Behavioural Economics

My father can be a terrible old curmudgeon sometimes.

When asked by his friends what it is his only son and heir does for a living he has two stock answers. Depending on his mood he either says “He puts those annoying things in that fall out of your paper” or “He sells people rubbish they don’t need”.

Interesting views both, but they recently came back to me as I was sitting in the marvellously titled IPA seminar “Behavioural Economics: Red Hot or Red Herring?”

This is the latest big thing at Belgrave Square HQ. The one-liner is as follows: “behavioural economics is a collection of disparate theories which seek to explain irrational behaviour”.

We learned how putting a picture of some scary eyes above a sign makes people pay more for milk without having to change the wording on the sign.

We learned why it is better to sell a Bentley at a yacht show than at a car show.

And we learned why fruit and veg are the first things you see in Tesco.

(Answers respectively: subliminal influence, comparative pricing, and over-purchasing of the first thing you see combined with high margins).

But why do we care?

Essentially, in a world in which the consumer’s attention is harder to gain and in which big ideas are more valuable than media buying, there is a wealth of knowledge which can make our marketing more efficient, more effective, and more innovative.

Super!

Except not, I thought. This is all very well, especially for a committed lateral thinker and crossword nut like myself, but how can we hope to introduce this into the way we work? I wholly agree that the future of media revenues is in creation of ideas that have long term impact rather than the day to day planning and buying grind, but how do we convince clients of this?

It is a strange phenomenon of the media industry that clients pay in direct proportion to the least valuable portion of what we do - i.e. media booking rather than the theory behind it. The trouble is that to change this would take a massive leap of faith on the client side as well as agencies being able to make initiatives such as behavioural economics transparent in the age of accountability that we live in.

I like to think of a great ideas as something that tells you what to do in ten years time, and what to do tomorrow. And this is the trouble, agency side: I want to get paid tomorrow, not in ten years, which means I charge for tomorrow.

So I really don’t see the status quo changing. I absolutely believe that there is something in behavioural economics, but for the time being it will be confined to interesting, but probably unrewarded, high-level thinking of how our clients can sell their stuff more effectively, while plain old media fees and commissions from bits of 200 gsm paper continue to pay my mortgage.

Tim Part, Business Development Manager