10 takeaways from Nudgestock 2019


Nudgestock, Ogilvy’s annual festival of behavioural science, is highly unusual in its ambition and scope. The day is about developing creative solutions to human problems. We’re here to understand people in all their complexity and consider what unites them in their decision making.

Behavioural science is a young discipline, still mapping its boundaries. So instead of being spoon-fed a narrow diet of industry veterans re-presenting case studies, we’re invited to harvest our inspiration from thought-leaders from across domains of expertise. It’s a challenging approach, demanding your attention and sapping your brainpower.

A succession of anthropologists, economists, academics, marketers, brands and campaigners take the stage. I turn to the people either side of me to make sense of it all: I’m sat next to an evolutionary anthropologist and a food entrepreneur. I can’t even rely on industry jargon to bridge the gap in my understanding our as we chat through our impressions of each speaker.

I’m out of my comfort zone, and loving it. Here are a few things that stuck in my head:

1) Many problems are better solved using “psycho-logical” rather than logical thinking

Rory Sutherland anchors the event. Beaming from the stage in a Hawaiian shirt, his talk is a whistle stop tour of his new book, Alchemy. His argument: logical thinking is a straight-jacket when you are solving human problems. We should all consider “using psycho-logic to conjure up value from nowhere.” A host of examples show us how looking through a psychological lens enables magical creative solutions:

  • Instead of spending £80bn on HS2 to reduce journey times to Birmingham by 30 minutes, spend a fraction of that making the experience more pleasurable and productive;
  • Make paying tax less painful by keeping rates constant (we become accustomed to the rate we pay) and instead giving an annual rebate. You then have option of donating a proportion to causes of your choice, like the NHS (feelgood factor). Those sharing over 50% could have their names publicised (an opportunity both for kudos, and to signal identity).

2) There is nothing wrong with doing good by stealth

Huge improvements to human hygiene in the 20th century were in a large part caused by a growing urge to maintain the appearance of cleanliness, unconscious status-seeking. Soap was sold on its ability to increase your attractiveness, rather than its hygiene powers. Positive ends derived from selfish means.

There is much we can learn from “Scenting the soap”. If you can change the story, you change the meaning and value of the product. In the present day Beyond Meat is framed not around a rational benefit or hairshirted denial, but exceeding (not just imitating) what it is replacing.

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3) Make rational benefits irrationally appealing & “Don’t mess with Texas”

These themes were echoed by Richard Wise, a “global brand anthropologist” with a nice line in dry humour. He galloped through “five legendary case histories which made rational benefits irrationally appealing” which were all for “utterly worthless and contemptible categories”.

In each example, rational benefits were red herrings. Previous communication efforts often failed due to logical linear thinking. Brand owners struggled to see past them to connect to the human truths.

Anti-littering in Texas, for example, relied on Keep Texas Beautiful as a message, which failed to change behaviour (or in Wise’s words, “didn’t do shit”). Who litters most? Young men aged 16-35: pick-up driving, beer-drinking wrestling fans. The solution for the Lone Star State was to appeal to a more rebel instinct in the tone of their message, provoking tribal pride. This was about speaking to a lower self about a higher message. You can imagine the arguments getting it signed off.

The result? A 72% reduction in littering on highways over 4 years: the single greatest anti-littering campaign on record, subsequently adopted into culture, emblazoned on t shirts, meme-ified and parodied.

Permission details CC-BY-SA-3.0; Released under the GNU Free Documentation License.

4) The 3 psychological hacks which Uber rely on

Taxis aren’t new. You’ve been able to summon a cab to pick you up for over a hundred years. What makes Uber different – and crucially feel different – is the user interface:

  • The dot on the map reduces the uncertainty of waiting, reducing frustration. You can see where you are, where your driver is, and feel reassured. None of this changes objective reality: it changes the way you feel waiting for a cab.
  • No money changes hands physically at the end of the ride – payment is pre-arranged and intangible, reducing the pain of payment.
  • Chunking the customer journey into granular steps. The Uber Pool customer journey is longer, meaning people drop out. Showing updates like “now finding a driver going in your direction” and “finding other riders going in your direction” along the way resulted in a 11% reduction in ride cancellations. Chunking helps.

