Behavioural Economics (and beyond)

Recently I was invited to give a presentation on Behavioural Economics to the good people at Which? magazine.

As experts in consumer rights they’re naturally interested in the reality of how consumers behave, and how the advertising and marketing community use insight to communicate effectively.

Yesterday I gave the presentation, and it ended up being quite a sprint across quite a bit of ground. Of course there’s the initial ideas behind the theory of behavioural economics and a few examples of how advertisers have applied them. At heart, I think, brands have started, rightly, to focus on generating behaviours rather than merely seeking to change attitudes.

I also wanted to reflect the the importance the coalition government have attached to ‘nudge’ theory, and the influence of the Cabinet Office’s Behavioural Insights Team in cascading the value of insight through government policy and communications.

I’ve also given a nod to how the application of behavioural theory is developing, and more explicitly concerned with social norms and the contagiousness of ideas. Gamification, too, is clearly built on BE principles, and technology altogether is extending the ways brands can get people ‘doing’ in response to communications, rather than merely ‘thinking’.

The deck is below.

Red hot, red herring… or just read nothing else?

I’ve written a lot about behavioural economics here – for which I apologise. I do find it fascinating, as a means to understand the emotional context for people’s decision-making. After all, in marketing, isn’t that we’re supposed to be obsessed by?

Thought that’s not always the case. I remain frequently amazed how incurious some organisations are about their own customers at times. Perhaps that comes back to the points I made here about the need to systemically provide stimulus and direction to teams and individuals. Anyways, I wanted to make it clear that on no account do I believe behavioural economics is the be-all and end-all. For a start, so much of its value as a discipline lies in how effectively its validated some of what we’ve already been doing: insight, the why behind the what, contextual relevance, compelling messages, providing solutions to problems.

So, it can help us with universal insights, attributable to the uniform nature of our behaviour. But what about the differences between us. In the executive mind resides the stuff that makes each of us unique. The mores, the values, the social norms that guide us. There’s no way we could argue these impulses are uniform or universal. BE can help us establish mechanisms to optimise people’s behaviour, but it’s limited in helping us to address the underlying commitment to that behaviour.

Of course, this is the critique of the behavioural economics put by Mark Earls under the Herd model. Since we’re fundamentally social animals, reducing the analysis of our behaviour to a individual model of behaviour is a mis-step. That’s not to say books like Nudge couldn’t accommodate a social model of behaviour, but it does little to explicitly address it. For a full discussion of the role of networks in public policy (economic or otherwise), go here.

By way of a very quick example that highlights the distinction, at MEC we’ve looked at the area of job-seeking. We found that Choice Architecture thinking was great stimulus to find ways to help make people’s job-seeking behaviour more effective. But it felt little more than tinkering at the edges when attempting to affect people’s evaluation of work as something neither inherently valuable or potentially beneficial.  Is it worth the aggravation to find yourself a job when there’s nothing worth working for?

Real behaviour change required something deeper, overhauling sometimes generations worth of assumptions, a complex mesh of social, cultural and personal norms that no amount of nudging can compete with. Unless, that is, you want to resort to coercion.

So, BE isn’t social, it’s individual.

But beyond that, there’s a sense that the answers it provides might sometimes feel too easy, too uniform, too universal to be right all the time. The distinction between automatic/executive modes of thinking feel bang on. And while BE is great at the automatic, it’s less so on the executive.

And, in this space, there’s another field of study that’s quietly unearthing a wealth of evidence to challenge the idea that we’re ruled exclusively by the need for shortcuts, or that we default always to what’s easiest.

It seems that engaging the executive mind can not only be done, but is frequently achieved by appealing to the best of our psyche, not the most base, or laziest.

For anyone looking for more edifying conclusions as to what unites and delights us, then read on….

In Fun Inc, Tom Chatfield makes a compelling case for Games as a crucible of human insight: it has huge potential to effect change, engage communities, provide psychological insights, diffuse technological advances, influence the way we work, and signpost the way we might all live soon.

And incredibly it does this, not through escapism, fantasy or as the preserve of geeky young men in bedrooms, but by presenting a uniquely calibrated mix of challenge and reward, and making it accessible to an unprecendted number and variety of people.

Video games need to be intuitive – no-one’s being paid to play them. They need to be stretching – anything too easy is boring. Increasingly, they’re community-based, and focus on extraordinarily complex and time-consuming task completion. In short, they make difficult things fun.

And the more difficult things are, the more fun they seem.

