Marketing Secrets for Global Brainwashing - Richard Shotton

English
CChris Williamson
마케팅/광고도서/문학창업/스타트업정신 건강

Transcript

00:00:00What did you learn from Five Guys?
00:00:01- So Five Guys is the opening chapter,
00:00:06and we talk about something that they did very powerfully,
00:00:10which is when they launched, they were relentless
00:00:13at focusing on just doing burger and chips.
00:00:16So people like McDonald's got seduced by the fact
00:00:18that they could launch fillet of fish and chicken burgers.
00:00:22But Five Guys relentlessly honed down on just doing burgers.
00:00:28Now, some of the benefit of that is a ability
00:00:33just to get better at cooking,
00:00:34better at producing your core product.
00:00:37But psychologists argue there's something else on top of it.
00:00:40So there's an idea called the gold dilution effect.
00:00:43And the first studies were done
00:00:44by Zhang and Fischbach back in 2007.
00:00:47And they did a very simple experiment.
00:00:50Recruit a group of people,
00:00:52randomize them into two subgroups.
00:00:54And the first set of people are told,
00:00:57"If you eat tomatoes, it's very good for your heart health.
00:01:00Here are the reasons."
00:01:02And that group are asked to say whether they think
00:01:04eating tomatoes is worth doing for their heart health.
00:01:07Second group of people, they see exactly the same text,
00:01:12exactly the same reasons and logic and facts
00:01:15about why tomato eating is so good for cardiovascular health.
00:01:19But they are also told,
00:01:20"If you eat tomatoes, it will improve your eye health.
00:01:24It will reduce degenerative diseases."
00:01:26Now, when that second group are asked to say how good
00:01:29eating tomatoes is for heart health,
00:01:33they come back with a 12% lower score.
00:01:36So even though they've seen the same facts,
00:01:39because in this second group
00:01:41there was an additional reason thrown in,
00:01:43it reduced, it diluted the believability
00:01:46in that core reason.
00:01:48So there's a psychological as well as practical benefit
00:01:52about communicating that you do one thing well.
00:01:55People have a rule of thumb in their head
00:01:57that you can't be a jack of all trades.
00:02:01If you are, you'll be a master of none of them.
00:02:03So there's a sacrifice in credibility and believability
00:02:06if you claim to do multiple things.
00:02:09- What does that say about underlying human psychology?
00:02:13Is it that we have a zero sum or a resource limitation
00:02:18on how much we think we should be able to distribute
00:02:23between the traits of a particular offer?
00:02:26- I think a lot of these biases
00:02:30that behavioral scientists identify,
00:02:32that psychologists identify, they're generally true.
00:02:35I mean, all things being equal,
00:02:38you tend to get better at a task
00:02:40if it is the sole focus of your attention.
00:02:43If you spend 40 hours a week being a cyclist,
00:02:45you're gonna be a better cyclist
00:02:46than if I spend 10 hours a week.
00:02:49So people have a sensible rule of thumb in their head,
00:02:52but then the danger is they over apply it
00:02:54in situations where it's not relevant.
00:02:56Like in the situation Zhang set up,
00:02:58people got the same facts about cardiovascular health,
00:03:01but because they threw in this second benefit,
00:03:03it seemed to detract from it.
00:03:05So I think it's often the misapplication
00:03:08of a generally sensible rule of thumb.
00:03:11- Is the rule or the lesson for brands here
00:03:14that you need to win one thing very well
00:03:18and be very cautious about trying to add additional offers
00:03:21and features and potential advantages
00:03:26that people can get by using it?
00:03:28- Yeah, that's a fair summing up.
00:03:30It's essentially the argument that be very, very careful
00:03:33about adding extra reasons to believe
00:03:36because what they will gradually do
00:03:39is undermine believability
00:03:41in the core reason to buy your product.
00:03:44So if you start saying you're all things to all people,
00:03:47over time, gradually, continuously,
00:03:49that original reason to buy gradually disappears.
00:03:54- Reasons to believe is a wonderful way to put it.
00:03:56The believability thing is really interesting.
00:04:00So, you know, selfishly, I've got Nutonic.
00:04:02I've got my productivity drink
00:04:05and I'm shamelessly using yours and Sutherland's insights
00:04:09around behavioral science in an attempt to do this.
00:04:11And it does lots of things,
00:04:13but we could have talked about procrastination.
00:04:16We could have talked about alertness.
00:04:18We could have talked about energy,
00:04:20but we just tried to get one word, which was productivity.
00:04:24And we just went for one single thing.
00:04:26And I think the problem we have with productivity,
00:04:28the problem we're currently facing,
00:04:29we may end up pivoting a little bit,
00:04:31is that we're using fuel your focus and productivity drinks.
00:04:34There's two things that are kind of synonymous with each other.
00:04:37I think the problem is it's two-way morphous as an offering.
00:04:39I don't think that people necessarily want
00:04:41to be focused or productive.
00:04:42I think they want to get their job done with limited effort.
00:04:45So we're trying to think now about what a pivot
00:04:47from a copy perspective would be to talk about the outcome
00:04:51as opposed to the sort of mediator
00:04:55between you and the outcome.
00:04:57Like you don't want focus, you want your work completed.
00:05:01You don't want productivity.
00:05:02You want to be efficient.
00:05:04You want like efficiently to complete the task
00:05:06that's in front of you, so.
00:05:08- Yeah, I think there's two bits there.
00:05:11Firstly, selling the outcome
00:05:12rather than the product makes sense.
00:05:15I think it was Levitt said,
00:05:16now if you've got a drill, don't sell nine inch,
00:05:19I don't know, drill bit, sell nine inch holes.
00:05:22I think there's an argument there.
00:05:23But the other bit that struck me
00:05:26when you're talking about things like productivity and focus
00:05:28is that a lot of experimentation shows
00:05:33that people are pretty bad at remembering abstract data.
00:05:38They're very good at remembering concrete physical things.
00:05:43So the original study was by Ian Begg back in 1972,
00:05:48and he recruits a group of people,
00:05:51reads them 22 word phrases.
00:05:55He doesn't mention it to the participants,
00:05:56but half of these two word phrases
00:05:59are what he calls abstract concepts.
00:06:01So they're intangible ideas like basic truth.
00:06:05Half of the phrases he reads out
00:06:06are what he calls concrete phrases.
00:06:08So they describe physical things like a white horse.
00:06:11So he reads out this list
00:06:13and then later on he asks people what they can remember.
00:06:16And his key finding is people can remember
00:06:18on average 9% of the abstractions,
00:06:21but 36% of the concrete phrases.
00:06:25So you are four times more likely
00:06:27to remember the thing that you can visualize.
00:06:29And Begg's explanation applies just as much to 2026.
00:06:34His argument is vision's the most powerful of our senses.
00:06:37So if you use language we can visualize, it's very sticky.
00:06:40But if you stay in this realm of abstraction,
00:06:43like focus or productivity,
00:06:45people can understand what you're saying,
00:06:47but they'll struggle to remember it
00:06:48a minute or two after you've mentioned it.
00:06:50So there could be something there.
00:06:52- I was gonna say, what would be an equivalent way
00:06:54to visualize increased productivity or focus?
00:06:58- Well, coming up with that on the fly would be very hard.
00:07:01- Freestyle rapping might be a little--
00:07:02- Yeah, yeah, yeah, yeah.
00:07:03This could go disastrously wrong.
00:07:05But maybe concrete, sorry, maybe specific examples
00:07:09of people doing it.
00:07:11Red Bull didn't say Red Bull gives you energy,
00:07:13which is abstract.
00:07:14They said Red Bull gives you wings.
00:07:15That's something you can picture and visualize.
00:07:18Apple didn't say you get a gigabyte of memory
00:07:22when they first launched the iPod.
00:07:24They said 1,000 songs in your pocket.
00:07:27You can picture a pocket,
00:07:28can't picture a gigabyte or a megabyte.
00:07:30So I think what those businesses and copywriters
00:07:34did so successfully is translate that abstract objective
00:07:39into something that people could picture.
00:07:43- Talk to me about Red Bull.
00:07:45Obviously, absolute giga brand.
00:07:48Pretty fascinating, I'm gonna guess,
00:07:51from a consumer behavior standpoint.
00:07:53What have you learned about them?
00:07:55- I think one of the most powerful things they've done,
00:07:58and you may have covered this with Rory Sutherland,
00:08:01was apply this principle of price relativity.
00:08:05So a core concept of behavioral science
00:08:07is when people are weighing up
00:08:09what a product is worth paying for,
00:08:13they don't look at the benefits that product brings
00:08:18and then try and translate that on a universal yardstick.
00:08:21So they don't think to themselves,
00:08:22okay, well, a can of Red Bull will give me
00:08:24one unit of happiness,
00:08:26and I will pay $1 per unit of happiness,
00:08:28whether it's a pair of jeans or a soft drink.
00:08:31People don't do that 'cause it's a complex question.
00:08:34Daniel Kahneman argued when people face complex questions,
00:08:38what they tend to do, even if they don't realize it,
00:08:40is replace the complex question with a simpler alternative.
00:08:44And the simpler alternative is how much did I pay
00:08:47for something similar?
00:08:49So if a new item like Red Bull launches,
00:08:51if it's more than a similar purchase,
00:08:54people think it's bad value.
00:08:55If it's less than a similar purchase,
00:08:57people think it's good value.
00:08:59Now, when you first hear that, it sounds bleeding obvious,
00:09:01but actually, that's a very powerful insight from a marketer
00:09:06because if you accept that value is perceived relatively
00:09:09rather than absolutely, what it leads to is thinking,
00:09:12if I can change my mental comparison set,
00:09:15I can change the willingness of my consumer,
00:09:17the willingness to pay.
00:09:19- Is this the Rolls-Royce thing?
00:09:21- Well, this, I would say, is the Red Bull thing.
00:09:22I mean, it could be the Rolls-Royce.
00:09:24The Rolls-Royce example would be,
00:09:26don't sell them at car shows, sell them at yacht shows
00:09:28or air shows because a Rolls-Royce is cheap
00:09:32compared to a private jet,
00:09:33not cheap compared to a Audi or Mercedes.
00:09:36But think about Red Bull.
00:09:37When they launched, the standard soft drink
00:09:40was about half the price.
00:09:43And the standard soft drink, and I've used the UK numbers,
00:09:47what Coke and Pepsi did was they sold in these squat fat
00:09:50330 mil cylinders.
00:09:54If Red Bull had launched in exactly that same can,
00:09:57it would have been compared to those prices.
00:09:59And people might have paid a five or a 10% premium
00:10:02because they knew it was highly caffeinated,
00:10:03had this extra functionality,
00:10:05but they wouldn't have paid twice as much.
00:10:07But paradoxically, you change the shape of the can,
00:10:10you make it smaller to 250 mils, you make it tall and thin.
00:10:13And essentially you've broken this unhelpful comparison
00:10:17with cheap soft drinks.
00:10:19And if you look around,
00:10:20quite a few businesses have done that.
00:10:24It's a very powerful way of changing willingness to pay.
00:10:27- What are some of the other examples of businesses
00:10:30that have done that?
00:10:32- So Seedlip, are you familiar with that?
00:10:34It's basically a fake gin.
00:10:39So it's a non-alcoholic gin.
00:10:41And what they did though brilliantly,
00:10:43they sold maybe two or three years ago,
00:10:45I think tens of millions to Diageo.
00:10:46This is phrased on the bottle.
00:10:52I think it's a distilled non-alcoholic spirit.
00:10:56It sells in the spirits aisle of Tesco's and Sainsbury's,
00:10:59but the kind of non-alcoholic end.
00:11:01The imagery on the front is like, you know,
00:11:04beautiful drawings, looks like a craft gin.
00:11:07And it sells for about 20 pounds a bottle.
00:11:10Now, what people think is, well, you know,
00:11:13a fancy craft gin sells for about 30 pounds a bottle.
00:11:16This stuff hasn't got any alcohol in it.
00:11:17I'm not prepared to pay as much, but you know,
00:11:1920 pounds is a bit expensive, but it's 10 pounds less.
00:11:22If that seems reasonable, I'll buy it.
00:11:24Now, think about an alternative universe
00:11:27where that brand was launched as a cordial,
00:11:30which is what it basically is.
00:11:31If it was launched in DayGlow colors,
00:11:34next to the Ribena, next to the Robinson Squash.
00:11:37People might be prepared to pay, I don't know,
00:11:39double what you pay for Ribena and other fruit cordials,
00:11:43but they wouldn't pay five times or six times as much.
00:11:46Even if this stuff tasted like the nature of the gods,
00:11:48people wouldn't pay that kind of premium.
00:11:51So it's about where you set your benchmark.
00:11:54Now, people will adjust from that comparative benchmark,
00:11:58but the general finding is people don't adjust
00:12:01as far as they should.
00:12:02So you throw out this super expensive benchmark
00:12:05through design or comparison set,
00:12:07and then as a business, you reap the benefits.
00:12:10- You know what's an interesting example of this?
