The credit crunch has been caused in large part by a series of poor decisions both within the financial sector and the regulatory sector. I was reading a study today that revealed yet another unintended consequence of a regulatory decision.
The rule in question forces credit card companies to take a minimum sum each month from all accounts with an outstanding balance. The idea behind the rule is that it stops borrowers from getting too heavily in debt. However a study by Neil Stewart from Warwick University suggests that it has actually had the opposite effect. It all revolves around a concept called anchoring whereby people rely too heavily on one particular piece of information to make their decision. In this instance people were anchoring the minimum amount they had to repay, thus not paying off as much as they otherwise may have done, costing them significantly in the long run.
The anchoring process was famously illustrated in a 1974 study by Daniel Kahneman and Amos Tversky. The study asked participants to estimate the number of UN countries were African, but only after having rolled a roulette wheel. Those that landed a higher score on the wheel estimated there were more African nations than those that scored lower on the roulette wheel.
Steward does provide salvation however by suggesting that more information would remedy the situation. He’s set-up a simple calculator on his website that allows people to caculate how much their actions could save (or cost) them.
I’m sure you’ve all heard the 5 fruit & veg per day mantra that is the key to healthy eating. I stumbled across a project today that sets out to do the same for our mental wellbeing. It’s founded by the RSA and is called Mindapples. This is what the site has to say:
“Mindapples is a social movement to promote individual self-management of mental wellbeing. The original “5-a-day” campaign encouraged people to take care of their physical health through simple daily activities, and we want to do the same thing for mental health. We aim to create a stigma-free public debate about mental wellbeing, simply by asking everybody the question: “What’s your five-a-day?””
My five-a-day
Riding my bike
Going to the gym
Have crunchy nuts in the morning
Walking the dog
Listening to music
You can take the survey yourself and help the project compile the 5 most popular activities for mental wellbeing.
I’m reading a book at the moment on consciousness called The User Illusion. The book talks about how our unconscious brain does an awful lot more of our computing work than we are aware of, akin to the visible section of an iceberg. Back in the 50′s subliminal advertising was all the rage until people took umbridge at appearing to be manipulated by unscrupulous advertisers.
Now we have Tesco spoofing this approach with its advert featuring Paul Daniels.
An interesting meme from the book is that because unconscious thought is, well, unconscious we cannot therefore be conscious of it. All of which got me thinking how much this approach is used in marketing today and whether it is indeed ethical or not.
I wrote on Tuesday about the importance of reviews and word of mouth after a survey came out in support of email to communicate with the younger market out there. Lo and behold today has seen a study by Rubicon Consulting bestowing the virtue of reviews and word of mouth in your marketing campaigns. Some of the key findings of the study were:
The Web is the #2 resource for customer support information, after user manuals. It ranks ahead of calling the manufacturer or asking a dealer.
Website categories that get the most daily usage are search, social communities like MySpace and Facebook, general news websites like CNN.com and NYTimes.com, and online banking.
The websites that Americans value most are (in order), Google, Yahoo, YouTube, Wikipedia, and Facebook. Although Yahoo’s financial challenges have generated a lot of press attention, it continues to have a very large and loyal following.
Young people (age 22 and under) are much noisier online than their elders. They account for about half of all the content and comments posted online.
Facebook appears to be ahead of MySpace in terms of number of users in the US, and perceived value of the site.
Despite extensive publicity, the community sites SecondLife and Twitter reach only a few percent of US Internet users.
Democrats are more active online than Republicans. Democrats are more likely to participate in online communities, and say they are more heavily influenced in their voting decisions by information they find online.
Of course to do well in these areas requires both an excellent product and a good deal of time and effort to liase with the communities in your industry. Unfortunately many marketers want a short cut when interacting with communities and cannot resist spamming at the first opportunity. The following steps are a good start for those wishing to use communities as part of their marketing strategy.
1) Lurk, work out how things are done.
2) Respond to posts, share knowledge.
3) Start posts on topics of interest.
4) Discuss with the admin/owner any way that you can help them.
