Transcript PPT - Advertising Principles

Evidence-based Management: An
Application to Persuasive Advertising
J. Scott Armstrong
The Wharton School, University of Pennsylvania
[email protected]; jscottarmstrong.com
July 26, 2014- R8
File: Evidence-based Management/Persuasive Advertising Lecture/Overview of
Persuasive Advertising
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Today’s objectives
Ask you to “consider” the benefits of an evidencebased approach to management.
Introduce you to “all useful knowledge on
persuasive advertising.”
Help you to find an action step.
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Agenda
Evidence-based management
Development of advertising principles
Examples of advertising principles.
Action steps for yourself? (Who can persuade you?)
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Seeking a diagnosis
If you have a disease, who should you see:
A) A doctor with years of experience who has seen
many patients with similar symptoms?
B) A doctor who is just out of medical school?
Some history:
– Prior to around 1940, if you had a disease, doctors
were of no help. What happened after 1940?
– It was the birth of evidence-based medicine.
Although slow to take hold, the benefits have been
enormous. Today, doctors are sued if they fail to use
the findings.
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Where does evidence come from?
In complex and uncertain fields, experiments provide the
only source of valid evidence. This applies to all areas of the
social, management, and behavioral sciences.
Specifically, advancements depend on experimentation that
compares multiple, reasonable hypotheses supported by
independent replication studies.
Unlike medicine, evidence-based management has not
been adopted by practitioners or by business schools.
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Applications of evidence-based management
1.
2.
3.
4.
5.
What will global temperatures be in 100 years? (theclimatebet.com)
Will the number of polar bears decrease over the next 50 years? (See on
YouTube)
Are mandatory disclaimers in advertising beneficial? “Are Top Executives Paid
Enough?”
How can we reduce socially irresponsible decisions in organizations
Are returns on government investments in higher education positive or
negative? (“Natural Learning in Higher Education”)
Could I convince you to change your position on any of the above items in this
lecture?
No. So how are people persuaded?
Self-persuasion. And advertising (and books and articles can help).
We can come back to this later if you would like me to demonstrate that I cannot
convince you.
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Typical complex problem
Failures in observation
Does humor sell?
___ Yes
___ No
Complexity: Too many conditions for unaided observation
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“Advertising is fundamentally persuasion.” - Bill
Bernbach (1960)
“Everyone is practicing oratory on others thro the
whole of his life.” - Adam Smith
“One quarter of GDP is persuasion.” - McCloskey &
Klamer (1995)
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Can advertising be improved?
“ . . advertising is now so near to perfection that it is
not easy to propose any improvement.”
Do you agree?
Who said that and when?
Dr. Samuel Johnson, 1697
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Problems in persuasive advertising
1. There are thousands of studies on persuasive
advertising, but most are useless.
2. Of the useful studies, most are unintelligible to
normal humans, and few show management
implications.
3. We need a set of studies to make
generalizations(e.g., replications and extensions).
Some exciting findings fail on replication.
4. It is impossible to remember the all the findings.
In short, it is expensive and senseless for practitioners or
students to read the academic literature.
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Objectives of the Persuasive Advertising Project
To summarize all useful knowledge about
persuasive advertising in the form of principles
(condition/action statements) that are:
–
–
–
–
–
–
useful
operational (what to do under what conditions)
understandable
easy to use
up-to-date
easily accessible when needed
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Experts’ knowledge typically lacks
systematic record-keeping
You have seen thousands of ads for
watches. What time do they display?
By systematic observation of the
evidence, one can quickly learn.
Most watch ads show the same
pattern.
Ten minutes after ten
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Development of principles
Actions: most have been proposed by practitioners
Conditions: identified by researchers
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Principles can summarize knowledge
A principle describes:
• what to do (actions in concrete terms)
• when to do it (under what conditions)
That is, “Given the objective, product, and target market,
use advertising action X…”
Example: Do not put a period at the end of a headline.
• What is wrong with that as a principle?
The principle has no condition.
Write the most important advertising principle you can
think of for persuading people. Check that it follows the
definition for a principle.
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195 Principles for Persuasive Advertising
There was a many experimental studies over the past
century.
It took 16 years to develop the principles.
Were advertisers pleased?
Publishers: Why not the top ten principles?
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Assessing your current knowledge
___ 1. Complete Test your Advertising IQ on
adprin.com. (Guessing leads to a score of about 8.)