00:12:13In the UK, there are co-investor in Nutonic,
00:12:17which is what makes me think about it, grenade bars.
00:12:19Familiar with them and their story?
00:12:21- I'm familiar with the brand, but not the story.
00:12:24So I know the kind of protein bars and-
00:12:26- Correct, what are you looking at for the next one?
00:12:28Look at the numbers, look at the price difference
00:12:29between them and a chocolate bar.
00:12:31They outsell Cadbury's on the forecourt
00:12:36and they've got pride of place.
00:12:38Well, why?
00:12:39It's because they're probably more than double the price,
00:12:42maybe triple, maybe quadruple the price.
00:12:45And it's because they moved themselves out of the category
00:12:48of, look at you, there you go, writing it down.
00:12:51- Sorry, I thought I'd sneak that in.
00:12:52- No, no, no, get it down, get it down.
00:12:55Alan Barrett, who's the founder of grenade
00:12:58and Nutonic investor is just, it was such a genius insight
00:13:02that there was an upper bound of how much people
00:13:03were prepared to play for a chocolate bar.
00:13:06But when it's, oh, it's protein, this is good for me.
00:13:09It's a better for you treat.
00:13:10It still tastes sort of comparable,
00:13:13but I have way less guilt and it's got all of this
00:13:16added advantage of it hitting my protein target for the day.
00:13:19And yeah, they now are more expensive and do higher volume.
00:13:24- Now there's a double benefit there,
00:13:28which is people have another rule of thumb in their head,
00:13:32which is price equals quality.
00:13:34So high price is a badge of quality.
00:13:37There's a study from Baba Shib who's at Stanford.
00:13:40It's a really nice, slightly kind of duplicitous study
00:13:43with a bit of subterfuge.
00:13:44He gets a group of people.
00:13:46He serves them five different bottles of wine.
00:13:49And each of these wines has a very prominent price label,
00:13:53but the twist in the experiment is there are only
00:13:55four different liquids.
00:13:57So one of the wines is repeated.
00:13:59So people get to sample each of the wines,
00:14:01they have a tiny little sip from each of the bottles
00:14:03and they will drink say a Cabernet Sauvignon,
00:14:06thinking it comes out of a $5 bottle
00:14:08and they'll rate it as kind of mediocre.
00:14:10Few minutes later, they're drinking exactly the same wine,
00:14:14but it comes out of this fancy wine bottle.
00:14:17It's got this big $45 price label.
00:14:19And when people rate it,
00:14:20not only do the qualitative adjectives get a lot better,
00:14:24when they come to the quantitative scoring,
00:14:26people give it a 70%, seven zero, 70% higher score.
00:14:31So according to Shiv, people to a degree, not completely,
00:14:35but to a degree, they experience
00:14:37what they expect to experience.
00:14:39And one of the best guides to think it's going to be great
00:14:44is what a brand's charging.
00:14:46'Cause we have a rule and a thumb in our head,
00:14:48which says, look, if a brand is brilliant,
00:14:52it's created an amazing product,
00:14:54surely they're going to maximize their profit.
00:14:55Surely it's going to be at a high price.
00:14:58Now, only someone who has a bit of a mediocre product
00:15:00would sell it at a cheap price.
00:15:03So the actual high price also then will support
00:15:09the grenade bar perceptions of quality.
00:15:12And those perceptions will translate into actual experience.
00:15:15- Interestingly around that,
00:15:16we are currently the most expensive energy drink
00:15:19category product available on the Morrison's local meal deal.
00:15:24So if you get a Sainsbury's or a Morrison's local meal deal,
00:15:29and this is going to be fascinating to see what happens.
00:15:31So I think we're launching in Sainsbury.
00:15:34I probably shouldn't say this, fuck it, whatever.
00:15:35I've said it now.
00:15:36Well, I think we're launching in Sainsbury's
00:15:37at some point within the next month or so.
00:15:40And on the meal deal,
00:15:41I don't think people in America have meal deals.
00:15:44This is a big problem in America.
00:15:47It is absolute sacrilege.
00:15:48America sucks at sandwiches.
00:15:51America absolutely sucks at sandwiches.
00:15:54What I want is a high quality brown bread,
00:15:58slice of brown bread, two of them cut into triangles.
00:16:03Want them cut diagonally.
00:16:04And I want them filled with some salads and some chicken
00:16:07and a bit of mayonnaise.
00:16:08And I cannot buy that in America.
00:16:10I can go to Subway or I can go to like Mikey's subs
00:16:14or whatever, but I can't get that.
00:16:16Anyway, in the UK, this is kind of everybody's lunch
00:16:20in one form or another.
00:16:21It's probably quite on brand for what Americans think
00:16:23about British people too.
00:16:24They put a lot of sandwiches.
00:16:26You can get a sandwich, some sort of main,
00:16:28some sort of side thing and a drink.
00:16:30And it's usually five, between four and five pounds,
00:16:32something like that.
00:16:33Now you're able by bundling these together
00:16:35with a bottle of water and a saurine and something else,
00:16:39you're able to get a discount.
00:16:40What we are, because of how high we've priced ourselves,
00:16:43but because we still sit in the premium meal deal category,
00:16:47what we're gonna be fascinated to see is whether or not
00:16:49people think I want to maximize my buying utility.
00:16:54Oh, I got an even bigger discount
00:16:56'cause I got that really expensive productivity drink
00:16:59with all of the additional stuff in.
00:17:01And I got that as a part of the meal deal.
00:17:04And I'm gonna be really interested to see
00:17:05if that grenade effect is gonna happen to us too.
00:17:09- Yeah, I think that'd be fascinating.
00:17:11I think there's maybe two bits going on.
00:17:14You've got this sense of getting a bigger discount,
00:17:18but I wonder if there's another part which is,
00:17:21it won't damage perceptions of quality
00:17:25because maybe it's seen as gaming the system
00:17:28and getting a little, you know,
00:17:30you've kind of caught safety.
00:17:31- They haven't even noticed this.
00:17:32- Yeah, and I think that hopefully will maybe protect you
00:17:35from some of that degradation of perception otherwise.
00:17:39- A quick aside, do you remember learning
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00:18:51All right, talk to me about the genius of Guinness.
00:18:53I've been blown away by what's happened
00:18:56to Guinness over the last five years.
00:18:58It's fucking spectacular.
00:19:00- Yeah, and some of that power of Guinness
00:19:04has been phenomenal, you know, product creation.
00:19:08The Zero products, Guinness Zero is phenomenal.
00:19:11It's, I think, probably the only alcoholic beer
00:19:13which tastes anything like its parent brand.
00:19:16So there's some amazing product development going on.
00:19:19But in the book, Michael Aron and I talk about
00:19:21a very specific campaign.
00:19:23So we talk about this idea of good things
00:19:26come to those who wait.
00:19:28And to me, that is an amazing example
00:19:31of what's known as the pratfall effect.
00:19:34So the pratfall effect is the argument
00:19:36that if you admit a flaw, if you open about a weakness,
00:19:40you become more appealing.
00:19:42So the initial experiment was done all the way back in 1966
00:19:46by Elliot Aronson at Harvard.
00:19:48Simple study, recruits a colleague from his university,
00:19:52gets that colleague to take part in a quiz.
00:19:55He's given, Aronson has given the contestant all the answers.
00:19:58So the guy does amazingly well,
00:19:59gets 92% of the questions right,
00:20:01wins the quiz by miles, looks like an absolute genius.
00:20:05But then as the quiz is coming to a close,
00:20:07he makes what someone in the 1960s
00:20:09might have called a pratfall.
00:20:10He spills a cup of coffee down himself.
00:20:13Now Aronson has recorded all of this,
00:20:17and he takes the recording and plays it to listeners.
00:20:19But sometimes he plays out the full version to listeners,
00:20:25so they get the spillage and the great performance.
00:20:28Other times he edits out the spillage.
00:20:30What Aronson finds when he questions everyone
00:20:34as to how appealing the contestant is,
00:20:36is this slightly counterintuitive result.
00:20:40He finds that there is a greater preference
00:20:43amongst the group who heard the spillage
00:20:45compared to the group who just heard
00:20:47the amazing quiz performance.
00:20:49And it's not a small difference.
00:20:51The people that heard the spillage and the great performance,
00:20:53they rate the contestant 45% better than the people
00:20:56who just heard the amazing quiz performance.
00:21:00So he calls this the pratfall effect,
00:21:01essentially this idea that people or products,
00:21:04and there are some nuances here,
00:21:05but people or products that exhibit a flaw
00:21:08become more appealing.
00:21:10And I think that's at the very heart of this Guinness line.
00:21:13Good things come to those who wait.
00:21:15You don't try and sweep under the carpet.
00:21:18You don't try and airbrush out
00:21:20the irritation of the delay of Guinness.
00:21:22What you do instead is lean into it
00:21:25because people assume if it has taken a lot of time to make,
00:21:30it must be higher quality.
00:21:32I think that's at the heart of
00:21:34probably the best ever Guinness campaign.
00:21:36- It seems like there's two things going on.
00:21:37One is identifying the flaw.
00:21:41The second is kind of an IKEA effect craft.
00:21:46It's taking a while to make thing.
00:21:49So if it wasn't for that, I mean, I guess you could,
00:21:52I've heard rumors that websites like Skyscanner,
00:21:56they could load all of their results immediately.
00:21:58The reason that they have the loading bar is to do the,
00:22:02look at how hard we are searching for you.
00:22:04We are getting you the best deals possible.
00:22:07It is taking so much time, bing, there it's done.
00:22:09- Yeah, well, I don't know whether Skyscanner
00:22:12artificially slowed things down,
00:22:14but there are definitely experiments that show if they did,
00:22:18it would increase people's sense of
00:22:20the results being comprehensive.
00:22:22So, Ryan Bewell at Harvard Business School
00:22:26ran a study into this,
00:22:27and he randomizes people into two groups.
00:22:29Some people use a Skyscanner-style site,
00:22:33and they are given their results immediately.
00:22:35Other people, the site is slowed down,
00:22:38and on the results page,
00:22:40rather than the results popping up immediately,
00:22:42there's a little bar that appears that goes round and round,
00:22:45saying, "Searching Alitalia, searching United,
00:22:48"searching British Airways."
00:22:50And that group have to wait a couple of extra seconds,
00:22:54and that group rate their results,
00:22:56as I don't know, it's something like 10 or 15%,
00:22:58more comprehensive than the first result, first group.
00:23:02There's essentially a rule of thumb in our head,
00:23:05often called the kind of labor illusion.
00:23:07The more effort we think someone else has gone
00:23:10to create a product,
00:23:12the higher quality we think that product will be,
00:23:14even when people are getting exactly the same beer
00:23:18or exactly the same vacuum cleaner.
00:23:20If people know about the stories of effort behind it,
00:23:23it changes their perceptions.
00:23:26- I remember a short from some seminar
00:23:30that was given by an advertising guy.
00:23:32Maybe it was a designer or something like that,
00:23:33and he's sort of talking to a room, and he says,
00:23:36"How much would you pay for me to design the logo
00:23:38"for your company?"
00:23:39And the guy gives a number, and he says,
00:23:40"What if I could do this in 60 minutes?"
00:23:42And the guy said, "I'll give you less."
00:23:45Says, "Well, hang on a second.
00:23:46"Does that mean that you would pay me more
00:23:47"if it took me longer?"
00:23:48And he just explains this effort illusion thing perfectly.
00:23:53- Yeah, it's, I mean, in the book,
00:23:57the brand that I think really leans
00:24:00into this illusion of effort is Dyson.
00:24:03So across all their communications,
00:24:07PR, advertising, the website,
00:24:11even the very first line of James Dyson's autobiography,
00:24:14they keep on referencing this number.
00:24:17Now, James Dyson says, "I went four years.
00:24:19"I went through 5,127 prototypes
00:24:22"before I created the bagless vacuum."
00:24:24Now, logically, or at least from a very narrow-minded
00:24:28logical perspective, how many prototypes he went through
00:24:31is irrelevant.
00:24:32What people should care about is the beautiful design
00:24:36or the quality of how well it sucks up dirt.
00:24:39But what behavioral scientists have shown
00:24:40is again and again, if you show people the same product,
00:24:44sometimes you tell people the amount of prototypes
00:24:46or the amount of effort that went into it,
00:24:47sometimes you don't, you get these wildly different scores,
00:24:51wildly different perceptions of premiumness.
00:24:54So absolutely, emphasizing effort
00:24:57creates a perception of quality.
00:24:59- What is the advent of AI doing
00:25:02to the advertising landscape in that case?
00:25:04Because what we're doing here is basically
00:25:07undercutting the illusion of effort.
00:25:09- Yeah, absolutely.
00:25:10So there is a Dutch psychologist called Coby Millet,
00:25:14VU Amsterdam, and he was interested in that back in 2023,
00:25:19runs a simple experiment.
00:25:22He shows people products.