There was an interesting piece in TechCrunch today about a new service being launched out of Israel called IMScouting. From the IMScouting site:
“IMScouting collects in-depth data on 48 leagues in more than 40 countries with a total coverage of over 40,000 professional footballers. The data is collected using a network of 40 “correspondents”—football experts situated locally in European, African and Latin American countries that IMScouting employs to report data back to the mothership. Propriety crawlers are also used, but to a lesser degree. In-house experts—journalists, ex-players and other football experts—review the data to ensure reliability before it’s made public.”
Sounds like a decent service and with super scout Pini Zihavi behind it must have a strong attraction for clubs around the world. The free version has some basic information on each player, including their size and season stats. Nice to have it all in one place but nothing that couldn’t be found out by searching the web. The premium version provides some more meat with contract details provided and more detailed search functions.
I’ve long thought however about whether clubs could make use of crowdsourcing to find out about players. Crowdsourcing in football came to the fore recently with the MyFootballClub venture by William Brooks whereby fans bought and run a small English football team.
Before that however the popular Football Manager computer game has long relied upon volunteers from around the world to provide the statistics for each player, and the game often proves remarkably accurate in predicting the abilities of players, especially those young players looking to hit the big time. So why can’t clubs do something similar?
The bigger clubs have millions of fans around the world, many of whom will have decent knowledge of their local leagues and the players within them. Football Manager has shown that the software to input this kind of information isn’t too hard to construct. Clubs could even pay people that first highlight a player that then goes on and becomes a player for the club. Obviously things like contract details might be harder to come by for the layman but nevertheless it would be interesting to see how fruitful such a project could be.
Football fans are unique in the support they give their team so I’m sure it would get plenty of interest and crowd sourcing could provide clubs with an awful lot of insight from the collective brains of their fan base, not to mention tightening the bond between club and supporters.
I’m sure we’ve all seen various adverts or messages that use fear to try and change our behaviour, be it smoking and drinking, or flying abroad for our holidays. Heck, I’m sure we’ve all seen those annoying debt consolidation adverts (often featuring Carol Vorderman), that raised the spectre of home reposessions back in the days of easy credit (or so it seemed). Casting aside the ethically dubious loan adverts though, does the use of fear in an advert really change our behaviour?
I came across a few studies recently that does seem to support the use of fear within a message but provides a couple of crucial caveats that I feel aren’t often used by marketers in current fear related ads.
1. Use fear but provide a solution
We’ve seen with the run on Northern Rock earlier in the year that scaring people can often lead to actions that the opposite of what would be deemed desirable. One thing that was noticeable around the time was that people were doubting the ability of Northern Rock to stay afloat (fear) but weren’t providing much advice for people with savings in the bank. As Franklyn Roosevelt once said “the only thing to fear is fear itself” and this is playing itself in our current situation, with lenders scared of lending.
I read a study by Howard Leventhal recently that looked into the use of fear in public health pamphlets. Two sets of pamphlet were created, with a variety of scary images and actions the students needed to take to immunise themselves. The study found that the use of scary images only worked if they were followed by steps the students could take to immunise themselves.
2. Put the message where the action is
As a student I often used to see posters around campus encouraging us not to drink too much. The posters themselves were usually well constructed, but the problem was that they were usually placed in halls of residence or lecture theatres. So by the time everyone got to the pub or students union they were out of sight and out of mind.
Cognitive research has found that if you can create a memory aid between the advert and the location of the action itself then it has a much better chance of success. So for instance, using the drink example, if the logo from the advert could be placed in the students union, say on the coasters, could see some improved results.
Getting the results
So maybe to get better results at changing behaviour marketers need to provide both solutions in their message and memory triggers closer to the location of the activity itself.
A new study by ExactTarget and Bail State University reveals today that email marketing is more effective than social networking for reaching the 18-34 age group.
“. . . 18- to 34-year-olds claim they are more likely to be influenced to make purchases based on e-mail marketing messages and direct mail than marketing messages on social networks,” said Mike Bloxham, director, insight and research, Ball State University’s Center for Media Design. “It is too easy to assume that the media consumers choose for their own news, information and entertainment are, by default, the best media to use for marketing messages. This is a dangerous assumption to make in a time when consumers are becoming increasingly aware of their level of control over their media experiences.”