5) Stand up to quantification bias – unconsciously valuing the measurable over the immeasurable

Tricia Wang bounded on stage with barely suppressed energy. Wang is a tech ethnographer – someone who watches what people do with technology for a living. She coined the term “thick data” (which essentially means qualitative data) – “the most direct, unmediated data from humans which captures the full context of their emotions and stories”. As she put it “you cannot put tears and smiles into spreadsheet.”

Without paying close attention to human experience you miss emergent behaviours, unseen opportunities and strategic shifts – meaning your strategy will be wrong.

Wang believes companies make bad decisions because of quantification bias. They fall into a trap that their huge datasets hold the answer to what they should do next, rather than understanding people. She is famous for advising Nokia to change their reliance on featurephones after observing how smartphones were transformational to the lives of people living in the developing world. Nokia rejected the advice as their models predicted otherwise. Big data gives you an artifice of certainty: her experience taught her that without the right model you are not listened to.

6) Re-balance marketing functions to be more holistic

In Wang’s view, there needs to be a culture change in organisations. Thick data – qualitative insight from real people:

  • Rescues the context loss that results from relying on big data alone;
  • Inserts the human back into the loop that has become invisible undetected;
  • Changes your perspective, allowing you to focus on the right things.

You need a holistic approach, scale and depth, to drive businesses forward. It is interdisciplinary: we need to work together. The marketing function should balance thick data, big data and creativity. In her view this is why Apple outperform Nokia, Fender outperform Gibson and Zara outperform Gap.

7) Simple rules of thumb outperform complex prediction models 

A lot of people are here today to hear Gerd Gigerenzer speak; he’s spent 40 years studying how people make decisions in the real world. In his view: less is more.

  • The world we live in is complex: we have imperfect knowledge of future states of the world, their consequences and probabilities;
  • It’s counter-intuitive, but your aim should be to make things simple;
  • Rules of thumb are more effective than all other approaches.

He compared two models of predicting whether a customer will make a future purchase:

Strategy 1 – Less is more – experienced managers used a rule of thumb: ”if a customer has not bought in the past 9 months classify them as inactive” (the “hiatus heuristic”).

Strategy 2 – A complex problem needs a complex solution. Use a pareto negative binomial distribution model.

The former was a more accurate strategy than the latter, across many categories (see pic). As Gigerenzer put it: “…simple solutions are out there, we just need to look for them. Often just a single variable is important…”

A simple “hiatus heuristic” required less information, was fast and saved effort. The implications are clear: speak to the doers, people on the front line more likely to have skin in the game experience. We should aspire to fast and frugal heuristics, not be ashamed of them.

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8) The sentence that can predict flu with more accuracy than Google

Another example related to a flu prediction project at Google:

  • Google created an algorithm to predict spread of flu. Their hypothesis was the volume of searchers would correlate with the number of ill people. They used 50 million searches centring on 45 search terms, with a 4-year calibration period. The model failed to predict the swine flu breakout in April 2009 – a black swan event with no precursors in the data: big data is backward looking. If the future is not like the past, this is a problem.
  • To improve the model, they re-engineered the algorithm, with even more data: 160 predictors. Again, it failed, even with another 4-year calibration.
  • What turned out to be more accurate was a simple rule of thumb, based on recency: comparing the number of flu related doctor visits 2 weeks ago to the number of doctor visits one week before flu diagnosis, in the previous year.

9) A lot of management decision making is about “arse-covering”

Defensive decision making is the notion people choose the option which protects themselves, rather than the best decision for their organisation. Many organisations have a culture of fear and blame: why take a risk? Far better to “fail conventionally than to succeed unconventionally” as John Maynard Keynes put it.

Gigerenzer said that many CEOs admit to him privately they approach decision making this way. This has serious implications:

“Defensive decision making strangles us because people can no longer do their best for you”

When it comes to medicine this can be the difference between life and death. He cited research showing 93% of doctors admitted to defensive decision making. If your doctor is motivated by protecting themselves from litigation rather than healing you, they end up recommending a different – interventionist – course of treatment. His rule of thumb? Ask them what they would do if they were choosing a treatment for themselves.