00:25:25So sometimes one of the products was a poster of a skull.
00:25:29And sometimes he labels it as hand-drawn,
00:25:33sometimes he labels it as created by an AI-powered robot.
00:25:38And people are asked about the artistic merit of the poster,
00:25:43the creativity of the poster, and crucially,
00:25:45purchased intent.
00:25:46Now for every single metric, he sees the same pattern.
00:25:50People who saw the hand-drawn label,
00:25:54they rate that poster better than the group
00:25:56who saw the AI-powered label.
00:25:59And the scale is quite surprising.
00:26:02Now when it comes to purchasing intent,
00:26:04there is a 61% difference.
00:26:05Now Millet's explanation for this is the illusion of effort.
00:26:11He says, "People's personal experience of Claude or CHAP-GPT
00:26:16"is that they will spit out an answer in a few seconds.
00:26:20"So therefore we think it's low effort."
00:26:23So if we tell people our product has been created by AI,
00:26:27all things being equal, that product will be rated worse
00:26:30than if people were told that it was hand-drawn
00:26:34or made through human effort.
00:26:36So you've gotta be really careful as a business
00:26:39when you're bringing AI into your products.
00:26:42Now I'd be a luddite to suggest don't do that,
00:26:45but what you have to do is be aware of the illusion of effort
00:26:50and therefore shift the conversation.
00:26:52Shift the conversation away from how quickly
00:26:54the product was delivered to how much effort you put in
00:26:57to setting up the protocols and processes
00:26:59to get this AI system set up in the first place.
00:27:02- I think this is one of the reasons
00:27:05that people have an ick around AI music.
00:27:08There's a lot of that at the moment.
00:27:09Spotify has a bunch of charts that are being dominated
00:27:14by AI bands and an interesting realization I had.
00:27:19So the illusion of effort idea that you were talking about,
00:27:23everybody knows, everyone that's ever tried to sing
00:27:27or pick up a new instrument realizes just how difficult
00:27:30and inaccessible it is.
00:27:32That I think gives music a kind of protected class
00:27:37that people, it's inaccessible to most people.
00:27:39I can't read music.
00:27:40I don't understand how it works.
00:27:42I know what I like, but I can't recreate it.
00:27:44If you gave me any of the instruments,
00:27:45including the one that I was born with
00:27:47that's at the front of my face,
00:27:48I wouldn't be able to make the sounds of the songs
00:27:50that I like.
00:27:51And that I think makes it feel particularly egregious
00:27:55for someone to jump over it.
00:27:57I wonder whether there's an equivalent
00:27:58where it comes to art as well.
00:28:01If somebody is drawing something.
00:28:03I'm not particularly good at drawing,
00:28:05but I can get an AI to do it.
00:28:06But the fact that I've skipped the queue of something
00:28:09that used to be a reliably costly signal
00:28:12of competence and effort,
00:28:15the fact that I've circumvented that
00:28:17feels sort of additionally unfair.
00:28:20- I mean, that might well be true.
00:28:24I mean, what the experiments are very clear on
00:28:27is if you look at these metrics for, you know,
00:28:31how much you're prepared to pay
00:28:32or how good quality you think the item is,
00:28:35if people see exactly the same products,
00:28:37you change this labeling and you get a different score.
00:28:41And it does extend beyond music.
00:28:44So you've got Millet's work with, you know, art.
00:28:48I did something with Michael Aaron Flicker
00:28:51just showing people a fake new brand.
00:28:53We didn't say it was a fake new brand,
00:28:54but we showed them these pictures of a brand
00:28:56called Black Sheep Vodka.
00:28:58And sometimes we said, look,
00:28:59the designer went through 143 iterations.
00:29:02Other times, we just showed them the picture of the bottle.
00:29:07The people that saw that story of effort,
00:29:10they thought the bottle design was more beautiful,
00:29:13significantly more beautiful,
00:29:14than the people that didn't hear that story of effort.
00:29:18So it certainly seems to extend beyond
00:29:20what we might think of as art into commercial design,
00:29:24all the way through to estate agent services
00:29:27have been shown to have a similar effect.
00:29:30- On the Guinness thing, what do you make of splitting the G?
00:29:35Have you seen this?
00:29:38- I have my, I went to the Guinness storehouse,
00:29:41the giant brewery tour you can do in Dublin.
00:29:45I went with my son, I think it was last summer,
00:29:48and that's, or maybe summer before,
00:29:49that's when I was introduced to this.
00:29:51He was trying to show me how to do it.
00:29:53I mean, it's adding a bit of fun to the experience.
00:29:57I think Guinness themselves try not to promote it
00:30:00'cause it's probably a little bit dubious
00:30:02in terms of kind of safe drinking,
00:30:03but I think it's an organic thing
00:30:05that gets the brand talked about,
00:30:07adds a bit of excitement and uncertainty.
00:30:10- I'm fascinated by these things that are bottom up,
00:30:14almost anti-marketing campaigns.
00:30:16I think that it's kind of like a perpetual motion machine
00:30:21for a brand.
00:30:23I think white monster energy has the equivalent
00:30:27at the moment as well.
00:30:27It's almost a meta meme.
00:30:29It's Americana.
00:30:30It's WWF from the '90s.
00:30:33It's Creed and New Metal.
00:30:35It's heavy hits in the NFL.
00:30:38It's Linkin Park and Transformers, the early movies.
00:30:42It's all of these things.
00:30:43And at no point, as far as I can see,
00:30:47has Monster Energy pushed this white monster thing
00:30:51in the same way as splitting the G from Guinness.
00:30:54Just, they did not place the word Guinness
00:30:59on the side of that pint glass at the point
00:31:02that would be two-ish mouthfuls,
00:31:05two and a half mouthfuls deep.
00:31:06Hard enough to make it hard,
00:31:07not so hard that you have to drink it.
00:31:09It's just the way it's done.
00:31:10And then this now has been pushed out so much.
00:31:13I don't know whether you saw the stories
00:31:14from last summer in the UK.
00:31:16Some pubs made people buy two or three drinks
00:31:20before they could buy a Guinness.
00:31:23You weren't allowed to because they had Guinness shortages.
00:31:27They had such a Guinness shortage
00:31:29they had to fucking titrate the supply to customers.
00:31:34- Yeah, so two things there.
00:31:36The first, I wonder if there's an element of,
00:31:38you know that supposed, I think it's Arnold Palmer,
00:31:40the golfer's phrase, you know,
00:31:41the harder I practice, the luckier I get.
00:31:45I wonder if there's something akin to that
00:31:47in the world of brands.
00:31:49In the bigger you get,
00:31:53the more enjoyable people find your kind of communications,
00:31:57the warmth out of the brand.
00:31:59I think the more likely
00:32:00these spontaneous ideas are gonna spring up.
00:32:03Now more people, more chance of drinking comes up with the idea
00:32:06and also I think if there's warmth towards the brand,
00:32:08they're more likely to do it.
00:32:10So I think that, you know,
00:32:11you might have this kind of Matthew effect of,
00:32:14to the best brands you get the best organic ideas.
00:32:17But that second point you mentioned
00:32:19is around the shortage.
00:32:21Now I'm not claiming in any way
00:32:22that Guinness actually did this.
00:32:24But I think if I was a brand,
00:32:25I would certainly be tempted occasionally
00:32:27to spread rumors of a shortage.
00:32:30- Supply validation. - The most powerful ideas
00:32:32in behavioral science, the one that,
00:32:34when psychologists try and do comparative ranking
00:32:37of some of these biases,
00:32:39the one that comes out towards the top again and again
00:32:41is scarcity.
00:32:43You know, we want what we can't have.
00:32:45There's this amazing G.K. Chesterton phrase where he says,
00:32:48"The way to love anything is to realize it might be lost."
00:32:53And I think you get these stories in the press about
00:32:56they're gonna be a shortage.
00:32:57And then it will drive even greater demand
00:33:00because that fear of missing out,
00:33:03that fear of,
00:33:04or that belief that lots of other people want this thing,
00:33:07you know, it powers the desire for it.
00:33:11- Before we continue,
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00:34:09Speaking of another pretty interesting brand,
00:34:11Red Bull, Guinness, Liquid Death,
00:34:13pretty disruptive, I think, for a water company.
00:34:16I know they're now moving into a lot of other products.
00:34:18How, what's your perspective on Liquid Death?
00:34:22- So, I mean, I think it's a fantastic marketing case study
00:34:26because if there is one factor that captures attention,
00:34:33it's behaving distinctively.
00:34:36So the original studies into this
00:34:38were done all the way back in 1933 by a German psychologist
00:34:42called Hedwig von Restorff.
00:34:44It was the University of Berlin.
00:34:46And what she basically did, I mean, with a bit of changing,
00:34:49she'd kind of give people lists of words.
00:34:53So I might write down, let's say 10 words, give them to you.
00:34:56Nine of them would be items of furniture.
00:34:59One of them would be an animal.
00:35:01And then I would take those lists away,
00:35:05ask you what you could remember.
00:35:07And overwhelmingly, people were much more likely
00:35:09to remember the distinctive animal
00:35:12rather than the kind of nine bits of furniture.
00:35:17So her argument was we are hardwired
00:35:20to notice what's distinctive.
00:35:22Now, that is a very, very well-known finding.
00:35:26It's been repeated over the last kind of 90-odd years.
00:35:29But if you think about an awful lot of advertising,
00:35:34brands end up aping the behavior of their competitors.
00:35:39You know, you look at watch ads.
00:35:42They all follow the same formula.
00:35:43Or car ads, you know, in Britain it's always a kind of,
00:35:46seems to be a kind of Central European dusty mountainous scene
00:35:49with them going round the corner.
00:35:52Again and again, these norms of behavior spring up.
00:35:56And when it comes to water, there were some traditions
00:36:02that every brand like Perrier or all the others
00:36:06seemed to adhere to, which is you've got to have clear glass
00:36:10so people can see the purity of products.
00:36:12You've got to have shots of nature.
00:36:14You've got to have alpine scenes and yoga moms.
00:36:19And I think what Liquid Death did so brilliantly
00:36:22is realize all this stuff is just there for tradition's sake.
00:36:25You don't need to communicate in that way.
00:36:28And actually, if we take the polar opposite approach
00:36:31and we behave like a craft beer or an energy drink
00:36:34and have these outrageously gory ads
00:36:36and, you know, kind of out there humor,
00:36:39that will stand out, it'll get attention.
00:36:43And frankly, if you don't have attention,
00:36:44everything else you do in marks and communication
00:36:46is academic.
00:36:48So I think that relentless pursuit of being distinctive
00:36:52and then crucially being distinctive in a consistent way.
00:36:57They didn't have one ad that was out there
00:36:59in a certain direction and then a completely different one
00:37:02the next time.
00:37:03They all had this theme of kind of behaving
00:37:05like a heavy metal band or a craft beer brand.
00:37:08So they had this recognizable way of breaking conventions.
00:37:13I think that is at the heart of their American success.
00:37:16- How important's humor?
00:37:17- Humor, yeah, absolutely.
00:37:20So Mike Cesario, the founder of Liquid Death,
00:37:26he talks about the fact that he found it strange
00:37:30that the beers and crisps and candies,
00:37:35they had all the fun when it came to advertising
00:37:39and the healthy virtuous goods
00:37:42were all a bit hair shirtist in their communication.
00:37:45So they have definitely doubled down
00:37:49on being funny and humorous.
00:37:50And again, you know, it's a great way of attracting attention.
00:37:56The etymology of advert is the Latin,
00:38:01I think, for turn towards.
00:38:02And what do people turn towards?
00:38:03They turn towards things that bring them pleasure
00:38:06and happiness.
00:38:07They turn away from dry, dusty information.
00:38:10So to get attention, one of the best things you can do
00:38:13is amuse people.
00:38:14- What about Haagen-Dazs?
00:38:16That's a brand that I kind of forgot about in the US
00:38:20because I don't think that distro is as big,
00:38:24quite as big over here.
00:38:25Ben and Jerry's and there's sort of three buckets
00:38:30of ice cream.
00:38:32There's very sort of experimental stuff.
00:38:36The Ben and Jerry's would go into that.
00:38:38There's healthy craft, better for you,
00:38:42Amy's ice cream type stuff.
00:38:44And then there's the high protein,
00:38:48good for you, lower calorie.
00:38:52So Haagen-Dazs, I forget about,
00:38:53but I know that they're a monster of a brand.
00:38:55- Yeah, so the origin story of Haagen-Dazs
00:39:00is, I think, fascinating.
00:39:02And it is a little bit dubious.
00:39:03I'm not saying I would recommend exactly what they do
00:39:07to other people, but they were set up in the Bronx
00:39:12in the 1940s, maybe the very early '50s.
00:39:15And they were set up by a Jewish couple
00:39:17who had emigrated from, I think, Ukraine and Russia.
00:39:23And they had moved to New York,
00:39:26kind of gone into the family ice cream business,
00:39:29and they decided they wanted to launch