It’s an interesting conclusion and quite a shock I would imagine for the social networks that are making tentative attempts to monetize their traffic. What is of note however is that a number of studies in the past 12 months have revealed how word of mouth is an important aspect of the purchasing decision. Back in July for instance Online Research Company revealed that 61% of respondants consult user reviews and other consumer feedback before purchasing.
A further study by Big Research revealed that 47.0% of those who regularly search online say they frequently offer others advice about products and services they have purchased, versus 29.4% of all adults.
All of which makes for an interesting contrast. On the one hand people seemingly don’t welcome advertising in the social networking environment, but on the other hand people appear more than happy to share their experiences with other people. All of which does seem to emphasise the importance of providing an outstanding service to your customers to give them every incentive to talk to their friends about it.
Of course that may not help the social networks themselves to monetize their traffic, but it should at least provide marketers with some comfort and the encouragement not to abandon social media as a marketing tool.
I came across a couple of studies this week that looked into the importance of names for a variety of things. The first one was conducted by a chap called Brett Pelham. He looked into whether our names can affect some big decisions in our life, and surprisingly came to an affirmative conclusion. Let me explain.
Apparently it is the case that we often choose careers (for instance) that have a similarity to our name, be they in the tone of the word or even the first letter. They tested this by analysing dentists in America to determine whether more Dennis’ were dentists than should be the case under the law of averages. Lo and behold there were nearly twice as many dentists called Dennis as there were dentists called Walter and Jerry (before and after Dennis in the list of most popular American names). Likewise he found that George is more likely to work in geographical fields and so on.
I still wasn’t particularly convinced so read on to his study into where people choose to live. The links here seem a little more tenuous, but people also tend to live in states that resemble their names (Louise in Louisiana etc.), and also streets and even partners. Who’d have thunk it?
Study 2 – Company naming
Anyway, that was the first study, the second looked into stock performance and the ease with which people could pronounce both the company name and the stock ticker. This study was done by two Princeton scientists called Adam Alter and Daniel Oppenheimer. Initially they asked for perceptions of a range of ficticious companies based purely on the names of them. The study concluded that the easier to pronounce companies were perceived to be better by the survey group.
They then tested this in the markets themselves. They picked out 89 companies from the New York Stock Exchange that had floated between 1990 and 2004, and analysed their performance a period after flotation. They found that if $1,000 had been invested in the most fluent sounding companies that they would have outperformed the less fluent sounding companies by around 35% over the year.
So there you go. It seems that picking the right name is more important than many people realise.
Today I joined the nice folks from Dulwich Paragon for their Saturday club ride. They go for a 50 odd kilometre ride out into the London countryside. All very nice and genteel on what was a lovely autumn day. Little did I know however that today was also the annual club hill time trial, whereby each rider goes at 1 minute intervals up a stupidly steep hill for nearly a kilometre. It might not sound very far but rest assured it is a couple of minutes of lung bursting effort.
The course is the same one used in the Bec CC Hill Climb, one of the leading such events in the country. Don’t have any pics from the event today but some of these from the Bec Hill event may give you an idea of the anguish involved
You may be able to tell the gradient of the climb from the pictures. Rest assured it was bloody steep. Anyway, dragged my butt up the hill in 2mins 44seconds, not too bad for a first effort.
After a pretty long wait I finally managed to see the latest Coen brothers creation, Burn After Reading, today at a little cinema near Charing Cross. It’s hard not to like Coen brother films and with recent staple George Clooney safely installed in what he has called the final of his idiot trilogy.
In many ways the film covers familar ground, with a tail of blackmail going wrong in a goofy fashion. They had to resort to one or two gimmicks to pull the movie off, such as Brad Pitt’s hair, and it didn’t have me rolling around in the way O’Brother did.
It had a stellar cast and it’s kinda hard to go wrong with Malkovich and Clooney, and the film was typically dorkish to make it an entertaining enough way to spend 90 minutes, but I don’t think it hit the high spots of their other films.
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