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10) Organisations are monitoring people to death – decentralise and empower to win

Professor Sir Paul Collier from Oxford University closed the day. Talking without notes, he covered the birth of capitalism, how it developed, diagnosing where it is failing, before prescribing solutions – all in 30 minutes.

So I’ll focus on a single point. The annual jobs and skills survey has shown a sustained drop in agreement to the statement “Do you have enough discretion in your job to do it properly?” Since the 1970s there has been a 40% drop, and now most people disagree. People don’t feel trusted – but are micromanaged, targeted, tested and controlled. This simply does not work, in business (GM vs Toyota) or in the public sector (teachers in the UK vs Finland).

As our world becomes more complex, the amount of behaviour that can be codified reduces. So much of what we do at work relies on tacit knowledge. The lesson? Decentralise decision making, empower people and trust them. Work provides us with dignity, respect and esteem – we shouldn’t forget it.

In summary

Reflecting on it all, the common thread is our obligation to argue for, justify and reassert human connection.

Abstraction and data have a role to play, but in isolation they feel cold, insufficient. The relentless logic of businesses scaling-up risks humans being engineered-out completely. As Sutherland writes in Alchemy:

“It is impossible to quantify many of the psychological factors which people care about… there are no S.I. units for what really matters.”

So here’s to using our judgement, in business and in life.

——

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How defaults reinvented workplace pensions

It’s easy to get downhearted when you think about politics. So let’s take a moment to be cheerful in these hyper-partisan, Brexity times. Sometimes politicians do leave legacies that make a real difference to people’s lives.

In 2012 there was a crisis in pension saving. Fewer than half (47%) of UK workers were saving towards their retirement in a workplace pension scheme, and many were facing an uncertain future due to their lack of provision. Speaking to people across the income spectrum at the time on a project for the National Employee Savings Trust it was clear were lots of reasons for it. For some, affordability was the issue. Others didn’t think much about the future – retiring seemed a long way off and they assumed “things will work out.” Many more however fell into the “I always meant to but never got round to it” category.

Inertia is a powerful force. Our attitudes and intentions may clearly point in one direction, yet our behaviour won’t necessarily follow. Stacked on top of each other the friction costs involved in opting-in to a pension act as a barrier. Thinking about the future is hard. People find finances boring (shock horror!) so considering a pension provider, deciding which funds to invest in and then filling out the paperwork is not fun. All this meant a significant proportion of people who wanted a pension never took one out.

That all changed in 2012 when new pension rules were enacted, and large employers became responsible for auto-enrolling staff into workplace pensions by default. The decision point – the barrier – was removed.

The results were profound. ONS data (see figure below) showed that by 2018 more than three-quarters of us (76%) had a workplace pension, a significant increase.

Proportion of employees with workplace pensions in the UK - 1997 to 2018

This ‘nudge’ was transparent: people could opt-out if they wanted to. But when we are presented with a default option already set we tend to accept it, going with the flow. My interpretation? There were a pool of people with a latent intention to save who were helped by this intervention – and they’ll end up happier retirees as a result.

Takeaways:

  • Like with a lot of examples in behavioural science, findings are counter-intuitive. The person in control of the decision is the person who designs the “choice architecture”– not you.
  • Little “friction costs” add up. If you make it hard to do something, fewer people will do it.
  • Defaults are probably the biggest behavioural lever you can pull. Their use can quite easily backfire, so should be carefully considered.
  • In this instance there was a huge amount of supporting education, communication and stakeholder engagement that complemented the pension rule changes. Interventions are not binary: educative nudges which “strengthen the hand of System 2 by improving the role of deliberation and people’s considered judgements” (Sunstein & Reich 2019) supplement the non-educative nudge (the default opt-in) in this example

 

 

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Using behavioural science to unlock customer opportunities: keeping it SASSY at Leeds Digital Festival

This month Trinity McQueen were delighted to take part in the fourth annual Leeds Digital Festival. Comprising 200+ events over eleven days it’s a great showcase for innovation in the city.

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My presentation focussed on applying behavioural science. It’s something we’re talking to lots of our clients about: it helps us see problems in a new light, and unlocks value for marketers at little cost. We went through seven case studies from work over the past decade covering everything from pensions to breakfast cereal.

