This week the Nobel prize in economics is of note for marketers. Not because of advertising’s impact on the economy, but because of behavioral economic’s impact on advertising. This week Richard Thaler, one of the founding fathers of behavioral economics, won the Nobel prize for his “nudge” theory, which essentially says people cannot always be relied upon to make rational choices, even in regards to their own economical interests. I’ve written a lot about the “lizard brain,” and behavioral economics leverages the idea that gut instinct, even if irrational, can drive behavior. Mediastruction provides media mix modeling using a methodology with behavioral economics at its root. Our model assumes that consumers make decisions with incomplete bits of information in a very complicated environment. Most economic modeling assumes that consumers distill complicated sets of information to make a rational decision in a simple environment. The “nudge theory” has been adopted in all kinds of industries, including, no surprise, political. Read more here.
Green, Yellow & Red
Perhaps one area of “nudge theory” impact is the 5-star online rating system, where irrational negative rankings can bury a brand. For many marketers, peer review is critical to sales. Take nearly any entertainment brand, for example. But what exactly does 4-stars versus 3-stars mean? Forrester Research proposes replacing the 5-star system with a simple one of green, yellow and red. As a solution, Forrester announced this week its support of an app called “Tap.” Tap allows users to select from one color, but only if the user provides feedback. Forrester says Tap’s system is designed to facilitate the emotional side of the consumer experience, while also protecting brands from unfair negative reviews. Forrester encourages brands to embed the tricolor system on their websites, as a more useful tool than troll-infamous Yelp or Twitter. And in case you are skeptical about the gravitas of online reviews,read this week’s eMarketer survey that finds half of respondents use ratings and online reviews “always” or “often” to inform purchasing decisions.
IT Biz Credible Buyer for Ad Agencies
There is little doubt that marketing and data analytics are colliding at light speed. This week’s article from Marketing Dive hypothesizes Accenture is credible buyer to beleaguered WPP and Publicis. Because, you know, who needs creative? That said, the acquisition would be one solution to the conundrum of business analysts providing agency services and agencies providing business consulting. In either case, with the rise of automated advertising services, pressure on transparency issues, it’s a tough time for holding companies.
I have a geek-confession. I’m a huge fan of the Lego brand. They have managed to take a classic toy and create successful emotionally-sticky extensions to the envy of any creative brand. This week Lego recreated the opening sequence of the movie “It.” (over 3 million views) Creativity, humor, piggy-backing another creative success – genius. You know what’s going to happen. You know it’s a Lego. But I dare you not to get chills.