How to Shape Human Behavior

Executive Creative Director and Vice-Chairman for OgilvyOne in London, Vice-Chairman for Ogilvy & Mather UK, and IPA president, Rory Sutherland has +22 years experience exploring the stark discrepencies between theory and reality.

How do you see the advertising industry today? Never mind advertising, the whole job of marketing is to turn human understanding into business advantage – hence it is our job above all else to be at the forefront of any new insights into how people decide and act.

The changing nature of briefs and the new panoply of media available to us makes a deeper understanding more important than ever, for the more complex range of media requires a more complex and nuanced understanding of how different communications work – and why some work and others fail.

Good, experienced advertising and direct marketing people instinctively “know” many of the lessons of behavioural economics, but it makes these notions much easier to explain if there is a body of scientific thought and a vocabulary which supports our instincts.

There has been enormous progress in the social sciences in the last 30 years, for example:

• Behavioural Economics: The study of the effects of “social, cognitive, and emotional factors on the economic decisions of individuals and institutions.”
• Network theory: The study of “graphs as a representation of either symmetric and asymmetric relations between discrete objects such as the internet and social networks.”
• Game theory: The study of “strategic decision making and mathematical models of conflict and cooperation between intelligent rational decision-makers in areas such as economics, psychology, and logic.”
• Psychophysics: The study of “the relationship between physical stimuli and its effect on a subject’s experience or behaviour.”
• Darwinian psychology: The study of “psychological traits such as memory, perception, and language from a modern evolutionary perspective.”
• Cybernetics: The study of communications and automatic control systems in both machines and living things.

…to name a few.

Yet, perversely, advertising seems less interested in psychology and the social sciences than it was in the era of the early Mad Men episodes. This seems absurd to me.

Why do you think advertising steered away from psychology? I think it’s probably a number of unconnected things which all had the same effect:

• Advertising agencies started making most of their money through television. This television advertising model tended to push the rational-persuasion model, since it was a convenient fiction. And it didn’t need particularly sophisticated models to explain the workings of advertising in a media monoculture.
• There was a period when consumers and marketers, brought on by books like The Hidden Persuaders and films like The Manchurian Candidate, became paranoid about brainwashing and the idea that people could somehow be manipulated without their conscious knowledge. Of course we now know this to be true to a degree. This led to marketing and advertising businesses to claim that everything was merely simple-rational persuasion which took place in the plain light of day.
• In the 60s and 70s a lot of the social sciences took bit of a wierd turn; apart from anything else, in the late 1970s it might have been career suicide for academics to engage with commerce in any way.
• The dominance of packaged goods in advertising agencies. When you sell packaged goods (which up until the last 10 years dominated ad spend), brands couldn’t really control the environment in which their products are sold, and the simple pursuit of fame and fashion may be all you could do: you were asking someone to do little more than pay 10p more and to move their hand two inches to the right when reaching for the shelf. Today the behavioural challenges of much of marketing are dramatically different – take up cycling, move your broadband supplier, join a car club, book a flight…

What’s encouraging to me is that nearly all young people coming into advertising nowadays find this fascinating – the fact that we lost interest in it seems genuinely strange to them.

The simple fact is that modern marketing thinking has been polluted by a lot of very poor models which are increasingly wrongheaded. Neo-classical economic thinking has polluted the Anglo-Saxon world to a great extent, but also the obsession with the ‘rational-persuasion model’ has infected marketing to too great an extent. Any attempts which challenge these – without necessarily rejecting them entirely – seem welcome to me.

[EDITOR’S NOTE: Derek Sivers makes several good points about social rationality in his TED TALK ‘How to start a movement’.]

[EDITOR’S NOTE: For advice on how to manage analytics and trend analysis for your website(s) and social media platforms, read my interview with Benjamin Descazal, Data Consultant for KBMG.]

It hence provides a better template for what challenger brands need to do. Competing head to head on the same turf as your competitor rarely works. Interestingly, it’s Red Bull and bottled water that have both had more success competing against Coca Cola than Pepsi.

I’ve a small advertising buget, any advice? Behavioural economics can be useful to small businesses because it reveals very small things you can do which you can do in your spare time. Some of which require no budget at all which can really make a big difference.

More advice in no particular order:

• Go after your customers and make them more loyal.
• Never forget that customer service is relative to expectation. If you create some small unexptected element of surprise for the customer, that will make a huge difference.
• If you’re in an industry where customer expectation is low, then it doesn’t take much effort to stand out from your competition.
• Start from the transaction out. Don’t start with advertising. Start close-in to the point of sale and work outwards. What are the barriers that prevent customers from doing business with you? For example, what if a hair stylist sends its customers a text message offering a special reduction over the next week, and those customers could simply book an appointment directly to the text saying “Tuesday at 10:00am” instead of having to call the stylist or book online?
• A huge amount of our behaviour is devised to minimize transaction costs. To anybody under 30, it might seem weird to call up and physically book an appointment when this could be more conveniently done by app or by web.