy a diamond from Tiffany and just because Zale’s is sitting on top of them in a shaded box doesn’t mean they’re going to go to Zale’s and buy a diamond.

Friedman’s revelation about Restoration Hardware raises a number of subjects that are worthy of examination.

Perhaps the biggest: despite the fact that it is a publicly-traded company that does more than $2bn in revenue per year, Restoration Hardware’s online marketing team didn’t know which of the more than 3,000 keywords it was buying ads against were driving business.

Let that sink in.

The marketing team knew its customer acquisition cost and its ad cost, and probably could have reported on any number of other fancy metrics, giving it the confidence to ask for a doubling of its budget, but it didn’t know that “Restoration Hardware” and common misspellings were responsible for 98% of the revenue its paid search campaigns were delivering.

This is a great reminder to marketers of the importance of seeing the forest from the trees. There are more tools than ever that promise mastery and optimization of every facet of digital marketing, but these can be a double-edged sword. While many of them no doubt deliver benefit, they can also make it easier for marketing teams to get lost in the weeds and overcomplicate their efforts. 

While Restoration Hardware’s experience might be slightly more extreme than typical, the experiences of major advertisers like JPMorgan Chase, which drastically slashed the number of sites it advertises on after finding that most of them were useless, and Proctor & Gamble, which cut its digital ad spend by $100m without ill-effect, suggest even the most sophisticated of companies could probably benefit from taking a closer look at their digital ad efforts.