___ 2. Do the Predict Which Ad Pulled Best assessment.
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How can you tell which ad would be most effective?
Quasi-experimental data: Ad pair from Which Ad Pulled Best
B
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Value of experience in advertising
97 pairs of ads were shown to subjects with no
expertise in advertising (students). They were asked to
pick the most effective ad. They were correct on 54% of
their judgments (guessing would result in 50%
accuracy).
How accurate were experts on this task?
55%
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Evidence-based principles are often
ignored or violated
Of the 195 evidence-based principles that apply to
advertising:
•None were found in an audit of 9 advertising textbooks
and 3 practitioner handbooks
•When asked whether “principles” were true or false,
people did no better than if they had guessed (those who
read “pop management” books did worse)
•Current practice often violates the principles
•The above findings have also been found for marketing
principles
Source: “Evidence-based Advertising” by J. S. Armstrong (2011)
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Experimental evidence is resisted when it
challenges current beliefs
Semelweis’ experiments on deaths of mothers shortly
after delivery led to the recommendation that doctors
should wash their hands.
How would you respond if you were a doctor?
How do you normally respond when given evidence
that you are wrong about something?
The doctors strongly resisted for decades as they did
not believe Semmelweis’ experiments.
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Examples of a condition
Does the product (or service) have a comparative
advantage?
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Short written quiz. Do not sign your name & do
not yell out your answer.
• A bat and a ball cost $1.10 in total. The bat costs a
dollar more than the ball. How much does the ball
cost? ____
• If it takes 5 machines 5 minutes to make 5 widgets,
how long would it take 100 machines to make 100
widgets? ____
• In a lake, there is a patch of lily pads. Every day the
patch doubles in size. If it takes 48 days for the patch
to cover the entire lake, how long will it take for the
patch to cover half of the lake? ____
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Results from “Bat & Ball” study
Presented to 3,235 students at universities (e.g., MIT, Princeton,
Harvard, Carnegie Mellon) with no time limit.
• 17% correctly answered all three
• Range from 50% at MIT to 5% at Michigan State
• 32% missed all three
Implications for advertising?
People can be led astray when their involvement is low (Frederick
2005). Beware when you purchase low-involvement goods.
* The ball costs 5 cents, the machines will produce the widgets in 5
minutes, and the lake will be half covered in 47 days.
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Involvement
Involvement has been important in advertising since early 1900s.
Earlier terms included “short circuit” and “long circuit.”
• Under “high involvement,” people consider an ad’s claims.
• Under “low involvement,” the processing is peripheral—
customers are influenced by seemingly irrelevant considerations.
Products that are expensive (e.g., automobiles) or that lead to personal
risks or to concern about how they are viewed by the consumers’
peer group, lead to high involvement when being considered for
purchase.
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Evidence-based advertising principles
• There are 195 principles
• They can be used as needed by practitioners
• They appear in Persuasive Advertising, Palgrave
Macmillan (2010) with free access to the principles
online at AdPrin.com
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Risky Business
What would you rather receive:
___A) $500 for sure?
___B) 15% chance for $1,000,000 (and an 85% chance to
receive nothing)?
Frederick (2005) asked students at various U.S. universities.
– About half of the students chose $500.
– The expected value of the second offer is $150,000.
To reduce customers’ risk, use a product satisfaction
guarantee (1.3.7.)
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Provide information needed by the
target market
Does this Audi automobile ad comply with the
principle?
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Mouthwash case
You are introducing a new brand of mouthwash in a
discount store. Would you advertise:
A) A low introductory price?
B) At its listed price?
Why?
Long-term sales higher when intro was at listed price
When people made their original purchases of this
credence product at stores with the low price, they
concluded they purchased it for the price—for quality
Minimize price and promotional information for new
products (1.4.15.)
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Associate products with things that are
favorable and relevant to the product (2.5.1)
Good application
St. Patrick’s Day (Guinness) Commercial (2:35)
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May I use the Xerox machine?
Predict the percentage of people who would let someone cut ahead
of them in line for each of the three stated reasons:
60% (1) “Excuse me, I have five pages. May I use the Xerox
machine?”
______ (2) “Excuse me, I have five pages. May I use
the Xerox machine, because I am in a rush?”
______ (3) “Excuse me, I have five pages. May I use
the Xerox machine, because I have to make copies?”