One challenge we always face is summarising key principles in a way that makes them stick in your head. Let’s face it: as a topic behavioural science can intimidate. Marketers are busy people and not everyone is comfortable with terms like “heuristics” or “salience”. So when people ask “isn’t this all a bit complicated?” we say “no – it’s SASSY.”

Behavioural Science is SASSY.jpg

We also revealed results from a recent experiment, examining the effectiveness of different behavioural tactics with a nationally representative sample of 2000 UK adults.

Questions afterwards were wide-ranging, thinking about how principles stretch to different domains, whether some tactics become less effective over time and the emerging ethics of nudging.

Thanks to all who attended and contributed, and to iView Leeds for hosting.

 

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Stick or twist? Supermarket buying patterns from 5 years of Clubcard data

A team of psychologists and data scientists from UCL worked together to interrogate Tesco Clubcard data, exploring hidden patterns in how people buy. It is powerful study because of its:

  • Scale (283,000 people);
  • Scope (longitudinal data covering 5 years, 89 store visits per person on average)
  • Remit (purchase data, as opposed to attitudinal data)

I’m always keen to get a meta-level perspective of buying behaviour, stretching horizons beyond short-term client projects to long-term trends. The study promises a great deal.

The findings are a mixture of the obvious and the new. It’s a reminder that you can throw terabytes of computing power at an ocean of data and end up mostly confirming what we already know. That’s OK – it’s why it is called research.

Clubcard buying patterns

The academic paper is dense and has lots of jargon. The diagram makes the pattern clear. Each dot is a shopping trip: green dots are when people twist and blue dots are when people stick.

Coherency maximising_Clubcard

I find all this stuff useful for a couple of reasons:

A reminder that real-world decision making differs from the lab

The authors describe how lab experiments modelling similar choices often show people are systematic and rational. They exhibit system 2 strategies in these system 2 conditions, relying on objective criteria in comparable trade-off environments.

The real world is full of subjective evaluations (“ooh that looks tasty”) in varied trade-off environments (e.g. stores that change layout or merchandise).

As Professor Dilip Soman put it in his book The Last Mile:

“When you’re in a store, absolutely everything around you could influence what you buy: the display, the price presentation… the presence of crowds… What’s more, these factors could interact with each other… Theory can show us the way but without testing… we risk failure because of something in the background context that trips up the effectiveness of our intervention.”  

Data can only take us so far into the subjective world of human taste. How do you reverse engineer a whim?

Hidden patterns that shoppers may not be aware of  

People like things more the more often they choose them (the authors call this ‘coherency-maximising’). They hypothesise that “people come to like what they purchase, out of a need to “make sense” and explain their choices to themselves and others.”

This aligns with other sources – like Sharp’s How Brands Grow – showing how people bring their attitudes into line with their behaviour. As Sharp writes “…since brands aren’t very important to us, brand buying tends to have a strong effect on our rather weak attitudes.” 

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Dollar Street: a glimpse into how people live across the world

South Korea.jpg

The Lim family lives in Busan in South Korea on $827 a month 

Dollar Street is a photography project aiming to demystify the daily lives of people who live in other cultures.

Covering more than 30 000 photos in 300 homes across 56 countries, it’s a semiotician’s dream.

In each home the photographer spends a day taking photos of 135 objects, from front doors to shoes to household items. These become a searchable database, allowing you to see the commonalities across cultures, how and where things subtly differ. Crucially you can search by geography and by income. So you can compare “what people dream of buying” or children’s toys or front doors as you wish. It’s addictive.

It was founded by Anna Rosling Rönnlund (Hans Rosling’s Daughter) of Gapminder. Her remit is to address misconceptions about global development through accessibly presented information. Over time she found that presenting global trends data didn’t really convey the reality of life in the developing world. In her words:

“People in other cultures are often portrayed as scary or exotic…This has to change. We want to show how people really live. It seemed natural to use photos as data so people can see for themselves what life looks like on different income levels. Dollar Street lets you visit many, many homes all over the world. Without travelling.”