00:39:31this premium sophisticated ice cream.
00:39:34They wanted to get a charger,
00:39:35a lot more for it than the competitors.
00:39:37And they thought, well,
00:39:40how do we create this image of sophistication?
00:39:42Well, why don't we essentially position this brand
00:39:47as being Danish?
00:39:50Now there's nothing at all Danish about Haagen-Dazs.
00:39:52It was created in the Bronx.
00:39:54The couple had never, ever been to Denmark.
00:39:57I think they chose it
00:39:59because Denmark had a particularly strong reputation
00:40:04that it had, the populace during Second World War
00:40:08had done an awful lot to help Jews escape from the Nazis.
00:40:13So there was a lot of admiration, I think,
00:40:16for Denmark in particular.
00:40:18But basically they wanted a kind of European country
00:40:21that felt a bit sophisticated.
00:40:23So even though they hadn't been to Denmark,
00:40:24they start generating names
00:40:27and they come up with Haagen-Dazs.
00:40:29And if you go to a Dane, they'd be like, this isn't Danish.
00:40:32This is, we don't have, I think, umlauts over the A.
00:40:36We don't have ZS in our name.
00:40:38It doesn't even make sense as a Danish thing.
00:40:41But to American ear in the 1940s, it sounded Danish.
00:40:44And then the couple doubled down
00:40:46by putting a little map of Denmark on the tub.
00:40:50And what's so clever about this, albeit morally dubious,
00:40:55we can maybe talk about that,
00:40:56is people taste what they expect to taste.
00:41:00And if you wrap up a product
00:41:01in this aura of sophisticated provenance,
00:41:05people assume it tastes better
00:41:07and then they go out and look for confirming evidence.
00:41:10So exactly the same ice cream tasted that little better,
00:41:13a little bit better to an American palate
00:41:15because it had this set of associations of Danishness.
00:41:20Why do you think, go ahead.
00:41:23- Oh, and I was gonna say, the moral from this,
00:41:25I'm aware of what is quite charming
00:41:28when it's a mum and dad brand is one thing.
00:41:31When it's a multi-million dollar brand,
00:41:32it's a little bit less charming.
00:41:34But I think the lesson is what we experience
00:41:38isn't just due to the physical product.
00:41:40It's not due to just the milk and the fats and the sugars.
00:41:44It's also what we think we're gonna taste.
00:41:47So the color of the packaging, the weight of it,
00:41:50the story behind it, the provenance.
00:41:52You know, all these things are just as important
00:41:54and you as a marketer need to create
00:41:56those positive perceptions to give your product
00:41:58the best chance of success.
00:42:01- What do you think it is about the Danes
00:42:02that suggest that they're good at ice cream?
00:42:04- I think it's the fact that it was a far away country
00:42:09that Europe rightly or wrongly
00:42:12probably had this aura of sophistication.
00:42:14It's where luxury brands came from.
00:42:15It's where, you know, Renaissance figures came from.
00:42:18I think it was a sense of Europe
00:42:20having some of these values
00:42:21and then doubling down on Denmark
00:42:23because for a Jewish couple,
00:42:27their history of fighting against antisemitism
00:42:31was something that would have appealed.
00:42:33I think that was the case of why Denmark in particular.
00:42:36It's more a personal story to them.
00:42:38- What about the pumpkin spice latte?
00:42:40I know that we're into spring now, but the Starbucks.
00:42:44- Autumn, yeah, four or whatever it's called.
00:42:46- Yeah, yeah, yeah.
00:42:47- We're into spring shortly,
00:42:51so the pumpkin spice latte is very long gone.
00:42:54Yeah, what did you learn about Starbucks?
00:42:56- I think the point there is the time-specific nature
00:43:02of the pumpkin spice latte.
00:43:05So, you know, we've talked already about this idea
00:43:07of scarcity, that we want what we can't have.
00:43:10The brilliant thing about pumpkin spice latte
00:43:13is they launch this product, they have huge success.
00:43:17What 99% of businesses would have done is think,
00:43:19"Wow, we've got this cash machine of a brand.
00:43:22"Let's just run it all year round
00:43:24"and let's maximize our profits."
00:43:26And if a business had done that,
00:43:28it would have been super successful for a year or two,
00:43:33but probably over time, they would have lost
00:43:36the very kind of magic at the heart of that variant.
00:43:40So there's an idea called habituation,
00:43:44which is the idea that over time,
00:43:47we become a bit desensitized to enjoyment.
00:43:51So there's a study from Leif Nelson at NYU,
00:43:56which demonstrates this quite powerfully.
00:43:59He lets people experience a massage chair,
00:44:04and it's a very pleasurable massage chair.
00:44:06And some people just sit in the chair for three minutes,
00:44:09three minutes straight,
00:44:11and then they rate how much they enjoyed it out of nine,
00:44:14and the average rate is 6.05.
00:44:16Other people, there's a one minute,
00:44:2120 seconds session in the chair.
00:44:23They then turn the chair off for 20 seconds,
00:44:26and then there's another one minute,
00:44:2820 seconds with the chair going.
00:44:30So last for three minutes,
00:44:33but there's no massaging going on for 20 of those seconds.
00:44:37Now, logically, you'd expect, well,
00:44:40surely this group will enjoy the experience less.
00:44:43They had less time with the enjoyable aspect.
00:44:47But actually, you see something quite different.
00:44:49The rating actually goes amongst this group
00:44:51to 7.05 out of nine.
00:44:53So from 6.05 to 7.05, you get a 17% improvement.
00:44:57What Nelson argues is a curse of human nature
00:45:03is that when we experience something pleasurable, over time,
00:45:07the enjoyment level wanes
00:45:10because we stop comparing it to not having it.
00:45:13We compare it to the last time of using the service.
00:45:18So over time, we habituate.
00:45:20We get used to these pleasant things.
00:45:23So I think with something that's very powerfully flavored
00:45:27like the pumpkin spice latte,
00:45:28something's a little bit strange,
00:45:30they'd sold it all year by the sixth pumpkin spice latte,
00:45:34but some of them took it somewhere.
00:45:36You'd be sick of the bloody stuff.
00:45:38But by stopping it before that happens,
00:45:40removing it from sale,
00:45:42what you allow is this appreciation, anticipation,
00:45:45and desire to grow back again.
00:45:47So I think they turned something that would have lasted
00:45:50for a couple of years if it'd been permanently on sale
00:45:52into something that's been going for about 20 years.
00:45:54- Wow.
00:45:55Yeah, the LTO, the limited time offer,
00:45:58the sort of drop model, as it's known.
00:46:01It's how Supreme, the clothing company, do their things.
00:46:05It's how a lot of clothing companies, independent and big,
00:46:08build up, build up, build up.
00:46:09It's there, and then it's gone.
00:46:11- Yeah.
00:46:12And actually, you can actually spot this
00:46:16if you look hard enough in products
00:46:21where it's not immediately apparent.
00:46:23So one brilliant example is, do you remember Wordle?
00:46:27- Yes. - So that game,
00:46:29I think you had, was it six goes to guess a five-letter word?
00:46:34In a hugely popular,
00:46:36Josh Wordle, the designer, sold it for New York Times,
00:46:39I think for about $10 million.
00:46:40Now, at the height,
00:46:43you had hundreds of millions of people playing this game,
00:46:45or tens of millions of people playing it.
00:46:47But what's interesting is,
00:46:49even though usage spiked during COVID,
00:46:51this product had been around for ages.
00:46:55But when Josh Wordle first created it,
00:46:58the difference was you could do your Wordle game,
00:47:02and as soon as you finished, you could do another,
00:47:03and then you could do another,
00:47:04and then you could do another.
00:47:06And when it was set up like that,
00:47:08barely anyone played it yet.
00:47:09It was like dozens of people playing it a day.
00:47:12But then during COVID,
00:47:14Wordle becomes slightly obsessed
00:47:16with the New York Times crossword.
00:47:18And he wonders to himself, do I love the crossword?
00:47:21Because once I finish the cryptic crossword,
00:47:23I have to wait till tomorrow to get the next one.
00:47:25Now, and it builds this sense of anticipation.
00:47:29So he changes the programming of Wordle
00:47:32so that now you do one, you finish it,
00:47:35you can't do another.
00:47:36There are no more around.
00:47:37You have to wait till the next one's released
00:47:39in 24 hours time.
00:47:40And he attributes the success
00:47:43to kind of baking in this scarcity,
00:47:45baking into this limited time offer,
00:47:47into the very heart of the product.
00:47:50- We'll get back to talking in just one second,
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00:48:52One thing that I think about
00:48:56when it comes to modern marketing influences,
00:48:59the world of influencer marketing,
00:49:01what do you think people are getting wrong with that?
00:49:03What are the areas that that goes well
00:49:05and what are the areas that that fails
00:49:07from a behavioral science standpoint?
00:49:09- I think when it goes well,
00:49:12there is an idea called the messenger effect.
00:49:16So the original study was done back in 1953
00:49:18by Hovland and Weiss.
00:49:20They were at Yale at the time.
00:49:21It's quite a nice study.
00:49:22They stopped people in the street
00:49:24and they asked them a topical matter of the day,
00:49:27like can the US build a nuclear power submarine
00:49:30in the next 12 months?
00:49:32People say yes or no.
00:49:33And then once the psychologists have got the answer,
00:49:36they invite those people back to their lab
00:49:39in four days time.
00:49:41And when the participants arrive at the lab,
00:49:44on a table, there is a A4 sheet of paper
00:49:47and there is a very tightly argued bit of prose
00:49:52about why the participant is completely wrong.
00:49:55So if I said yes, a submarine can be built,
00:49:57very powerful argument about why it's just not practical.
00:50:00Once people have read this argument,
00:50:03they have to say whether they've changed their opinion.
00:50:06Most people don't, but the twist in the experiment
00:50:11is sometimes the argument is attributed to a credible source.
00:50:15So in the case of the submarine,
00:50:16it was Oppenheimer the physicist,
00:50:18sometimes the argument was attributed
00:50:20to a low credibility source,
00:50:22so Pravda, the Russian newspaper.
00:50:24And what the psychologists found is that
00:50:27if the argument was attributed to a low credibility source,
00:50:307% changed their mind, high credibility source,
00:50:3323% changed their mind.
00:50:35So even though everyone gets exactly
00:50:37the same logical argument, the same facts,
00:50:39the same figures, the same persuasive power of argument,
00:50:45you get this three and a half fold difference
00:50:47in influence dependent on who it came from.
00:50:50So their argument was who says something
00:50:54can be as important as what's said.
00:50:56Now that study was done what, 73 years ago?
00:51:00But yeah, but it's been repeated again and again,
00:51:03I'm just going back to the original one
00:51:04'cause I think it's the clearest, it's the simplest.
00:51:07But since they've done that,
00:51:09what people have started to look at is well,
00:51:11what makes for an effective messenger?
00:51:14And many different variables,
00:51:16three of the big ones are the messenger is neutral.
00:51:20So if I tell you amazing, my book's amazing,
00:51:23you might be skeptical.
00:51:25Even if I got my brother or my wife to tell you that,
00:51:28it's still even that tiny extra bit of neutrality
00:51:32will boost believability a bit.
00:51:33So neutrality is important.
00:51:35Credibility is important
00:51:36and that's why Oppenheimer was so powerful.
00:51:38But then the third bit that's really interesting
00:51:40is relatability.
00:51:42Now I might be influenced by what my neighbor tells me
00:51:44about the best sports drink or the best supplements,
00:51:47even though my neighbor doesn't know anything
00:51:49particularly in that area.
00:51:50But the fact that I relate to them,
00:51:51the fact that they're similar to me,
00:51:53it makes them more powerful.
00:51:55So I think the argument with influence would be
00:51:58you could get the neutrality,
00:52:00but ideally if you can get credibility
00:52:02and relatability as well,
00:52:04then you're on to someone
00:52:05that can change the behavior of others.
00:52:08- I was seeing some stories about experts
00:52:11expecting deeper creator partnerships,
00:52:14sort of these mega creators they're called.
00:52:16So it's fewer long-term brand deals
00:52:19and they extend into roles like co-branded product lines
00:52:22or internal leadership titles.
00:52:23So I'm not sure if you saw this,
00:52:24Virgin Voyages named J-Lo as its chief entertainment officer.
00:52:29- Okay.
00:52:29- So they've framed her as the co-architect
00:52:32of the sort of onboard experience
00:52:33rather than just a face in ads.
00:52:35Ridge Wallet just got Marques Brownlee, MKBHD.
00:52:39He's a big tech YouTuber.
00:52:41He's the chief creative partner.
00:52:42And then SoFi just appointed your Rich BFF person,
00:52:47Vivian Tu, as the chief of financial empowerment.
00:52:52So they're trying to give us sort of
00:52:53an internal sounding role that legitimizes her
00:52:57as a financial educator inside of the company.
00:53:01I think we saw this with maybe to a lesser extent,