For #2: 94%
For #3: 93%
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Print ads with a “reason why” had higher recall
Using Which Ad Pulled Best, we found 37 pairs of
print ads where one ad offered relevant reason to
buy the product while the other ad did not.
Of the 37 ads that used a reason, 65% had higher
recall.
On average, recall for ads with reasons was 1.3 times
higher.
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Organ donation problem
In Germany, 12% of people participate in organ donations, while in Austria, nearly
100% do so. Germany has asked you to propose advertising to increase organ
donations. What would you do? Your target market surveys show that 85% of
people favor organ donations in Germany.
In the Netherlands, nearly all adults received a letter asking them to sign up.
Estimate the success of this approach.
It had negligible effects.
In six European countries where people must take action to opt out of a donor
program, 99% are donors. In four countries where one must take action to be a
donor, only 15% are organ donors.
Reference for above
“To do nothing is in everyone’s power.” - Samuel Johnson, mid-1700s
Make the recommended choice the default choice (1.3.4 )
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The new pricing policy
You are a retailer of a quality product. You learn
about a new pricing policy, “P-plan,” that you
could implement at virtually no cost.
1. Customers say they prefer P-plan, and they believe it
to be a more honest way to do business.
2. It would save time and reduce confusion for customers
and retail clerks.
3. It would improve your image as a quality retailer.
4. It would improve long-term profits.
Would you adopt this new pricing policy?
___ YES
____ NO
___ NOT SURE
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Use round prices (1.4.2.)
Why? To build long-term relationships and save
time for buyers and sellers.
Of customers, 66% prefer even prices, and 13%
prefer odd.
Odd prices take 1/3 time longer to think about
and even university students are led to
substantial errors.
Kmart uses odd prices on 99% of its items while
Neiman Marcus uses it on 16%.
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May I use the Xerox machine? - Part 2
Predict the percentage of people who would let someone cut
ahead of them in line for each of the three stated reasons:
______ (1) “Excuse me, I have 20 pages. May I use
the Xerox machine?”
______ (2) “Excuse me, I have 20 pages. May I use
the Xerox machine, because I am in a rush?”
______ (3) “Excuse me, I have 20 pages. May I use
the Xerox machine, because I have to make copies?”
Explain your reasoning.
24%
42%
24%
(1)
(2)
(3)
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For high-involvement goods, the reasons
should be strong (2.1.2.)
Using Which Ad Pulled Best with 321 tested full-page highinvolvement print ads, 71% provided strong reasons.
Using Which Ad Pulled Best, we found 25 pairs of high
involvement print ads where one of the ads had stronger
reasons than other.
Example: An Isuzu ad that stated, "the new Isuzu comes in
many attractive colors….a powerful new 24-valve, V6
engine and a price tag you can actually afford," had a recall
score four times more than that for an Isuzu ad that did
not offer strong reasons.
On average, recall for ads with strong reasons was 1.5 times
higher.
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Predict the outcome of this experiment
The U.S. National Park service posted signs to reduce the
theft of petrified wood: “Your heritage is being vandalized
everyday by theft losses of petrified wood of 14 tons a year
mostly a small piece at a time.”
They then did an experiment on the extent to which the
sign reduced theft. Predict the outcome:
___A) no change; __B) small reduction; __C) large reduction.
Answer: Theft increased 2.7 times. Why?
It made the activity seem common (Cialdini 2003)
Use social proof to encourage people to follow certain
behavior.
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Associate products with things that are
favorable and relevant to the product (2.5.1)
Mixed evidence: Analysis of 1,059 TV commercials from
leading advertisers found that “scenic beauty” was
associated with lower persuasiveness (Stewart &
Furse 1986).
Probably a negative if the ad has strong arguments.
Note: Remember that liking can be a strategy in
certain situations, but it is not an objective.
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Provoke customers only when it attracts
attention to a selling point (3.6.1.): Complies
Ad for Bernardos,
a UK charity
Baby picture for
John Donaldson,
now a drug addict
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The bake sale case
In 2003, an affirmative action bake sale was held on the UCLA
campus. It involved selling items at higher prices for white
students than for minorities. How would you respond if you
were the President of UCLA?
National media attention was gained when university
administrators called the bake sales racist and discriminatory,
and tried to have them banned (scarcity).
The selling point was that such practices are analogous to the
affirmative action programs used by universities.
The bake sale was extended in 2010 & 2011 (video 2:35).