It’s immediately obvious that it’s a powerful tool for empathy. There is a beguiling mixture of hope, pride and pathos in the images. There’s poetry in the everyday.

toys_dollar street

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Three ways to think about value: scarcity, context and signalling

Bring to mind someone ordering oysters in a restaurant.

Who are they? What do they look like? What type of restaurant are they in?

I was surprised to learn this week that Oysters were an everyday staple in the Victorian era, so plentiful that they were given away free in pubs. They fell out of fashion in the early 20th century, and thereafter oyster beds declined in UK waters.

Whilst oysters haven’t changed much in the past few generations, our beliefs have; current associations of luxury & decadence would have seemed strange 150 years ago.

This leads to a broader question: what is behind what we value?

I’d argue we value what we believe in, and that belief is largely driven by scarcity, context & signalling. Here’s as brief a summary as I can manage.

1) Scarcity

Natural scarcity

The team at Ogilvy Change subdivide scarcity into rarity, quantity, competition & time. This makes intuitive sense, whether applied to goods (like truffles or blue fin tuna) or services (like front row seats at the theatre).

Artificial scarcity

In business scarcity is just another lever to generate demand, as evidenced everywhere from Disney’s release schedule to your hotel booking website.

2) Context

Value is relative, not absolute

Karl Marx put it best:

“A house may be large or small; as long as the surrounding houses are equally small, it satisfies all social demands for a dwelling. But if a palace rises beside the little house, the little house shrinks into a hut.”

Culture

The most popular restaurant I saw whilst on holiday in Thailand was Mont. They sell toast. Toast with butter. Condensed milk. Chocolate spread. But essentially grilled white bread. If I proposed we pop out to a restaurant for toast in the UK, you’d assume I had a brain injury. In Bangkok I’d be on trend.

Mont nom sod Chiang Mai

A very busy Mont outlet in Chiang Mai, and some of their toast (pic: mont-nomsod.com)

Comparison

A wonderful example of anchoring is at the Ferrari museum in Maranello. After you’ve gawped at the wonderful lines of the 812 Superfast (£260,908) and heard the rumble of the naturally aspirated V8 in a 458 Speciale (£208,000), you exit through the gift shop. Here you can buy a single bolt from a 1996 F1 car for £450. Mounted in Perspex with an authentication certificate, it is a potent totem. It isn’t a bolt at all: it embodies belief, and signifies connoisseurship.

Ferrari screw from Schumacher Suzuka1

A bolt or a potent totem? Perhaps both.

Similarly, when you are specifying options on your £90,000 Ranger Rover Sport, Carpathian Grey metallic paint seems reasonable at £1700. This is about £170 a litre.

Brands frame our perceptions

As Barden makes clear in the excellent Decoded, brands frame our experience of goods & services. Framing is why people pay about two grand more for a VW Sharan over a Ford Galaxy, virtually identical cars made on the same production line.

Habituation

The novelty soon wears off a new purchase. Psychologists call this hedonic adaption. Consumption is merely a treadmill.

At a societal level, the Easterlin paradox is apt: as societies get richer there are diminishing returns to happiness. A fascinating study on housing supports this point.

Indeed, as we get richer, the market premiumises existing products to soak up our disposable income, even in unengaging categories. You can buy a “cool” washing machine LG Signature range if you so wish.

3) Signalling

Sign value

Baudrillard described four ways an object has value. I’ll focus on three:

  • Use value – what it does;
  • Exchange value – what you can trade it for;
  • Sign value – how it is perceived in relation to other items & what it implies about the owner.
SMEG & Beko_How cool is your cooling device.png

How cool is your cooling? Pics: SMEG & Beko

A SMEG fridge chills just like a Beko fridge; both cost a portion of your monthly pay; however they both have radically different connotations. Functional differences aside, when you buy a SMEG fridge you are buying into the unwritten, intangible but powerful meaning it conveys.

Communicating status

Social distinction is the shadow motive behind much consumer behaviour. We have such a profound need to signal identity that the normal rules of supply and demand don’t always apply: increasing prices can increase demand because of exclusivity. As Clarkson said about SUVs:

“Admit it. You want a big SUV because it’s part of today’s uniform. It tells people that you have a second home in the country and that you shoot. It says that money’s not a worry. All of this is human nature. It’s silly but it’s how we are.”