That this sort of appeal to our better selves doesn’t only exist in games is strong evidence against the reductive assumptions that nudging makes of us all. Look at YouTube for example. It’s familiar and undeniably mainstream, and is no sense a game, yet it highlights how applicable some of gaming’s most important mechanisms are to us in other realms.

  1. Collecting: as a YouTube user, the capacity to gather a list of ‘favourites’, to be displayed as part of your personal identity, and seen online by anyone else who wants to participate
  2. Points: the secret to all games, and the true addiction. Anyone who’s posted a video can assess their ‘performace’ through the number of views, clicks, stars, and links that make up the public index of your profile
  3. Feedback: evidence of a dynamic community, and an essential element of any site deemed successful, despite it leaving the user open to rebuke as much as reward
  4. Exchanges: a core transactional component of games that underlies the new virtual economies developed within the gaming world – visibile in YouTube in the form of video responses to video posts, with all the tributes, mash-ups, re-edits, etc that we know and love
  5. Customisation: with any profile allowing opportunities to reconfigure their users’ experience, the remake/remodel credo is as strong here as with any avatar

The point to all this, of course, is that none of this is especially easy, but it does represent a course of action taken by a huge amount of people. The YouTube example is illustrative, but the principles could probably be applied to most kinds of social network activity, and are therefore representative of the kind of complexity people are prepared to take on in other, equally public, spheres.

So, behavioural economics makes sense of a lot of things. What is misses out, however, might be the most important element of ourselves. People’s natural leaning can be to be creative, to interact,  to build, to make. And, of course, to work incredibly hard to create social value for themselves and for others.

It means we shouldn’t let ourselves think we’ve found definitive answers.

Which should be easy, as long as we continue to make curiosity a virtue.

Content, Context… and Alan Partridge

In my last post I mentioned that Behavioural Economics thinking can highlight the relative roles of content and context in decision-making.

If my emotional attachment to a brand or product is only as strong as its proximity to my immediate needs, then it becomes fairly straightforward to assume that context trumps content. To continue with the lager example, this might mean, for example, that the efficacy of a brand’s distribution strategy counts for more than the brand personality the latest advertising seeks to capture.

But there’s a cartographer’s library between the territory occupied by advertising, and the co-ordinates that represent the moment where I choose my lager at the bar. If there wasn’t, would I default to Peroni as soon as I see it on draft? I certainly don’t remember any Peroni advertising. What’s more, why would I somehow feel I’ve failed in my quest for confident connoisseurship whenever I find myself ordering a Foster’s?

So, having massively enjoyed, and been really rather impressed by, the Foster’s co-option of Alan Partridge, I wonder if I’ll be judging myself any less harshly next time.

What Fosters have done does progress the content/context debate a little. It has a new, if somewhat literal, take on what content might mean. It makes me think of the Medici model of branded content: benefactor declares his wishes, throws enough cash around to show he’s serious, and the artist does his bidding.

And, relief all round, it’s not shit.

Mainly, though, Foster’s have pretty much substitutes ‘advertising’ with ‘entertainment’. It might add utility, and it has produced something people will want to to share. Because it does Partridge so well, it might even fuel what Naked no doubt planned it would – blokey, competitive banter in the pub – and connect the brand’s content to the product’s context. However, you still get the feeling it’s started with the brand, and with what a bunch of marketers think their ‘consumers’ want.

And they might well be right.

I’d love to see more ideas, though, that had been generated from a buyer-centric, and not seller-centric, point of view. I can’t help feeling that, rather than finding new ways to make content that creates preference outside the context of decision-making, shouldn’t we getting more effective at connecting context to content? Can we identify what help people need to make decisions, then create a series of solutions from that insight.

In media planning, we often talk about context, but we’re fairly narrow in the way we apply it. That’s because we’re still bewitched by the premise of presumed receptiveness – once we acept the need to get a ‘message’ to people, we work out when and where are they most likely to want to hear it. Or rather, when are they least likely to have their defences up. This is entirely seller-centric, and so increasingly futile, I think.

Media agencies’ capitulation to this convention is understandable, I guess.  Whatever moments of optimum relevance or influence have been identified, we always need to revert instead to points when media actually allows for interventions. So, for ‘downtime’ read ‘magazine supplements’, or for ‘busy middle-class 35 yr olds’ read ‘commuter Outdoor’, for ‘family moments’ read ‘saturday night TV’.

It’s a depressingly narrow and reductive expression of what people are really like. And if ad agencies have been in charge of articulating brands, it’s unfortunate that media agencies have taken such little care of their custody of consumer insight the strategies to engage them.

