The great issue in our industry over the last 15years is that, while there has been an explosionin the technologies and media available tomarketers, our models and metrics describinghuman behaviour and decision-making haveoften been left stuck in the 70s.Rory Sutherland, Vice Chairman, Ogilvy Group
Quit smoking BEHAVIOURAL CLASSICAL PSYCHOLOGY/ ECONOMICS ECONOMICS ADVERTISING Humans are Consumers are Humans are “predictably rational emotional irrational” Induce fear or guilt Pre-commitment: via anti-smoking Pledge to give up Prohibitive pricing for campaigns smoking in a public cigarettes forum like Facebook that Deter using will help people control grotesque images future behaviour.
Ease traffic congestion in Singapore BEHAVIOURAL CLASSICAL PSYCHOLOGY/ ECONOMICS ECONOMICS ADVERTISING Humans are Consumers are Humans are “predictably rational emotional irrational” Fixed fee ($60 per It’s cool to cycle to ERP: Institute a month) to drive in work. variable “pay for Feel the pinch! “restricted zones”. usage” system, Prohibitive pricing for Make friends by where loss incurred is car ownership carpooling. made visible every Increased parking time the option is charges used. Increased vehicle taxes
Behavioural economics in digital marketingChoices can bedesigned.
Behavioural economics in a nutshell:Employing hidden forcesto shape decisionsIn making decisions about life and what we buy and do, thecontext, framework, interface, medium and pathways through whichwe reach decisions may have a greater influence on the decisions wetake than the long-term consequences of the decision.
Behavioural economics in digital marketing:Engineering the smoothestpath to conversion High Triggers succeed here Motivation B=MAT Triggers fail here Low Hard to do Easy to do Ability BJ Foggs’ Behavioural Model
Status quo bias People will usually follow the path of least resistance when given options.• I’d like to register as an organ • I do not wish to register for organ donor donation 2• I’d like to skip this question 1 • I’d like to register • I’d like to defer my decision • I’m already registered 3Default position: Default position:You are not a willing You are a willingdonor donor
1 2 3 Setting the default positionSet the default, but ease the adoptiveprocess by providing pre-launch opt-ins
Feedback loopsCreate pathways of desired behaviour by making behaviour visual inthe form of personal informatics
Feedback loops in digital marketing Encourage consumers to reveal more information aboutthemselves for a relevant benefit.
How many more miles do I need to achieve PPS membership? Loyalty Am I on my way to retaining or losing my Elite status? Feedback loops in digital marketing Compel loyalty by providingvisual progress reports against set goals
Loss aversion /ProspectTheoryConsumers feel a bigger absolute impact Losses hurt more thangains feel good. #youprefer Income Tax VS VAT
Drive adoption by giving out limited free trials