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Do not mix rational and emotional appeals in an ad
(3.1.1.)
Experiments:
In ads for donations to “Save the Children,” the description of a victim alone
had more donations than when statistics were added (Small, et al. 2006).
In 80 auto ads, those with both rational and emotional appeals had lower
recall than ads limited to one appeal (Mehta & Purvis 2006).
Non-experimental data:
In TV commercials, ads with “a balance of rational and emotional appeals
were poorer on comprehension” (Stewart & Furse 2003).
In non-experimental eye-tracking studies on TV commercials, subjects were
overwhelmed when both emotion and information were present (Elpers,
Wedel & Pieters 2003).
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A bargain in other terms
Which ad will sell more?
____ A. “For a package of 8 note cards, the price is $3.
It’s a bargain” or
____ B. “For a package of 8 note cards, the price is 300
pennies. That’s $3. It’s a bargain.”
Will they differ much?
Why?
A. 35%
B. 70%
Disrupt, then reframe an offer for low involvement goods that are
for immediate sale. (5.1.4)
Evidence: Laboratory exp & field experiments in European stores.42
When customers refuse traditional appeals,
surprise them with an unusual approach (5.1.3.)
Bernbach’s ad for
Volkswagen’s “Lemon”
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When someone has an opposing viewpoint (e.g. nonsmoker vs. smoker), how do you try to change their mind?
Should you tell stories or give them facts?
Use stories. They:
1. Convey powerful emotional images, which aids recall
2. Lead people to process the information about the example, rather
than the argument
3. Do not directly attack the target market’s beliefs, which disrupts
counter-arguing
When the target market has an opposing viewpoint, consider
stories (5.3.1.)
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Subway story
Jared Fogle’s incredible story of losing 245
pounds on Subway sandwiches, diet,
and exercise was featured in Subway
advertisements.
It was powerful and easy to remember.
People thought about the example.
It was a true story, so it avoided counterarguing.
It led to a successful campaign.
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Help-wanted ad
“Men wanted for hazardous journey.
Small wages, bitter cold, long
months of darkness, constant
danger, safe return doubtful. Honor
and recognition in case of success.”
Good ad? ____ No ___ Yes
In 1913, this small ad from the
London Times drew 5,000
applications for a crew of 27 on
Shackleton’s trip to the Antarctic.
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Two-sided arguments
Are two-sided ads effective? (Aristotle said yes.)
__ Yes
__ No
__ Yes, but only under the following conditions:
O’Keefe (1998) analyzed 107 studies that compared one-sided
with two-sided arguments.
• When the negative argument was refuted, the two-sided
argument was more persuasive than the one-sided.
• When the negative argument was not refuted, the one-sided
argument was more persuasive.
Use a two-sided argument that refutes the negative argument
(5.8.1.)
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British Air Campaign
A British Airways advertising campaign invited people to try
its business class. If unsatisfied, they would receive free
coach tickets for another trip. Was that a good idea?
___ Yes
___ No
Explain.
Ofir & Simonson (2001) did experiments on satisfaction
with a computer company, electric utilities company,
supermarket, electronic equipment company, and magazine.
All experiments were done in real situations with large
samples.
Some people knew that they would be asked later about
their satisfaction, while others did not.
Those who expected to evaluate the product were much less
satisfied.
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Do not invite customers to evaluate their
satisfaction with the product prior to consumption
(5.11.3)
Pre-announced surveys reduced the likelihood that
people would complain; thus, producers are less likely
to know why they were dissatisfied.
What to do?
1.Use unannounced surveys occasionally
2.Train people to listen carefully to customer
complaints and suggestions – and use them.
3.Ask customers to report things about the service that
delighted them.
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Evidence for the evidence-based revolution
in advertising
Now remember that experts were able to correctly identify
54% of the better ads.
What was the corresponding accuracy for the non-experts?
73%
Source: “Predictive validity of evidence-based advertising principles”
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Action steps?
• What steps might you take?
For example, you can use the lectures on adprin.com and the
Persuasive Advertising book to follow a self-directed course.
• What information do you need to take the next step?
• Help to promote the evidence-based management
movement. Remember Semelweis!
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Sources of Information
Persuasive Advertising (2010), Palgrave Macmillan.
(see adprin.com). Available in German, A Chinese
translation should be out in late 2013.
advertisingprinciples.com In particular, read the FAQ on
that site.
I will post this lecture on the above site
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