So many choices only make sense from the perspective of evolutionary biology, the signalling value they offer. Rory Sutherland makes a similar point about cheese:

“…middle-class rules now require that every dinner party cheeseboard must contain at least two cheeses which aren’t very nice… I was baffled by this for a long time, until I realised that these cheeses are not bought to be eaten, but to signal the sophistication of the occasion…There are many forms of consumption today where — dress it up all you like — it is obvious the main value lies not in the intrinsic value of the thing itself but in signalling the refinement of your taste. This increasingly creates a kind of feedback loop where people are driven to absurd lengths to gain competitive bragging rights.”

Absurd lengths? The Silicon Valley elite’s latest status symbol: keeping chickens. As the Washington post report:

“..egg-laying chickens are now a trendy, eco-conscious humblebrag on par with driving a Tesla…Being able to say you have chickens says, ‘I have a back yard,’ and having a back yard says, ‘I have space.’ And having space means you have money, especially when it comes to Silicon Valley real estate.”

Signalling is useful lens for consumption as it allows us to consider underlying motives. In the western world experiences, knowledge and connoisseurship are new markers of status. In California buying SUV might serve a similar purpose to buying a live chicken.

Belief is a trick we play on ourselves

Blind taste testing is often a waste of time; I’ve seen budget supermarkets win taste tests blind, then lose them branded. Research by Stanford neuro-economist Baba Shiv shows our expectations overcome our sense impressions. You taste what you believe. It’s a variant of the placebo effect.

In summary?

  • What you believe in, you value.
  • Value is subjective and relative, not objective and absolute.
  • Value is dynamic, ever changing.
  • Value is dependent on context and culture.
  • Brands frame our experiences.
  • Brands act as carriers of belief.
  • Expectations increase over time. There is no end point.
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APG Noisy Thinking: a planning surgery with Les Binet and Sarah Carter

The APG brought together Les Binet and Sarah Carter for a Q&A at Google HQ yesterday evening, the latest in their Noisy Thinking series. Billed as a “planning surgery” it was an opportunity to pose questions to and discuss the finer points of marketing strategy in a confidential environment.

It’s been a busy year for the APG: 2 books, a conference and a multiplicity of events. Members are getting their money’s worth.

Here’s 7 themes from the evening:

Binet & Carter How Not To Plan APG

#1 Don’t worry about alienating existing users when trying to get new ones

  • We discussed the hardy perennial of comms briefs: the aim of appealing to new buyers “without alienating existing buyers”
  • Their evidence shows this never happens: they have never seen any ad have a negative influence on sales
  • Alienation as an idea is flawed, based on 2 false premises:
    • Brands are important to people (they aren’t);
    • People who buy you are “your customers” (as Andrew Ehrenberg put it “Your customers are the customers of other brands who occasionally buy you”)
  • The violent re-positioning of Super Noodles – taking it from kids’ tea time treat to blokes post-pub grub – had the effect of increasing sales to all users. That’s how ads work.
  • Badly designed research will means provocative new ideas tend to be rejected. When you make an ad, people often end up liking it.
  • Research also underestimates herd effects. When people experience others really enjoying an ad this builds momentum.
  • Takeaway: Worry less. Build new brands through bold executions.

#2 Put communications LAST

  • We discussed a failed loyalty campaign, based on downloading an app to get a discount. The critique? An expensive way to reach a small amount of people, preaching to the converted, cannibalising existing sales, selling them at a lower margin. It got commissioned because it was a “cool idea.”
  • Put comms LAST not first: start with your business objectives:
    • How much you want to sell, at what margin?
    • Think about what behaviours want to elicit to get there (e.g. penetration vs. loyalty)
  • Advertising is a numbers game. John Lewis speak to most people in Britain multiple times at Xmas, investing in something like 800m impressions. A million impressions is a “rounding error” for a national brand campaign.
  • Takeaway: Marketing is about all 4Ps: get away from “1P marketing”.
  • Takeaway: recognise when the audience for any activity is the marketing community itself: “cool ideas” smack of empire building to me.

