The document discusses how behavioural economics can be applied in digital marketing. It begins by contrasting classical economics assumptions about rational decision making with the realities of human psychology. Behavioural economics recognizes that humans are predictably irrational and influenced by subtle contextual factors. The document then provides several examples of how behavioural economics concepts like social proof, scarcity, commitment, and feedback loops can shape online user behaviour and decisions in a way that nudges them towards a desired conversion or action. It argues that digital choices can be designed by employing hidden psychological forces that have more influence on decisions than long-term consequences.

1. Behavioural economics
in digital marketing

2. What is behavioural
economics?

4. Versus

6. The great issue in our industry over the last 15
years is that, while there has been an explosion
in the technologies and media available to
marketers, our models and metrics describing
human behaviour and decision-making have
often been left stuck in the 70s.
Rory Sutherland, Vice Chairman, Ogilvy Group

7. 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.

8. 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

9. Behavioural economics in digital marketing
Choices can be
designed.

10. Behavioural economics in a nutshell:
Employing hidden forces
to shape decisions
In making decisions about life and what we buy and do, the
context, framework, interface, medium and pathways through which
we reach decisions may have a greater influence on the decisions we
take than the long-term consequences of the decision.

11. Behavioural economics in digital marketing:
Engineering the smoothest
path to conversion
High
Triggers
succeed here
Motivation
B=MAT
Triggers
fail here
Low
Hard to do Easy to do
Ability
BJ Foggs’ Behavioural Model

12. The Art of
Choosing
Sheena Iyengar
Mental jam

13. Paradox of
choice
Too much choice leads to decision paralysis.

14. Limiting choice online
Increase click throughs by
focussing on one or two choices.

15. Limiting choice online
Increase social sharing by giving
salience to the key channels.

16. The best guide to Singapore shopping and dining:
Go where the queues are.

17. Social proof
People assume the actions of others reflect correct
behaviour for a given situation.

18. Social proofing online
Instill trust, reassurance and respect

19. Social proofing online
Drive adoption

20. Social proofing online
Make an idea travel

21. Social proofing online
Increase desirability

22. 578 Christmas
cards to perfect
strangers.
117 responses
received.

23. Theory of
reciprocity
An inherent human need to return a favour that was done for us.

24. Reciprocation online
Generate awareness and buzz
through social payment

25. Reciprocation online
Create advocates by starting with:
“what can I give?”

26. Reciprocation online
Build mutually beneficial communities
by enabling mutual admiration

27. Absence makes the heart
grow fonder

28. Scarcity
creates value.

29. Using the scarcity principle online
Drive traffic to your stores

30. Using the scarcity principle online
Target hot prospects and
lost carts to bite the bait

31. Using the scarcity principle online
Stoke the fire closer
to conversion points

32. Unfamiliarity
breeds contempt.

33. 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 3
Default position: Default position:
You are not a willing You are a willing
donor donor

34. 1
2
3
Setting the default position
Set the default, but ease the adoptive
process by providing pre-launch opt-ins

35. Set the context.

36. Framing
People are strongly influenced by the way choices are framed
(i.e., presented).
90% lean 10% fat

37. Framing in digital marketing
Create desirability around price
by using an anchor

38. The Goldilocks Effect
Framing in digital marketing
Create desirability around the
option that’s right for the business.

39. The power of the (publicly) written word.

40. Commitment
People like to believe that their behaviour is consistent with their
beliefs.

41. Leveraging commitment in digital marketing
Guide future behaviour by
getting people to publicly
commit to something

42. Leveraging commitment in digital marketing
Create advocates by actively
encouraging content sharing

43. Progress report cards for everyone

44. Feedback loops
Create pathways of desired behaviour by making behaviour visual in
the form of personal informatics

45. Feedback loops in digital marketing
Encourage consumers to
reveal more information about
themselves for a relevant benefit.

46. 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 providing
visual progress reports against set goals

47. Loss aversion /
Prospect
Theory
Consumers feel a bigger absolute impact Losses hurt more than
gains feel good.
#youprefer
Income
Tax VS VAT

48. Drive adoption by giving out
limited free trials

49. Symbolic non-solution?

50. data FRAMING mobile
SOCIAL PROOF purchase FEEDBACK LOOP
apps LOSS AVERSION social
PARADOX OF
STATUS QUO BIAS crm / loyalty
CHOICE
click throughs COMMITMENT website design
SCARCITY edm RECIPROCITY
Clearly understood principles for driving conversions

51. Recommended:
http://www.behaviormodel.org/

52. Q&A