00:53:04Ryan Reynolds with Mint Mobile,
00:53:05but certainly Ryan Reynolds with the football team.
00:53:08Somebody, smaller numbers of roles
00:53:12that are with higher value individuals
00:53:14with a more legitimate sounding position.
00:53:18- Yeah, so once you start talking about the order of a J-Lo,
00:53:23I think you start moving into kind of other behavioral biases.
00:53:27There's an idea called costly signaling.
00:53:31So the original work on this was done by biologists
00:53:36rather than behavioral scientists.
00:53:38But it's essentially the believability of communications
00:53:43is in proportion to the expense of that communications.
00:53:47So if there is a brand that gets a celebrity like J-Lo,
00:53:52the general person on the street
00:53:55won't know whether J-Lo costs,
00:53:56and I don't know whether she costs 100 million or 50 million,
00:53:58but I know she's very, very expensive.
00:54:01And that sends a credible signal
00:54:04about how much the brand believes in their offering.
00:54:09The argument being extravagant advertising
00:54:12works in the long term.
00:54:14If I hire J-Lo to advertise my terrible soft drink,
00:54:20I might get people to try it once,
00:54:23but they're not gonna recommend it to their friends.
00:54:24They're not gonna come back.
00:54:25I'm gonna go bust.
00:54:26But if I have a brilliant soft drink
00:54:28and I get J-Lo to be the face of it,
00:54:30well, then it works out for me
00:54:31because I know that people will try it, recommend it,
00:54:35and it will go on and on and on like that.
00:54:38So the fact that extravagant spend
00:54:41is an effective screening mechanism,
00:54:44only people who genuinely believe in their brand would do it
00:54:48because if you thought your brand was awful,
00:54:50adopting that largess would make you bust.
00:54:54That's, I think, what makes it
00:54:56a credible and powerful and persuasive signal.
00:55:01- What about KFC?
00:55:02We talked about five guys.
00:55:04What have you learned from KFC?
00:55:06- So KFC, there's a few different things there.
00:55:08There's, I think the power of a secret is quite interesting.
00:55:13But the other one that they did that I really loved
00:55:17was a bit more tactical,
00:55:19but it's kind of one of the themes
00:55:20that we've come back to again and again,
00:55:22which is this power of scarcity.
00:55:26So they did a slightly different approach
00:55:28to the examples we've discussed so far.
00:55:31And there was a wonderful Australian campaign.
00:55:35I think it was back in, first in 2016,
00:55:38where they would promote $1 chips.
00:55:42So you get these big large fries at $1.
00:55:44Very, very good deal.
00:55:45And when they did it for the first few years,
00:55:48hidden in the tiny little T's and C's
00:55:51at the bottom of the ads was the fact
00:55:53that you could only get four bags of chips per person.
00:55:57What the marketing team did was put that front and center
00:56:02of the messaging.
00:56:04So they tested loads of different behavioral science biases
00:56:07that could boost sales.
00:56:08The one that works best was saying big layers on the posters,
00:56:12maximum number of these bags of chips you can buy,
00:56:14bags of fries, four per person.
00:56:16And what it did was provide a very credible signal
00:56:22that either these chips are gonna be so enticing,
00:56:27they're worried about selling out,
00:56:29or that it's such a powerful and good value deal
00:56:33that they're actually losing money on it.
00:56:35Now that's not speculation.
00:56:39Michael Aaron and I did a very simple test.
00:56:43We told people about Sierra Nevada Palau
00:56:48being sold in America, 12 bottles of beer for $18.99.
00:56:54And I think 14% of people thought it was good value.
00:56:58And then other occasions we told people,
00:57:03Sierra Nevada Palau, 12 pack of beer
00:57:05being sold for $18.99 in the supermarket,
00:57:08maximum number of cases you can buy is six.
00:57:11And the proportion of people
00:57:12who thought it was good value went up to 22%.
00:57:14So you get this I think 57, 59% improvement.
00:57:18People worked a rule of thumb
00:57:22that if a business is not letting you take
00:57:25as much of a product as you want, it must be a good deal.
00:57:29It's either so good it's gonna sell out or so good
00:57:31it's actually hurting the bottom line.
00:57:33So that to me was a wonderfully simple tactic
00:57:37that far more people could apply.
00:57:39- So funny because KFC's fries are actually the worst
00:57:45as everybody knows.
00:57:46- I have heard people say this.
00:57:48- Yeah, they're the worst of all of the fries.
00:57:50So I would not have leaned on the fries.
00:57:52I suppose what's interesting
00:57:53about doing it with the fries as well
00:57:55is that that is something which Burger King has fries
00:58:01and McDonald's has fries as well.
00:58:03You didn't pick something that only you make.
00:58:08If you picked the signature Zinger burger,
00:58:13well, no one else can make that.
00:58:16So doing the scarcity on something
00:58:19which isn't a non-computable good
00:58:22would probably change the framing of it
00:58:25versus these you can get elsewhere, but not like this.
00:58:30- Yeah, I think it was a reasonably good deal,
00:58:36but there's, whenever something's on offer
00:58:39there's always a bit of suspicion as well.
00:58:41Have they cut corners?
00:58:43Is there some kind of trade off for this low price?
00:58:45- They're trying to counter signal the discount.
00:58:47- Yes, yes, yes.
00:58:51I think, and what differentiates it
00:58:54from just saying limited time offer or exclusive,
00:58:59is it's not just staying in this realm of statement and claim.
00:59:04It's not just in this realm of talk being cheap.
00:59:08It's actually a physical restriction.
00:59:10You go to the counter,
00:59:11they will not serve you more than four.
00:59:13Now, I think it's this action rather than claim
00:59:16that distinguishes it
00:59:17from the kind of more common use of scarcity.
00:59:21- I can't believe that Klarna and these companies,
00:59:24I thought, what are they called?
00:59:27Micro pay later companies?
00:59:29- Buy now, pay later.
00:59:30- Buy now, pay later things.
00:59:32And there was this joke
00:59:35that you could get your Chipotle order on Klarna.
00:59:39So you could get your burrito,
00:59:41buy it today and pay for it tomorrow.
00:59:45But just the same as the prediction markets,
00:59:48these things seem to be here to stay.
00:59:51So what's your perspective on the buy now, pay later industry?
00:59:56- So there's a long standing idea
01:00:00called the pen is a day effect.
01:00:02So the original study was John Goreville at Harvard
01:00:05and he did it with charities on a time.
01:00:08So essentially, he found out
01:00:10were people willing to donate to a charity?
01:00:13And sometimes the request was $365 a year.
01:00:18Other times it was a dollar a day for a year.
01:00:21And what he found is even though
01:00:22the sums works out to be the same,
01:00:24people were much like more likely to donate
01:00:27if you phrased it as a dollar a day.
01:00:29Now, what seems to be happening
01:00:32is people give different weights
01:00:36to two sides of the equation.
01:00:38You know, the dollars that are being discussed
01:00:41looms large in people's mind.
01:00:43The unit of time doesn't seem to be
01:00:46given the weight it should be.
01:00:47So it's a bit like people think three times seven
01:00:49is different from seven times three.
01:00:51So if you've got a time-based product,
01:00:54the more you can break
01:00:57or the more that you can discuss that product
01:01:00in the smallest unit of time,
01:01:02the better it works out for you.
01:01:03Now, exactly the same thing happens with physical items.
01:01:09So I mentioned that Sierra Nevada parallel study
01:01:12Michael and I did.
01:01:14And we did another version of it.
01:01:16So key factor, if you say to people,
01:01:18a 12-pack of Sierra Nevada costs $18.99,
01:01:21you get 14% thinking it's good value.
01:01:25If you say to people, this is a different group,
01:01:29costs $18.99 for a 12-pack,
01:01:31that's the same as $1.58 a bottle.
01:01:34The proportion jumps, I think, to 29 or 30%
01:01:37thinking it's a good deal.
01:01:39So you break down a physical item into smaller subunits
01:01:44and you create a perception it's better value.
01:01:48So one of the things Kleiner offers is,
01:01:50now I go to a website, I wanna buy a jumper for $60.
01:01:54I don't pay $60 in one go, I pay three lots of 20.
01:01:58People treat three lots of 20 completely different
01:02:02from one hit of 60
01:02:03because they're focusing too much on the 20.
01:02:07They're not doing the multiplying as much as they should.
01:02:10So brands put that on their website,
01:02:13retail's put Kleiner or competitor on the website,
01:02:16they end up selling more.
01:02:17So there is a strong reason for businesses
01:02:22to start handing over a bit of commission to Kleiner.
01:02:25- I'm interested in the difference
01:02:27between framing things as negatives versus positives.
01:02:31And it seems like the direction that you come into this from
01:02:36can be pretty important.
01:02:38- Yeah, so there's an idea called loss aversion.
01:02:42The original studies were done by Kahneman and Tversky
01:02:45in the '70s, but they're a little bit bizarre
01:02:47and just got a bit confusing.
01:02:51I think the much better study was done in 1988
01:02:53by Elliot Aronson at Harvard.
01:02:55So what he does is go to homeowners, 404 homeowners,
01:02:58he has a nice big sample, knocks on the door,
01:03:01tries to sell them loft insulation.
01:03:03Sometimes he says, "Buy my loft insulation
01:03:06and you'll save 75 cents a day."
01:03:10So a psychologist would say, "This is the gain frame.
01:03:12You're emphasizing what you benefit as a consumer
01:03:14by taking out loft insulation."
01:03:16But other homeowners, he gives them the same mathematical sum.
01:03:19He says, "Look, take out the loft insulation
01:03:21because if you don't, you'll be wasting 75 cents a day."
01:03:26Even though it's the same amount of money,
01:03:28by emphasizing people could be losing out on that,
01:03:31they could be wasting that money,
01:03:33he got a 50 or 60% higher response rate.
01:03:37So absolutely, there is an argument
01:03:40that the mathematically equivalent loss affects us more
01:03:44than someone getting that gain.
01:03:48The way I'd put it is if you and I
01:03:51go our separate ways today,
01:03:53you realize you have lost $5,
01:03:57I find that $5,
01:04:00your unhappiness will be larger than my happiness.
01:04:04- So it would be if I knew that you'd found my $5.
01:04:06- Yeah, yeah, yeah, yeah.
01:04:07Oh, don't worry, I wouldn't be telling you.
01:04:08I'd be keeping that secret, yeah, yeah.
01:04:11You just see me in a slightly fancier t-shirt
01:04:13next time we talk.
01:04:14- It makes me think about the anti-smoking ads
01:04:19because it's not saying if you stop smoking,
01:04:22you will live four years longer.
01:04:24It's if you keep smoking, you will die four years sooner.
01:04:27- Yes, the only caveat there is when it comes,
01:04:32the great thing, behavioral science and psychology,
01:04:37it's not like maths where people are particles
01:04:41and exactly the same occurrences happen.
01:04:45I think there's a bit of a complexity
01:04:47when it comes to humans and context is hugely important.
01:04:51When it comes to going from a loss to engendering fear,
01:04:56then I think you've got to be quite careful.
01:05:01- Why?
01:05:02- There's an argument from people like George Lowenstein.
01:05:07He calls it the ostrich effect
01:05:08and it's essentially the argument that
01:05:11if you make people feel ashamed or scared or too worried,
01:05:15rather than resolve the underlying issue,
01:05:18what they tend to do is behave like the metaphorical ostrich.
01:05:21They just start ignoring the ads.
01:05:22They stick their head in the sands.
01:05:24Now, his study was already done about 20 years ago
01:05:28when he was at Carnegie Mellon
01:05:30and he's given anonymized data from Vanguard in America,
01:05:35so this massive fund provider.
01:05:38And he can see how often users
01:05:40are checking their stock portfolios.
01:05:43He then plots that against the movement
01:05:47in the American stock market.
01:05:49And what he finds is as the stock market goes up,
01:05:53people check their wealth reasonably regularly.
01:05:57When the stock market declines, people stop checking.
01:06:01It's not a small effect.
01:06:02I think it's for every 1% drop in the stock market,
01:06:06people check their portfolios 5% to 6% less regularly.
01:06:10And his argument is,
01:06:12from a narrow-minded logical perspective, that's irrational.
01:06:16The information about our wealth is equally valid,
01:06:18whether it's good news or bad news.
01:06:20But he says people have a rule of thumb,
01:06:22is if something causes them pleasure, they do it more.
01:06:25If something causes them immediate pain,
01:06:28they turn away from it.
01:06:30So the danger with smoking ads or anti-smoking ads
01:06:34that scare people is that often,
01:06:36unless the change you're asking is really easy,
01:06:40you can cause people either to avoid
01:06:43paying any attention to the messaging
01:06:45or going through these kind of mental gymnastics
01:06:47to explain to themselves why that messaging
01:06:49doesn't affect them.
01:06:50- Yeah, I mean, it makes complete sense
01:06:55that people wouldn't want to hear something
01:06:56that they really wouldn't want to hear.
01:06:58- Yeah, yeah.