#3 Something is better than nothing: the mere exposure effect

  • You can think yourself into inaction, executional paralysis.
  • The biggest sin is not doing anything: 2 years off air is enough to kill a brand.
  • Consider the mere exposure effect: just putting a logo out there will have some effect; investing in 40m exposures even more. Move into the realm of great creative work and you’ll be 10x more effective.
  • Takeaway: check your ego and act.

#4 Ads don’t have to make sense

  • Changing the shape of Tetley teabags to make them round made them market leaders within 3 months. This was despite PG Tips’ iconic and long running Chimps campaign.
  • There is no rational defence: it was the same tea, people just quite liked the change. It felt cosy, the bags fitted in a mug. PG inevitably retaliated with the pyramid bag…
  • It’s a reminder that we live in a system 1 world: mints with holes and meerkats that speak Russian are not bounded in cost benefit analyses.
  • Takeaway: The magic of advertising is in the little things that don’t make sense. Fight to hang on to random illogical things that make people feel something.

Binet & Carter How Not To Plan APG 1#5 Think about “functional alibis”

  • Advertising works beyond the linear message > response paradigm it is often reduced to.
  • The Rowan Atkinson Barclaycard campaign used humourous vignettes involving things like burning carpets to illustrate functional benefits like purchase insurance. These “functional alibis” are just jumping off points for creatives to guide the execution – which actually work through swagger & humour.

#6 Stop worrying about maximising efficiency and ROI: worry about effectiveness

  • In 2011 the AA cut ATL brand spending – putting all their investment into DM, email & paid search. This was an offers-based strategy: hook people, then increase prices.
  • Highly efficient & profitable in the short-term, brand metrics went into free-fall. This led to commoditisation as people searched for the category not the brand. Discounts had to be deeper and existing customers lent upon harder; churn increased etc.
  • Analysis showed the brand would be insolvent within 5 years if the strategy continued.
  • Investment in a heavyweight ATL brand campaign reversed the decline (pic).

Binet & Carter How Not To Plan APG 2.jpg#7 Quant pretesting needs a rethink

  • Most quant pretesting methods work on a rational, linear, message-response model.
  • The best you can say for it is that it gets rid of the worst performers, lifting the floor.
  • The critique is that it lowers the ceiling: it dulls the lustre of anything original.
  • MAJOR VENDOR X state they get the same result from an animatic as a finished ad. Question: how can this be anything other than literally testing a message?
  • It is hard enough working out why successful ads work after they are live. The thought experiment of how successful ads might fare in pretesting makes the argument clearer. Example: the Hamlet photo booth ad (worth rewatching BTW) cannot be rationalised: the comedy is in the nuance, comic timing and casting.
  • Question: do we end up not doing humour if pretesting can’t allow it through its maw?
  • Question: what are we pretesting for? If it is executional guidance, isn’t skilled qualitative research best for this kind of nuance?
  • Takeaway: get a grip researchers.

A thought provoking evening. Thanks to Les Binet & Sarah Carter, Google for hosting and compere Matt Tanter from the APG.

 

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Digital Darwinism by Tom Goodwin: book review

Digital Darwinism by Tom Goodwin

Digital Darwinism was published in April to some acclaim. Goodwin is Head of Innovation for Zenith Media, a master of the pithy aphorism and a twitter-era contrarian. My question on picking up the book was whether there would be depth behind the soundbites.

I’m pleased to say there is. It’s packed full of ideas to help us think about business in these ‘accelerated times’. Goodwin contextualises 2018’s digital world by looking at the past, drawing learnings from the adoption of previous ‘new’ technologies like electricity.

What is Digital Darwinism?

The core idea is that technology changed the parameters for business success:

  • The mass adoption of networked computing has supercharged competition: it’s never been easier to try a new provider in any category.
  • Companies are designed to evolve slowly over time, but the speed of technology means the background for business changes faster than any company can.
  • New players, defined by their tech-enabled customer centricity are like invasive species, quickly coming to dominate once stable ecosystems.
  • To survive, established players shouldn’t aim for incremental change, slowly breeding-in hybrid vigor. They need to look further ahead and get used to reinventing and re-reinventing what they offer.

