Tag Archive: behavioural economics

  1. MSiX – Marketing Science ideas XChange 2014

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    I’ve gotten together with the team at Focal Attractions (Mumbrella) to co-create a conference dedicated to marketing sciences MSiX.  This year the conference has a behavioural economics slant. I’ve curated the conference and gotten together a wonderful group of speakers. If you’re in Sydney on July 30 and 31 and are into this type of thing then please come along – it will be the strongest line up of marketing science ever assembled in Australia.


    Below is a ‘Google Hangout’ I did with Tim Burrows, talking about MSiX.


  2. Pre-testing Advertising: Is it a Little Silly?


    This is a article I wrote recently for B&T magazine – kind of antagonistic by proxy.


    I was recently asked by ABC radio to name the four big unanswered questions in our field.
    One of the questions I posed was that we don’t know if a campaign or idea is going to work. I was excited about this concept. But, I then came across an article by Millward Brown exclaiming they had the answer. I immediately grew despondent.
    However, buried in the comments on this article was a forthright reply by James Hurman, MD at Y&R New Zealand: “How was this little sample
    of 1,795 cases chosen from Link’s database of 45,000 case studies? And why is it only consumer packaged goods? And finally – independent research in the US, UK and Germany all shows that 70% of TV ads create a short term sales effect – so although a positive Link score might give you
    a fraction better chance of achieving this already highly likely outcome, what are you sacrificing
    in terms of efficiency of spend (because with a rational piece of marketing messaging you’ll have to spend many times as much to stand out) or long term brand building (which as MB themselves point out, is compromised by short-term sales driving tactics and ‘persuasion scores’)? There have been three independent studies of pre-testing research since it was invented in the 1950’s and they all show a negative correlation. Would MB consider an independent study of their full Link database?”
    Hurman also suggests the concept of pre- testing advertising has no predictive validity in a presentation, in which he quotes the IPA as saying “beware of pre-testing”. The IPA says ‘ads which get favourable pre-test results, actually do worse than ads that didn’t’.
    I’m not writing this to have a go at Millward Brown or any other pre-testing research company. It’s a good thing there are people attempting to understand what makes advertising work.
    What I guess I’m partially excited about is that we are beginning to lift the rug on why it is that things like pre-testing don’t work.
    We, through behavioural economics, are getting better at realising what people say and do are very different things. What people say they like, and what they actually like are very different things. They (we) are incapable of understanding what we like and don’t like, or what will have an impact on us.
    If you need sobering up, look up ‘cognitive bias’. We all make cognitive biases (thinking errors). It’s these errors that make trying to work out if an ad will work via pre-testing potentially no better than having an educated guess.

  3. Behavioural Economics in Action: A Case Study


    Our agency is getting our head around the principles of behavioural economics and it’s starting to inform our thinking and improve our ideas dramatically.  I see behavioural economics as rather executional – it doesn’t help frame the problem, the behaviour to change, or the overall strategy – but once all of that is clear it can be extremely effective in helping devise very effective solutions and ideas.


    This is a campaign for a business called Good Goods, who has a toilet paper called Who Gives A Crap.  The campaign nominated as one of the Top 12 Entrepreneurial Campaigns world Wide by Indiegogo in 2012.  It also just took out the Grand Prix for Australia’s PR awards, Commcon. The campaign involved CEO Simon Griffith’s sitting on a toilet until people had donated $50,000.  We decided on this activity as we had seen the principle of scarcity work in many other crowd sourced programs. By giving people only time limited opportunity to get involved in something ‘silly and talkable’ we hypothesised that it would create demand, and it did.  Further, we provided social proof the campaign was working, encouraging others to join in.

    The other key element of behavioural economics principles informed was the prizes we offered for donations.  We offered very high end prizes (up to $2,500 donations) to anchor the expected donations as high as possible (we presented the list in ascending order of donation – in retrospect it should have been in descending order).  We also ensured there was an honour role to further incentivised donors with public recognition.