01:06:59And it's this, I think, problem
01:07:02with long versus short-term thinking.
01:07:05It's absolutely in our long-term interest
01:07:07to listen to things that are gonna keep us living longer.
01:07:12But in the immediate moment, it makes us feel unpleasant.
01:07:15And then too often, we prioritize our immediate feelings
01:07:19rather than what works for us over the medium or long-term.
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01:08:21I remember, I can't remember if it was you or Rory
01:08:24that taught me about when people needed
01:08:27to increase their contributions to their pension
01:08:30rather than the money being taken out of their current pay,
01:08:37when they got a pay increase, a portion of the new pay
01:08:42was put toward that and people were more prepared
01:08:46to do the investing if it worked in that sort of a way.
01:08:50- Yes, so this was an American scheme.
01:08:52I think it was Shlomo Bernazzi that came up with the idea.
01:08:55And it was called Give More Tomorrow.
01:08:58And it's exactly as you say.
01:08:59If you ask someone to put more money
01:09:02into their pension today, what they focus on is
01:09:06the loss of that money.
01:09:08And they're remarkably resistant to doing it.
01:09:10They think, well, I can't afford to go on that extra holiday
01:09:13or buy a car.
01:09:15So what they started to do instead was say to people,
01:09:18look, don't put any more money into pension today.
01:09:20But when you get your pay rise in nine months time,
01:09:23are you okay if we automatically set up a system
01:09:26where we'll just take 10% of that, 20% of that
01:09:29and put it into your pension?
01:09:31And because the conversation was about money
01:09:35being taken away long in the future,
01:09:38it felt attenuated to people.
01:09:40There's an idea called present bias,
01:09:42which is essentially people give too much weight
01:09:45to what's gonna happen now in the near future.
01:09:48And we massively underweight pleasure or pain
01:09:51in the distant future.
01:09:53So often that's a big problem for pensions
01:09:55or insurance or savings.
01:09:57But Bernazzi's clever design meant that he used human nature
01:10:03to encourage this very desirable behavior.
01:10:06- Is there a way that fast food companies
01:10:09would use this on the inverse?
01:10:10They sort of don't think about the tomorrow,
01:10:12do you think about the today?
01:10:14- Yes, yes, absolutely.
01:10:17What might be one of my favorite experiments ever,
01:10:20I don't think they've ever chatted about this one.
01:10:21It's a 1998 study from Daniel Reed,
01:10:25who at the Times at university leads,
01:10:26I think he's at Warwick now.
01:10:27And he does this brilliant study
01:10:29where he goes round a Danish office
01:10:32and he offers people a choice.
01:10:34So you can either have an apple or a chocolate bar,
01:10:38they're completely free, but you only get to pick one.
01:10:41The first half of people, it's a very straight set up.
01:10:44He just says, pick which of these one snacks you want,
01:10:48take it now, eat it now.
01:10:50And 82% go for chocolate bar, 18% go apple.
01:10:54Next time he does this experiment, he twists it slightly.
01:11:00And he says to people, you can have a chocolate bar or an apple
01:11:03you pick now, but I will bring this snack
01:11:06to you in a week's time.
01:11:07And suddenly the apple becomes a lot more popular.
01:11:10It's not quite beating the chocolate bar.
01:11:13I think it's 51% chocolate bar, 49% apple.
01:11:16But considering there was a massive skew
01:11:18towards the chocolate bar in the previous version,
01:11:21this is a big change.
01:11:23And the argument from Reed is that when we are picking
01:11:27for immediate consumption, we're very much driven by
01:11:31what we want to do, what's in art, what's gonna be tasty,
01:11:34what's our kind of base desire.
01:11:36But if we're picking for our future self,
01:11:39well, suddenly we are much more influenced
01:11:41by what we think we should do.
01:11:42And you take that experiment and then you think about,
01:11:48well, how would you behave if you're a low alcohol beer
01:11:52or a healthy food versus fast food.
01:11:57And if you want people to do the right thing,
01:12:00they don't try and influence them
01:12:01when they're sitting down at a restaurant just about to eat
01:12:04because they're gonna be driven by their appetite.
01:12:09What you wanna do is reach them maybe
01:12:11when they're doing their online shop.
01:12:13Now that you're on tesco.com and you're ordering your food
01:12:15that's gonna arrive in a week, then this is the chance
01:12:18to get them buying the low fat meats or the vegetables
01:12:21or the low alcohol lager.
01:12:23This changing in time perspective
01:12:26definitely changes how we behave.
01:12:28- I would love to see what the straight up impact
01:12:31of online shopping has done to the kind of baskets
01:12:34that people select from the same supermarket
01:12:37by simply not walking around, by not getting it immediately,
01:12:40by having this delay.
01:12:41- Yeah, and I think that experiment would suggest
01:12:45this ordering of healthy food.
01:12:48I think the other one, the biggest principle
01:12:50for in behavioral science is people do what's easy.
01:12:52So I wonder if you get a much narrower range of foods
01:12:57people buy week to week.
01:12:59'Cause once you've set up your basket,
01:13:01it's so easy just to repeat it.
01:13:03- It's almost like a membership.
01:13:05There's a cost associated with picking something new
01:13:09whereas there's a cost when you're going
01:13:11around the supermarket, there's a cost associated
01:13:13with picking something old or something new
01:13:15'cause you're already walking.
01:13:16- Yeah, and it's a brilliant example of people
01:13:21aren't just influenced by the end product.
01:13:23They're interested in how the choices are structured,
01:13:27what time the food's gonna be delivered,
01:13:29what's easy to spot, what's visible.
01:13:32These things that should be peripheral have a big impact.
01:13:36- I guess as well, this is also why bananas
01:13:40and pecans aren't put on the cashier shelves
01:13:45right at the very end just as you're going out
01:13:47because it's, oh yeah, I'm really gonna just treat myself
01:13:51to that banana that's not the way that we think.
01:13:54- Yeah, there is an argument called moral licensing
01:13:59that if we feel we've done something virtuous,
01:14:02we then overcompensate.
01:14:05So there's some quite scary studies done by,
01:14:10I'm not 100% sure how to pronounce his name.
01:14:11I think it's Chiu, it's kind of C-H-I-O-U.
01:14:15I think he might be from Taiwan
01:14:17and he recruited a group of smokers, that's key,
01:14:21and then he gives everyone sugar pills.
01:14:25That's right, he gives everyone sugar pills
01:14:26but some of them are told it's a course of vitamins.
01:14:29Some are told they are sugar pills.
01:14:31Then he invites them,
01:14:34after doing this two-week course of supplements,
01:14:37he invites them into his lab
01:14:39and they fill out this very long, boring form
01:14:42and they have to write down all the things
01:14:44they did over the two weeks.
01:14:46And they claim that the people
01:14:49who think they've taken the vitamins,
01:14:50they note down they've done more binge drinking,
01:14:54more smoking, less exercise.
01:14:57So it kind of suggests this moral licensing point
01:15:00because they think they've had the vitamins
01:15:02they overcompensate elsewhere.
01:15:04But that's still claim data.
01:15:06The clever bit is what Chiu does is monitor people
01:15:11as they're filling in these very boring surveys.
01:15:13And he just records whether or not the smokers
01:15:17light up a fag while they are filling in the survey.
01:15:20And the smokers who think they took the vitamins,
01:15:22they are 50% more likely to light up
01:15:24than the smokers who didn't.
01:15:26So that to me is the powerful bit of the study.
01:15:29Not just listening to claims,
01:15:30but looking at actual behavior.
01:15:32And that's quite a powerful overview of this idea
01:15:34that if we think we behave virtuously,
01:15:37we overcompensate elsewhere.
01:15:39Now with a supermarket, think about the design.
01:15:41What do you see as soon as you get into the supermarket?
01:15:45You got all your fresh fruit and veg.
01:15:47Now from a practical perspective,
01:15:48it's the very worst place to have it
01:15:50'cause it's at the bottom of your trolley now
01:15:53and you're gonna put all your heavy items on top.
01:15:54But what it does is allow people to feel they're virtuous
01:15:59and then they overcompensate with the crisps and the beer
01:16:01and the snacks later on.
01:16:04So I think you're right that placing those treat items
01:16:07right at the end, which I think has been banned actually
01:16:09in Britain, I think is a use of one of these biases.
01:16:14Maybe not for people's best interests though.
01:16:18- So it's been banned to put fast food--
01:16:20- So I thought though, I'm expecting it.
01:16:23I thought I'd heard either a discussion of that happening
01:16:26that you couldn't have the little bars now
01:16:28by the checkouts full of high fat, high salt,
01:16:33high sugar items.
01:16:33I think that's-- - In an attempt
01:16:34to try and make people healthier?
01:16:36- Yeah, yeah, a tiny little nudge.
01:16:39- Wow, isn't it interesting 'cause there's no way,
01:16:41if you were to put granola bars or fruits or whatever,
01:16:46your total market cap for that,
01:16:50total sales for that organization is going to go down.
01:16:53You're simply going to be able to convert people
01:16:54less effectively with that type.
01:16:56So I understand what you're doing
01:16:59and sometimes interventions are needed
01:17:02in order to be able to sort of help people
01:17:04make the right choices and stuff.
01:17:06But this is a, that's a big hammer blow to the supermarkets.
01:17:11It's a big hammer blow.
01:17:14We've already found the way to make this work.
01:17:16We found the most effective, we split tested.
01:17:18Do you not think we'd be putting apples out there
01:17:20if we couldn't get people to sell more apples
01:17:22than we could to do the chocolate bars?
01:17:24- I mean, the only thing I would say,
01:17:26so I'm realizing now, I've kind of straight,
01:17:30I think that's what happened.
01:17:31We should probably check as well.
01:17:34But you certainly could use a lot of the principles
01:17:37we've been discussing to sell more apples.
01:17:40What I find fascinating is the tactics
01:17:43that are currently used are almost the complete opposite
01:17:46of what the experimental data suggests should be done.
01:17:50So there's an amazing study by Bradley Turmwald
01:17:53in a cafeteria over six or seven weeks,
01:17:56and he randomizes the labels on the vegetables.
01:17:59So sometimes he will try and push the health benefit.
01:18:02So you might see something like carrots
01:18:05in low calorie citrus glaze.
01:18:07And I think something like 150 units
01:18:10of the vegetable are sold each day.
01:18:13Other days, same recipe, same vegetable,
01:18:17but he emphasizes the indulgent benefits.
01:18:19That's something like sizzling citrus, tangy carrot.
01:18:24And what he finds there is sales go up
01:18:26to about 230 units a day.
01:18:28It's a 41% increase.
01:18:31So his argument is just because something is healthier,
01:18:35it doesn't mean the message you should lead with
01:18:37is its healthiness.
01:18:38That I think is a massive problem
01:18:43with a lot of communications for virtuous goods.
01:18:46People keep on banging about the health benefits
01:18:48and the ethics behind these things.
01:18:52But actually, if you want to actually change behavior,
01:18:55the better thing to do certainly with food
01:18:56is to focus on--
01:18:58- Make it sound indulgent.
01:18:59Well, this is what--
01:18:59- It takes it indulgent and tasty.
01:19:00- Make it sound enjoyable.
01:19:01- This is what grenade bars did.
01:19:03Grenade bars didn't,
01:19:04I don't know what they did
01:19:06when they first, first, first launched,
01:19:08but certainly now looking at them at no point
01:19:10are they saying better for you bar.
01:19:12That's communicated through the macronutrients.
01:19:14That's the fact that it's got protein in.
01:19:17I guess the sort of broader brand messaging
01:19:19contributes to that.
01:19:20What they're saying is this is a collaboration
01:19:22with creme egg or this is a collaboration
01:19:25with Oreo or Jaffa cake or whatever.
01:19:27And they're exclusively competing
01:19:31on the luxury and the indulgence.
01:19:33- Yeah, and you go from,
01:19:36you go into things like beers with low levels of alcohol.
01:19:41What they tend to do is talk about being non-alcoholic beers.
01:19:43They are emphasizing the absence of the fun bit.
01:19:46Where they're emphasizing the deprivation.
01:19:50There's a few examples where they've lent into the appeal.
01:19:55It didn't succeed,
01:19:56I think that was because of the formulation,
01:19:58not the branding.
01:19:59But I loved it when Budweiser did prohibition brew.
01:20:02It made it sound like kind of exciting and fun and glamorous.
01:20:06There's a beer in Britain called Infinite Session,
01:20:08emphasizing how you can stay in the pub with your mates
01:20:11longer with this 0% lager.
01:20:13So I think moving away from a kind of hair shirt,
01:20:17it's advertising for healthy foods and less damaging drinks.
01:20:22That's something we've got to be thinking about more.
01:20:25- On the other side of the equation,
01:20:26what about Pringles?
