WARC: Behavioural Economics in Advertising

May 12, 2017



    Before Easter some of the Gracechurch team attended “Behavioural Economics in Advertising”, a WARC event hosted by Deloitte. This was perhaps the most stimulating event I’ve been to in a while – from the individual speakers to the take-away exclusive delegate report (the latter was quickly snatched and perused by all at Gracechurch who were not able to attend that morning).


    As someone new to Behavioural Science – particularly its application in advertising – I initially approached the series of presentations with slight scepticism: was this going to be a showcase in how effectively to brainwash consumers using scientific formulae? And although one presentation skirted closely on this line, I was highly surprised to find out that it was much the opposite. In fact, what was discussed were viable ways in which to understand human behaviour, why some advertising campaigns have been so successful and to therefore design marketing in line with what we know about how people act or make choices. It’s smart advertising. Of all the engaging presentations, I personally had three favourites in particular.


Mark Earls

    The first talk was given by Mark Earls, one of the leading thinkers in Behavioural Economics and the author of Copy, Copy, Copy: How to Do Smarter Marketing by Using Other People’s Ideas (2015). Earls began by getting the attendees perform a Mexican Wave. The point was to demonstrate his main thesis, which is: we tend to outsource our cognitive load. This of course means that most of us don’t actually think for ourselves. It’s an important observation, given that Behavioural Economics has mostly focused on the individual. Yet when we consider that the individual is largely a product of collective consciousness, this radically changes the way we approach an understanding of human behaviour. The major benefit of Behavioural Economics, according to Earls, is that it challenges the things we thought were plausible about human behaviour – in other words, inherited assumptions that aren’t actually true.


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Seamus O'Farrell

    O’Farrell explored the more practical application of Behavioural Economics in advertising, or “How science can enable us as creators of value-building market share.” First priority in this endeavour is to evaluate how we behave as a result of how we’re affected by external stimulus. In terms of this approach to behavioural science, the most effective brand is one that can master “fame, fluency and feeling”. When we measure these heuristics it becomes clear that they’re integral to brand. And since brand is the key driver of sales, these three heuristics determine market share.

    The fundamental insight here, according to O’Farrell, is that human beings don’t really care about the choices they have in front of them, even if they think about them, because people generally have a lot more important things to think about than brands. An example of this would be if one asked 1,000 people on the street, “What is the most dangerous form of transport?” Most will say aeroplanes, but if you give this same sample just 15 seconds in a data point, the most likely answer would in fact be motorbikes. But because the image of a plane crash is so vivid in the category of frightening transport, particularly when we’re not continually applying the rigour of reason at any given moment, aeroplanes are what comes to mind.

    This concept is absolutely crucial when thinking about the effect of brand on our consciousness. When something comes readily to mind, we perceive it to be a good choice, precisely because it comes to mind immediately. The key finding here is that top of mind recommendation is very reflective of market share. O’Farrell explained that when we’re told something repeatedly, for example, that YouTube has killed television, it creates set neural pathways and we begin to associate this notion as fact. On the contrary, television advertising still remains one of the most effective marketing channels.


Crawford Hollingworth

    Hollingworth’s talk turned to focus on social psychology and the perceived trustworthiness of a brand. More specifically, he showed how admitting a weakness makes a brand more appealing (so long as the weakness is related to a strength). The idea is that we are generally drawn to a self-deprecating posture and are more likely to find a brand desirable if that brand contains a small fault. This rationale makes more sense, I think, when we look at it from the opposite end: Where there is no apparent fault, we think it is “too good to be true” and that we’re being duped. In the latter case, Hollingworth pointed out, consumers become suspicious and believe that that hidden fault must be something significant. Of the many case studies Hollingworth provided, Volkswagen was particularly interesting.



    VW actually has quite a history of using failure as the core driver of an advertising campaign, not least of all in the 2015 diesel emissions scandal (there appeared an image of Adolf Hitler with a model of the original Volkswagen – underneath the tagline read something along the lines of: “To be honest, we’ve had worse PR campaigns”). Similarly, in the above example used by Hollingworth, it’s clear that Wilt Chamberlain won’t fit into the Beetle, but given that most people are not as tall as the basketball champion, that’s not so great a fault after all. This turns out to be just a clever way for VW to explain that there’s actually more room than you’d expect in a Beetle, mainly because of its uniquely situated engine. 


Chantal d’Offay, Research Analyst at Gracechurch Consulting