    In the end 1333 people donated a total of $66,000 dollars. We learned a lot about human motivations and how to incentive action.

    Have a look at the video for you behavioural economics junkies out there if you can help inform us on other behavioural economic principles we’ve used it would be appreciated.




  4. Review of Daniel Kahneman’s: Thinking Fast and Slow

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    This is a review I have completed in the International Journal of Advertising for Daniel Kahneman’s interesting book ‘Thinking, Fast and Slow’.  If you are into Behavioural Economics you may want to read it.  Unfortunately, I only have these photos – but if you click on them they should come up full size.

  5. Psycho-marketing Experiment: Stop Talking, Get People to Act


    Below is the write up of the psycho-marketing experiment we conducted at Mumbrella360, as it appeared on Mumbrella. There is also a link to it in The Australian, and on The Punch with some interesting comments.

    For those of you who missed it, we teamed up with Save the Children and Deakin University to run an experiment at Mumbrella360 to identify the most effective way to change behaviour using behavioural change and decision making principles (boring for some interesting for others). It was a fun way to put into practice, and demonstrate the power of some of the principles that change behaviour.

    We found that the most effective way for a charity to raise money was not to hit people with rational or emotive messages, but rather by asking them to participate in the communications even in a very small way.

    We also believe these learnings can be generalised to other forms of behaviour change desired. For example, convincing consumers to purchase one product over another may be more effective through ‘action’, rather than rational or emotive messaging.

    Here’s how it worked:

    Look at most charity organisations’ advertising and you’ll see that it focuses on one of two ways to unlock peoples’ wallets to raise money. It’s either:

    1. A rational message: Providing statistics that provide evidence as to how important the charity is, and how large the task at hand is. For example, how many lives are at risk, how many people have died, how many degrees the earth has warmed up and so on. Followed by a ‘donate now’ message.

    2. An emotive message: Showing evocative and emotive images of the cause (scenes of devastation) or the effect (scenes of happy, smiling people) of the charity. Followed by a ‘donate now’ message. Emotions of joy and fear are often used.

    We wanted to compare these traditional methods with this more ‘action orientated’, actually getting people involved in the charity, participating in some capacity and only once they have done something, asking for money.

    We teamed up with Mumbrella 360, Deakin University and Save The Children and conducted an experiment – on the participants of the conference (sorry about that – but you were warned). We divided some people at Mumbrella360 into one of four groups; one group receiving a rational message (stats and figures about children dying and being saved), the second an emotitive message (lots of smiling children over-coming adversity to a wonderful sound track); the third group was asked to create an advertising campaign for the charity, and finally a ‘control’ group (who were asked to solve meaningless puzzles). All four groups were then asked for money.

    It was the third of the these three groups, the ones who were asked to write an ad for ‘Save The Children’ that ended up donating the most money, they donated $4.03 each, around 35% of the total amount for cash they had on them. The rational group donated a measly $2.39 each, and the emotive group donated $3.69 each.

    These results support our thinking (and there is plenty of other evidence in science and marketing that does as well). At least three psychological principles were at play, that ensure an ‘action orientated’ approach is the most effective way to increase donations:

    a. Ownership: people feel more responsible for the charity, and therefore are more engaged with the message (need to pay attention)

    b. Cognitive dissonance: once people act in a certain way, they strive to align their thoughts and feelings accordingly. Thereby making it more likely to give to the charity

    c. Autonomy: people are invited to interact with a message on their own terms versus it being forced on them. This circumnavigates resistance to the message, and makes it more likely they will give.

    The results have a significant impact for charities, causes and brands in general everywhere (anyone who wants people to give them something!). If they involve people in their cause (whatever their cause may be), rather than just ask for money, or a purchase (with either rational or emotive messages), then they have a much greater likelihood of success.

    We like to believe that this is pretty radical thinking and is flipping conventional advertising theory on its head. No longer do we try and build awareness, then interest, then desire, then action. We flip the old AIDA model on its head, start with action and the rest falls into place.

    Thanks to everyone who got involved.