01:20:27- What's so good about them?
01:20:31The Pringles, the genius of Pringles was their line.
01:20:34Once you pop, you can't stop.
01:20:37And it's one of the most bizarre studies
01:20:40in behavioral science.
01:20:42It's about this idea called the Keats heuristic.
01:20:45I think there's some kind of Keats line where he says,
01:20:50"Truth is beauty and beauty is truth."
01:20:51Something like that.
01:20:53He's saying that we mistake beauty for truthfulness.
01:20:57So there's two academics in the '90s
01:20:59called McGlone and Toffig-Bash,
01:21:02and they create some fake proverbs.
01:21:05And for every proverb, they create two versions.
01:21:08So the non-rhyming version might be, "Woes unite enemies."
01:21:13The rhyming version would be, "Woes unite foes."
01:21:16Now, you get, say,
01:21:18if we were both taking part in this experiment,
01:21:20you might read, "Woes unite foes,"
01:21:21and you're asked to rate how believable this statement is.
01:21:25I would see, "Woes unite enemies,"
01:21:27and I rate how believable I think the phrase is.
01:21:31Now, we've both received essentially the same information.
01:21:34All that's changed is the packaging.
01:21:36You get this nice rhyme.
01:21:38I get this non-rhyming version.
01:21:40What happens is that the people who hear the rhyming version,
01:21:45they rate the believability of the statement 17% higher
01:21:49than the people that hear the non-rhyming version.
01:21:52People are conflating ease of processing with truthfulness.
01:21:56Now, the interesting bit is if you then go back
01:21:59to all the participants and you say to them,
01:22:02"Why did you think this statement was believable?
01:22:04"Did the rhyme or absence of rhyme influence you?"
01:22:09Every single participant bar one denied
01:22:12that the kind of form, the rhyme,
01:22:15the ease of processing affected them.
01:22:16They all said, "No, no, I was making a judgment
01:22:17"based on the inherent information."
01:22:20So it's one of these great examples of tiny little changes
01:22:24about the fluency, the ease on our ear.
01:22:29Tiny little changes have a big effect,
01:22:30but people are really low to admit
01:22:33that's what influenced them.
01:22:35- Isn't this what happens with split-brain patients
01:22:39and where they'd stroke the hand of one side,
01:22:43"Why did you get up to go and do this thing?"
01:22:45And then they confabulate some sort of an idea.
01:22:47I'm aware that it's different in terms of the mechanism,
01:22:49but the point being people are usually pretty good
01:22:54at coming up with a logical explanation
01:22:57for why they did the thing,
01:22:58even if they were manipulated to do the thing,
01:23:00because the sort of required discomfort
01:23:05at the admission of deception or self-deception
01:23:08is pretty costly socially.
01:23:10- Yeah, so I'm not overly familiar with those studies.
01:23:14I know they're kind of headline results,
01:23:16but I think you're absolutely right
01:23:18that they will be set up in such a way
01:23:21that the experimenter knows what generated the answer,
01:23:25but the patient will just come up with this plausible,
01:23:29much more rational sounding reason
01:23:31to maintain kind of a sense of face
01:23:33and being a sensible person.
01:23:35And that's absolutely true
01:23:38with a whole swathe of behavioral science studies.
01:23:40A key theme of behavioral science
01:23:43is that if you ask people
01:23:46why they bought a particular protein bar
01:23:48or a pair of trainers,
01:23:51the problem is they'll give you loads of answers,
01:23:55but most of them are just plausible post-rationalizations.
01:23:58They're not a reflection of what actually motivated them.
01:24:01So there's this amazing psychologist called Timothy Wilson
01:24:03at the University of Virginia,
01:24:05and he has a brilliant book called "Strangers to Ourselves."
01:24:08And essentially, the whole book is a series of studies
01:24:10showing that people don't know their own motivations.
01:24:12So one of the worst things businesses can do,
01:24:15and it accounts for an awful lot of poor communications,
01:24:18is ask people what they want
01:24:20and then take those answers at face value.
01:24:22- And people don't know what they want.
01:24:24What's that line from Henry Ford?
01:24:26If I'd asked the customer what they wanted,
01:24:28I'd have given them a faster horse.
01:24:29- Yeah, yeah, yeah, yeah.
01:24:30Or slightly more modern one than one.
01:24:331960s, there's a David Ogilvy line
01:24:35who was this kind of amazing ad guy.
01:24:37And he said, "Consumers don't think how they feel.
01:24:40They don't say what they think,
01:24:41and they don't do what they say."
01:24:43So I think the best entrepreneurs,
01:24:46the best ad people have known this for a long while.
01:24:49But the problem is the average advertiser
01:24:51finds it easy to run a survey,
01:24:54and then it sends them off in the wrong direction.
01:24:57- Why do you get interested in Ignaz Samuelweis?
01:25:00'Cause I studied him for a talk
01:25:02that I gave a little while ago,
01:25:04and I thought he was fascinating,
01:25:05but I didn't immediately see the correlation
01:25:09between your world and...
01:25:11- Yeah, so- - Samuelweis.
01:25:13- I was, while Claire and I were looking at
01:25:17kind of ways to end the book,
01:25:21and I came across this story of Samuelweis.
01:25:26And so if people haven't heard of it, 1840s,
01:25:29he is a doctor in Vienna,
01:25:32kind of reasonably recently trained in the 1840s.
01:25:36And he's shocked when he arrives at the hospital
01:25:40at the proportion of women who die in childbirth.
01:25:44Now it's astronomical, you know, some of the wards,
01:25:47you would probably be better playing Russian roulette.
01:25:49You've got 10, 15% of people dying in labor.
01:25:53Spends an awful lot of time trying to work out why this is.
01:26:00And one of his findings is that the wards
01:26:04that are run by midwives
01:26:07tend to have a much better survival rate
01:26:09than the wards that are run by doctors.
01:26:12And one of the things that the doctors do differently
01:26:14from nurses is that they will do autopsies.
01:26:17So they will come straight from cutting up a body
01:26:20to then deliver a baby.
01:26:23And Samuelweis wonders if they are bringing
01:26:26what he calls cadaverous particles to the mom-to-be.
01:26:31So he starts getting doctors to wash their hands in chlorine.
01:26:38Now they've got to scrub them, in his words,
01:26:39till the stench of kind of putrid decay has gone.
01:26:43They have to scrub their hands clean
01:26:44and then they can help with labor.
01:26:48And the death rate plummets.
01:26:50It goes from 10, 12% to 3%.
01:26:53So this is, in Samuelweis' eyes, phenomenal.
01:26:56Surely everyone is going to adopt this behavior.
01:27:01But to his absolute horror,
01:27:03lots of doctors don't jump at the opportunity
01:27:07to save more of their patients.
01:27:08They are amazingly resistant
01:27:11to accepting this new technology.
01:27:15And essentially, it drives Samuelweis basically mad.
01:27:19- He dies in an asylum, right?
01:27:20- He does.
01:27:21His wife, I think, probably for a good many reasons,
01:27:24tricks him, says they're going out on a day's escapade.
01:27:28She takes him to the asylum.
01:27:31And when he's being put in the asylum,
01:27:32this is the horror of it all,
01:27:34he, unsurprisingly, doesn't want to go.
01:27:36There is a struggle, there is a fight,
01:27:38and he gets injured, he gets cut.
01:27:40And he dies of a sepsis
01:27:42that his research had been showing how to--
01:27:45- No way, I didn't know that.
01:27:47Holy Jesus. - Absolutely horrible story
01:27:49on so many reasons.
01:27:50But it became famous as not just,
01:27:54it's probably the most extreme example.
01:27:56But again and again, there are all sorts of discoveries
01:28:01that people, even though they have this amazing impact,
01:28:06existing practitioners won't accept.
01:28:10So essentially, the Samuelweis reflex is the argument
01:28:12that there's a tendency to ignore new ideas
01:28:16if they challenge existing ones.
01:28:19Put yourself in the shoes of a doctor
01:28:22who Samuelweis is telling.
01:28:24Now, for the last 10, 20 years,
01:28:26you've been killing lots of your patients
01:28:28by bringing disease to them.
01:28:29It's hellishly hard to accept that.
01:28:32So we kind of thought this was a brilliant place
01:28:35to end the book because what we want to say to marketers
01:28:40was all these principles
01:28:43aren't just about influencing consumers.
01:28:48You need to use the very principles
01:28:51that successfully persuade consumers.
01:28:52You need to use those principles
01:28:54when you are trying to sell your ideas internally.
01:28:57Don't just think you have a great idea,
01:29:00everyone's gonna rush to accept it.
01:29:01All these principles are discussed
01:29:03like scarcity or social proof.
01:29:05You can use them when you are trying
01:29:07to persuade people within your own organization.
01:29:10So it felt like a very good way
01:29:11of bringing the book to a close.
01:29:13- Yeah, conceptual inertia is a term
01:29:18that I learned a few years ago from this guy
01:29:20who researches the historical progress of ideas.
01:29:24So this is exactly what he's looking at.
01:29:26And he was looking at heliocentric model
01:29:29of the universe, for instance.
01:29:31So cool story on that.
01:29:35A hundred years before Galileo proclaims his insight,
01:29:40you have Copernicus, full century before.
01:29:44But his great work, which is called Da Revolutionibus,
01:29:47he kind of sort of squeaks it out basically on his deathbed.
01:29:51He's had this realization for most of his life,
01:29:53but he doesn't do it because he's afraid of the church.
01:29:56He's afraid of retribution.
01:29:57He sort of leaks this thing out.
01:29:58A full century later, they still haven't caught up.
01:30:01So Galileo sees the same thing
01:30:04and he proclaims it from the rooftops.
01:30:07He's forced to recant under threat of torture,
01:30:10spends the rest of his life under house arrest.
01:30:13He's completely castigated.
01:30:15And the Cassandra complex, as it's known,
01:30:18is justified, the fact that Copernicus didn't proclaim it,
01:30:23is justified by the treatment of a guy a full century later
01:30:27who did the exact same thing.
01:30:29So if you were to point a finger at Copernicus
01:30:31and call him a coward,
01:30:32he could point the finger at Galileo and say,
01:30:34oh, was I just prescient?
01:30:35- Yeah, it's a worryingly regular occurrence.
01:30:41And the only thing I would say
01:30:44with the Copernicus-Galileo story
01:30:46is there could be a danger, or my semivoice one,
01:30:49of thinking, oh, you know, this happened 500 years ago
01:30:53or 200 years ago.
01:30:54We are more sophisticated now.
01:30:56Surely we are better now.
01:30:58But there's recent-ish examples.
01:31:01I think it was Barry Marshall in Australia,
01:31:05like a very junior doctor
01:31:06at this kind of not very prestigious university.
01:31:11He works out that ulcers are not caused by stress.
01:31:15They are caused by a bacteria.
01:31:18I think it might be H. pylori or something like that.
01:31:22No one will listen to him.
01:31:23Because surely if a massive discovery like this
01:31:26was gonna take place, it'd be at Harvard or Oxford.
01:31:28So what Marshall does is the most dramatic demonstration
01:31:33he can to prove his theory.
01:31:34He drinks loads of this bacteria,
01:31:37then gets an ulcer almost immediately,
01:31:40and then he cures himself by taking antibiotics.
01:31:44And it took that kind of theater,
01:31:47putting his own life on the line,
01:31:48to persuade people this was a--
01:31:50- Well, that is putting your something
01:31:51where your mouth is, I suppose.
01:31:53- Yes, yes.
01:31:54- Richard Shorten, ladies and gentlemen.
01:31:56Richard, you're amazing, mate.
01:31:58I think you're fantastic.
01:31:59Have you got, are you blogging?
01:32:01Have you got a substack?
01:32:02- I've now kind of moved mainly to LinkedIn.
01:32:06So what I'll try and do is post,
01:32:08not about family or awards or that stuff.
01:32:12It'll always be about the application of behavioral science.
01:32:14- Have you considered,
01:32:15have you considered some sort of newsletter-y type thing
01:32:19like a substack?
01:32:20- So newsletter, I have done.
01:32:22And I kind of quite reasonably regularly tell people
01:32:25where they can get that.
01:32:26So on my company website, Astro10.co.uk,
01:32:31you can sign up for a newsletter,
01:32:33and then every fortnight we'll send people a digest,
01:32:36a brief digest of an experiment,
01:32:39an example of people using it,
01:32:40and then the implications.
01:32:42- Unreal, and new book.
01:32:44- A new book, yeah.
01:32:45So co-authored with Michael Aaron and Flickr.
01:32:47It's called "Hacking the Human Mind."
01:32:4917 brands, each chapter's about a brand.
01:32:52And then we look at two, maybe three,
01:32:55behavioral science principles that brand has used
01:32:57to power its success.
01:32:59- You're great, dude.
01:33:01You're great. - Oh, thanks, Chris.
01:33:02- I look forward to whatever you do next.
01:33:05And let me know when you come over to Austin,
01:33:07'cause I need to hang out.
01:33:08- I will do, I will do.
01:33:09- Appreciate you. - Thank you very much.
01:33:10- Congratulations, you made it to the end of an episode.
01:33:14Your brain has not been completely destroyed
01:33:15by the internet just yet.
01:33:17Here's another one that you should watch.
01:33:20Go on.

