We are only just the tip of the Iceberg...

Our industry may be very important to businesses as we communicate their message to the people they want to say it to and how. However, understanding the whole business and their objectives is vital in order to get our job right. This can be seen as the 'Iceberg Analogy', where you must know about the whole Iceberg even if we only work at the tip of it. 

The bottom of the Iceberg is 'Business Objectives', where we understand how the business functions, what is important to them and what they want the business to achieve - this could be by way of profit, growth, ROI, shareholder value etc. 


The middle of the Iceberg represents the marketing objectives - this can be to influence sales, market share, price, product and distribution. Understanding the marketing objectives will help you gear your campaign to obtain these goals whilst keeping campaigns in-line with the business objectives.


The tip of the Iceberg represents the communication objectives (this is where we come in), which will involve influencing people's feelings, attitudes, opinions and behaviours. This will communicate the messages that fundamentally derive from the business objectives and which were refined and contextualised within the marketing objectives.


All three sections of the iceberg need to flow harmoniously whereby each section is in line with the one before - more and more agencies are focusing too much on the tip of the Iceberg whereby they lose sight of the fact that the communications strategies are used to deliver the key objectives of the business as a whole. Immersing yourself in the whole business will allow agencies to understand what they are trying to achieve, and in turn will create a better campaign in order to meet their objectives and deliver a healthy ROI. Maintaining a close and well-managed relationship with the client and fully understanding their business is essential in order to create strong future campaigns.

You choose first, then I will...

The whole concept of behavioural economics is the study of people and what makes them behave the way they do when it comes to their purchasing decisions. Marketing used to be governed by the classic economist view of 'people will try to get the most for the least effort', whereby people make rational decisions 100% of the time. It has come to light that this is not strictly true; people can make irrational decisions. Behavioural economics believes that decision-making is full of conscious and unconscious factors - which is why marketeers will look at many psychological ways to influence their audience to purchase their product. People are heavily influenced by what we think other people are doing (social norms) and how choices are presented to them (priming) - which is where the line between choice architecture and behavioural economics blurs. There are various ways of presenting choices to the consumer, which I will outline below;

Framing

This focuses on the belief that we make decisions on relative and not absolute information. I'll outline a basic example to prove this point based on a real American magazine;

If you go onto their site and see these options:

Online only - $59

Online and magazine - $125

People naturally go for the cheaper option as that is the most rational decision as you have nothing to base the value of the magazine on. In fact, 68% of people went for the subscription of 'Online only'. Now if we add another option into the mix:

Online only - $59

Magazine only - $125

Online and magazine - $125

The original options have not changed, but now the choice becomes more relative and people think that the third option is the better deal as it seems you get online for free. As soon as this other option was added, 16% of people went for online only and 84% went for the combined package.

Apple are also very good at this, no one realistically needs a storage device which will hold up to 140,000 songs of which you actively listen to, but as the choice is there, people will go for it.  

Apple's iPod Touch data selection

Additionally, in the restaurant world, owners will put a significantly expensive dish on the menu so that the comparison of the other dishes look cheaper and thus increasing average order value - a clever little trick to make you pay more. 

Automatic to executive decisions

Fly on the Urinal concept

People often repeat behaviours and some behaviours are done on auto-pilot. making people aware of their behaviours can help change the way you act. Which is why a lot of governmental campaigns will draw attention to your behaviour, so as by making you aware of it, you can change it. 'The fly in the urinal' concept has been proven to work - if you put a fly in the urinal, a man will look at it and suddenly be drawn to their behaviour, thus making them aim better and essentially not 'piss on the floor'. In the words of my manager ' it is why we see strategies which recognise our own habitual nature: in this instance trying to raise a decision to lock your care from the ‘automatic’ mind to the ‘executive’ mind, or unconscious decision making and conscious ones'.

Scarcity value

People place more value on things they believe are hard to come by or not a lot of. Diamonds are not allowed to come into the UK by the bucket load, there is a restriction in place on how many we can import - which is why people believe they are harder to come by and thus put this 'scarcity value' on the diamonds (this makes a lot of revenue within the jewellery business). Similarly, a Chanel nail varnish had a limited edition colour called 'Jade', as soon as they were hard to come by and celebrities were seen sporting the colour, the varnish were being sold on eBay for £85! Essentially, it is only a nail varnish where other brands offer very similar colours. 

Other scarcity tricks are things like 'closing down sales', 'private member club' etc, all tricks to get the consumer to place a higher value on the products - very prevalent within the luxury goods market. 