Natural agility is not enough

Incumbents too often tinker around the edges, sprinkling a layer of tech on top of old problems (‘hey, let’s do something with chatbots’) rather than starting at the root of the issue, user needs. Indeed, when it comes to innovation incumbents are at a double-disadvantage. The incentives are misaligned. With success comes complacency:

“We live in the age of insurgents, who use last mover advantage to deploy the latest, best and cheapest tech and who take advantage of new behaviours… The insurgent isn’t bogged down with expertise. What in theory should allow dominant players to win easily often acts against them… you are so invested in the old paradigm, that you actively seek to combat change. Sony made too much money from selling music. Kodak from selling photo products.” 

Asking the questions no-one else is asking

Digital Darwinism is a mindset. The mega-cap tech firms re-imagined established categories by asking questions no-one else was asking, changing parameters of the design process. Goodwin cites the Tesla Model S by example: with fewer than 20 moving components compared to 1500 in a standard car, it takes a sixth of the time to assemble. We’re urged to learn from this audacity. Forget how you currently operate & consider what your company would be like if you started from scratch. Be hard on yourself. Would you do the same things?

Value is different in the digital age

We’re so overburdened with choice in every conceivable category that managing abundance and aiding discovery is what people really need. The consequence? The content gateway is more important than the provider. Examples abound. I shudder to say it, but I know people who know which playlists they like, but not which artists.

“Value is different in the digital age. I use a slower more expensive train to visit my parents because it has wifi and plug sockets. My time is most valuable.”

He’s particularly good on trends

In his view business success emanates from empathy and human understanding, not technology.  

“Innovation has always been misunderstood to mean more. We thought that Nokia was innovative because they made 72 handsets a year, until Apple made a single one and it changed the world. The collective goal of companies has to shift from doing extra, to work hard on doing less, better.”

Indeed, Goodwin urges us to think harder as we look forward. He is scathing about much trend prediction which he dismisses as chartism – the mindless extrapolation of existing trend lines. Assuming you are right because you have a lot of data is absurd:

“We think data will light the way but increasingly it is blinding us…”

“If you ask people about something that doesn’t yet exist, you get something worse than useless – you get something damagingly misleading…”

“Data does an excellent job of mapping the past and the current, but a terrible job for those who need to look ahead…”

I really liked his material on second & third order effects, which make the dance and interplay of trend and counter-trend much clearer. Craft beer makes sense when all the mass market wants to give you is Bud Light; farmers markets make sense in the era of stack it high, sell it cheap retail.

But… winners may not remain winners

The missing element may be a recognition that winners may not remain winners. Volatility is baked-into networked capitalism. As David Karpf writes in WiredIn the rush to identify the next industry that will be disrupted by the digital revolution, we underrate how fragile the business models of the disruptors themselves tend to be.”

Taking the long view from my research, in 2007 Bebo was the teen’s social network of choice; in 2017 the teens I researched only talked about Instagram. Facebook occupied the middle years. Envisage a world where Facebook’s success ebbs away because young people see it as something “for old people – like mum or dad…”

Overall

Goodwin comes across as a frustrated idealist, wanting us to do better. It’s an enjoyable read, and provides helpful context to think more clearly about the parameters of business success in 2018. But don’t expect a blueprint. Goodwin helps us map the terrain. The route we’ll have to plot for ourselves.

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Addendum: other books worth reading about tech-enabled business  

Zero to One by Peter Thiel

Thiel was co-founder of Paypal and is now a venture capitalist, famous for being the first outsider to invest in Facebook. He’s from what you might call the muscular individualist school of capitalism. Depending what you read he may also be a genius suffering from survivor bias and a lack of empathy. Zero to One is slim, crisp and highly readable. Like Goodwin he is no fan of incrementalism. The sections on how Paypal succeeded, power laws and his four scenarios for the future are all highly thought-provoking.

The Inevitable by Kevin Kelly

Idealist, hippie sage Kelly takes us through 12 technological forces which will shape the future. Written in 2014 it feels slightly optimistic in the era of bot-created fake news, but his commentary on AI, “flows” and how screens affect our behaviour is superb.

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