Key Takeaway

Richard Shotton explains how brands can leverage deep-seated behavioral biases, such as the illusion of effort and price relativity, to bypass logical resistance and influence consumer perception and behavior.

Highlights

The Goal Dilution Effect suggests that adding secondary benefits to a product can actually weaken the perceived effectiveness of its core benefit.

The Concrete Language Effect demonstrates that people are four times more likely to remember physical

Timeline

Goal Dilution and the Power of Focus

The discussion begins with the success of Five Guys, noting their relentless focus on a limited menu compared to competitors like McDonald's. Shotton introduces the "Gold Dilution Effect," citing a study where adding a secondary health benefit to tomatoes reduced the believability of the primary heart health claim by 12%. This suggests that claiming to be a "master of all trades" actually undermines a brand's credibility in its core offering. The conversation shifts to how businesses should communicate a single, powerful reason to believe rather than a laundry list of features. The speaker also notes that people want outcomes, such as finishing a task, rather than abstract mediators like "focus."

Abstraction vs. Concrete Imagery in Marketing

Shotton explains the importance of using concrete language over abstract terms to ensure brand stickiness. He cites a 1972 study by Ian Begg which found that people remember physical descriptions, like a "white horse," significantly better than abstract ideas like "basic truth." Successful brands like Apple and Red Bull use this by promising "1,000 songs in your pocket" or "wings" rather than technical specs or vague energy claims. Using language that the human brain can visualize makes the message far more memorable and effective. The section concludes that translating abstract objectives into physical metaphors is a hallmark of elite copywriting.

Price Relativity and the Red Bull Strategy

This section delves into how consumers perceive value through relativity rather than absolute utility. Shotton uses Red Bull as a prime example, explaining how its unique tall, thin 250ml can broke the comparison set with cheaper, squat soda cans. By changing the physical form and context, brands can shift the consumer's mental benchmark and justify a higher price point. Other examples include Seedlip, which positioned itself as a premium spirit rather than a cheap cordial to maintain high margins. Grenade protein bars are also mentioned for moving out of the chocolate category to command a 4x price premium.

The Illusion of Effort and AI's Impact

The speaker explores the "Labor Illusion," where consumers value products more if they believe significant effort went into their creation. He cites Baba Shiv’s wine study, showing that a higher price tag actually improves the neurological experience of the product. James Dyson's famous 5,127 prototypes are discussed as a classic marketing tool that builds a perception of premium quality through transparency of effort. The conversation touches on AI, noting that products labeled as AI-generated often suffer a 61% drop in purchase intent because they are perceived as low-effort. To counter this, businesses using AI must reframe their messaging to focus on the human effort required to build the AI protocols.

The Pratfall Effect and the Genius of Guinness

Shotton discusses the "Pratfall Effect," where admitting a minor flaw makes a brand or person appear more human and appealing. Guinness is highlighted for its iconic "Good things come to those who wait" campaign, which turned the negative of a slow pour into a signal of high quality. The speaker cites Elliot Aronson's 1966 study where a quiz contestant became 45% more appealing after spilling coffee on himself. This transparency builds trust and makes the brand's positive claims more believable to a cynical audience. The section also mentions how websites like Skyscanner may use "loading bars" to simulate the effort of searching, thereby increasing the user's perception of thoroughness.

Social Signaling and the Luxury of J-Lo

The dialogue moves into "Costly Signaling," the idea that expensive marketing acts as a screening mechanism for product quality. Shotton explains that hiring a celebrity like Jennifer Lopez (J-Lo) sends a signal that a brand is so confident in its product that it is willing to risk a massive upfront investment. This is contrasted with distinctive marketing, such as Liquid Death's use of heavy metal aesthetics in the normally "virtuous" water category. By being distinctive and humorous, brands capture the finite resource of human attention. Humor is noted as the ultimate way to make a consumer "turn towards" an advertisement rather than ignore it.

Habituation, Scarcity, and the Pumpkin Spice Latte

The concept of "Habituation" explains why Starbucks only sells the Pumpkin Spice Latte for a limited time. Shotton references a study on massage chairs which proved that brief interruptions in a pleasurable experience actually increase the overall enjoyment and rating. By removing a product from the market, brands prevent consumers from becoming desensitized and allow anticipation to rebuild. This is the same principle behind the success of Wordle, which limits users to one game per day to create a sense of scarcity. Scarcity remains one of the most powerful psychological drivers, as humans are hardwired to want what they might lose.

The Messenger Effect and Influencer Legitimacy

Shotton breaks down the "Messenger Effect," which dictates that who says something is often as important as the message itself. Credibility, neutrality, and relatability are the three pillars that make a messenger persuasive, as shown in the 1953 Hovland and Weiss study. Modern brands are moving toward deeper creator partnerships, such as Marques Brownlee's role at Ridge Wallet, to borrow this legitimacy. The section also covers the "Penny a Day" effect, explaining why breaking down a $60 price into three payments of $20 (Klarna) makes a purchase feel much smaller. This cognitive bias occurs because the brain focuses on the immediate number rather than the total sum.

Loss Aversion and the Ostrich Effect

The speakers discuss "Loss Aversion," the psychological principle that the pain of losing is twice as powerful as the joy of gaining. A study on loft insulation showed that telling homeowners they were "wasting" 75 cents a day was 60% more effective than telling them they would "save" that amount. However, Shotton warns about the "Ostrich Effect," where too much fear or shame causes people to ignore information entirely. This is observed in investors who stop checking their portfolios when the market crashes. Effective marketing must balance loss-framed messaging with easy-to-implement solutions to avoid triggering this avoidance behavior.

Choice Architecture and Moral Licensing

This section explains "Moral Licensing," where people feel that doing something virtuous gives them permission to indulge later. A study showed that smokers who thought they took vitamins were 50% more likely to smoke, believing they had a health "buffer." Supermarkets use this by placing fresh produce at the entrance, allowing shoppers to feel virtuous before they reach the junk food aisles. The speaker also discusses the "Keats Heuristic," where rhyming slogans like Pringles' "Once you pop, you can't stop" are perceived as 17% more truthful. This happens because the brain mistakes the ease of processing a rhyme for the inherent truth of the statement.

Internal Marketing and the Semmelweis Reflex

The brief concludes with the tragic story of Ignaz Semmelweis, a doctor who discovered that hand-washing saved lives but was rejected by the medical community. This "Semmelweis Reflex" illustrates the human tendency to ignore new ideas that challenge existing beliefs or status. Shotton argues that marketers must use behavioral science not just for consumers, but to sell their ideas internally to their own organizations. The discussion emphasizes that great ideas require theater and social proof to overcome conceptual inertia. Shotton ends by recommending his new book, "Hacking the Human Mind," which analyzes these principles across 17 major brands.

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