Surely we’re beyond this now. Technology means that interactions with potential customers can cut across time and location with ease. Real-time data frees us from the need to second guess where people will be, and what they’ll be thinking when they’re there. And that data is getting ever richer. If search was about revealing what people were interested in, then facebook allowed us to see what people were thinking, and now foursquare/facebook places adds an extra layer of insight telling us where they are right now.

BJ Fogg defines technology’s capacity to change behaviour as the way it can restructure tasks, or make them easier. I think that’s a pretty useful, if ahead of its time, description of what apps are doing for us right now, but effectively chunking the internet down into task-specific platforms, which fulfil particular needs at any given time.

Which brings us back to the content with which we fill this contextual space. Meeting needs doesn’t preclude us from making compelling stuff fuelled by creative thinking. In fact, quite the opposite. Alongside the kind of intellectual property typified by Partridge, we can also think about other services, tools, products, events, transactional opportunities.

In short, ideas with genuine utility. If brands can harness this I think the real connection between context and content isn’t far away.

Are brands missing the real value of Behavioural Economics?

“Faced with the choice between changing one’s mind and proving that there’s no need to do so, most of us get busy on the proof”

 - J K Galbraith

This blog is about recognising the potency of learning by doing. Though it’s often unrealised among most of us, that doesn’t mean we’re all exhibiting thought-out, rational, pre-meditated behaviour the rest of the time. It’s not just as simple as making the mental switch from procrastination to an active, effective new way of behaving.

Thing is, we’re not really built that way.

 
Behavioural Economics has harnessed ideas latent in psychology, economics and theories of social learning to highlight just how little conscious motivation most of us use at any one time.

Marketing has latched on to this, but disappointingly the discourse seems to be centred on how to assimilate the idea into its traditional armoury of persuasion. People think (or rather, act) using short-cuts. They think in relative, not absolute, terms. And they assess how much effort might be entailed in any choice they make. Given the chance, brands will seek to exploit this laziness for their own ends. Marketers, like most people, are getting busy on the proof.

So, it still sounds a lot like manipulation to me.

Far more powerful than the notion of selling brands, however, is the opportunity to use these insights to help people.

Last week I heard Simon Waldman talk about the challenges faced by businesses trying to adapt to the massive changes wrought by technological advancement. Of course, the biggest driving force behind the scale of these changes lies in how useful they are to people.

 Technology itself isn’t the problem, rather its utility, and its ability to help people circumvent the barriers put up around the products and services they want to access.

Waldman talked about technology’s capacity to ‘exponentially satisfy’ consumers. I think this meant that technology can make something you like more convenient to access, easier to use, or simply more enjoyable. Whoever enables this, in so doing they increase their value to the user of their services.

It’s by offering value to the buyer that we can add value to the brand, not the other way round.

Are marketers really ready for that paradigm shift?

Strange that we should be having to ask the question, when all around us we see the evidence that people (the ‘consumers’ who buy stuff) aren’t sitting around waiting for brands (the companies who sell them said stuff) to change.

They’re just going elsewhere, to a company that is.

Alan Mitchell’s fantastic blog, Reinventing Marketing, characterises this smartening up as the shift from seller-centric to buyer-centric marketing.

A shift that finally makes good on marketing’s supposed purpose: to identify and meet consumer’s needs.

As opposed to finding what those needs are, only to try and sell them something you can’t be sure they even want, let alone need.

In his latest post he suggests thinking about the customer’s metrics, rather than our own. By what criteria will they be measuring the success of the transaction? He recommends:

  • Understanding the time, effort and attention that customers have to invest in the making and implementing the decision, and 
  •  work out how to help the customer improve the points on this journey through a decision
I see this as a really potent approach. It’s not only a way assessing valuable buyer-centric opportunities, it also posits a new framework for evaluating success, by measuring how well a brand has been able to add value to their buyer. Or, as Mitchell says, how well a brand has helped generate customer ROI, as opposed to asking customers to generate ROI for the brand.

For marketers, it helps us focus on how, when, where and – critically - why a brand might intervene in someone’s decision-making journey. Nailing this highlights what sort of media will best serve the service the customer needs.

Which brings us back to Behavioural Economics. Loyalty to or preference for a brand or product only really remains loyalty or preference for as long as that brand or product remains a viable option. Do I choose not to buy a lager if my supposed first preference isn’t available? Probably not. Decisions, even about stuff we purport to care about, are as much about their context as they are about their content.

And technology, by collapsing the distance and time between customers and their favoured products and services, is making it ever easier for brands to fit with the context of people’s lives.

What an amazing opportunity for marketing and brands. Maybe some brands have already realised the potency of this idea. My guess is that most haven’t. I hope marketers realise the need to change their mind sooner rather than later

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