Social Herding

The Asch Test

We all think we are individual, special and unique but unfortunately this is not true.... it is in our nature to conform to social norms and do what everybody else is doing. The 'Asch test' developed in the 1950s was designed to do this (see photo), people were invited into a meeting where they were shown this picture and were asked which line A,B or C was the same size as the line on the left? It is C, right? Well they were told that they could only choose between A & B, even though it is quiet clearly C. Everyone in the meeting followed everybody else and no one was brave enough to go with what they thought intuitively, rather what everybody else thought. This is still very true today, looking at the army, people are being groomed to harm people and inflict violence which goes against our instinct, but they feel as everyone else is doing it, they have to too.

Loss Aversion

People place higher value on things they already have than what they haven't got. Confused? It is the £100 lost vs £100 gained. People have emotional value on things they own, so people put extra effort in preventing from losing things. An experimental study was conducted where people were given mugs, they had 1 cup of tea from the mug before they were asked 'how much will you sell your mug for?', whilst other people who had not been given the mug were asked 'how much would you pay for the mug?'. The people who owned the mug, on average, said almost double the cost than those who did not have the mug - and they only had 1 cup of tea from it!

Loss aversion techniques include: money back guarantees and introductory free trials - as people already own it, they don't want to lose it.

Chunking

People are more likely to complete tasks which have been broken down or made easier. Banks are notorious for creating rigorous advertising campaigns about promoting the 'easyness' of switching bank accounts with them - they will do it all for you and you do not have to do anything. This attitude wins them over a lot of new business as it simplifies a complicated process. However, people have to want to change in the first place which is another massive hurdle banks have to jump over as many people will only switch banks 1-2 times in their life. 

This is very basic overview of behavioural economics, but shows you how relevant it is in today's society. As consumers, we are constantly being analysed and studied as to our behaviour and what makes us buy certain products. There is so much information out there now, its scary! Soon hypnosis will be widely used and they can just hypnotise us to buying instead of relying on our own decision-making processes.

For further reading on this topic: 

Behavioural Economics: Red hot or red herring - IPA Publications

Freakonomics - Steven D. Levit and Stephen J. Dubner (I personally think this is an excellent book) 

Facebook-rexia

One of the many experiences at the agency is that we get to go to cool places like the Facebook offices in London. We got an opportunity to find out a bit more about the world of Facebook straight from their employees.


Firstly, lets recap some facts about Facebook;
845 million monthly active users at the end of December 2011.
Approximately 80% of monthly active users are outside the U.S. and Canada.
483 million daily active users on average in December 2011. 
425 million monthly active users who used Facebook mobile products in December 2011.

Mark Zuckerburg's First profile

Mark Zuckerburg's very first Facebook page contained very basic information, it was designed for 'elevator chat', information that you would usually share with people when you are just getting to know them; Name, where do you work, how old are you etc. Now, however, Facebook pages allow for a much deeper conversation where the it limitless to the information you can convey: what music you like, activities you have been doing recently, interactions with other friends, photos of what you have been doing etc. You can imagine that the demand for content is massive, therefore there are some very smart engineers, in America I presume, managing all this data.... a tricky job I would think....

Now more than ever, people check Facebook almost as soon as they get up, average time is something ridiculous like 5 minutes. This Facebookrexia is very much a very wide spread condition - in fact, a Burgler got caught by police after he had left him self logged in after checked his Facebook account on the house computer - true story!

Facebook has also allowed for social and political movements around the world. The people of Colombia formed a march against the Colombian rebel group FARC, the Facebook group started in Colombia which then transpired around the world. The day of the march, hundreds of thousands of people marched in Colombia, whilst other marches took place around different cities around the globe; Canada, London etc. The response was unprecedented, all from just one Facebook page. This goes to show how successful the social network is at providing a global platform to express your anger and feelings. 

The point of our visit was not only to be able to 'check-in' at Facebook, but we were also there to see how Facebook can be incorporated into our advertising campaigns and how it can help. Facebook is social by design - puting people at the beginning of the campaign process. A good example of this is the Photo ability that Facebook enabled on the site. At the time, Facebook was diversifying into a very cluttered market where companies like Flickr and Photobucket led the way. The photo tool was really bad, clunky and compressed the image so much that it was so small and very low res... and despite all this it was the top site for uploading photos as Facebook did something very different from their competitors - they allowed people to tag the people in their photos, which generated a method of sharing the photos easily. 

Another advancement in this social process is the link-up of Ticketmaster and Facebook. In the U.S at the moment, Ticketmaster has teamed with Facebook so that when people are buying a ticket to an event they can see which friends are going and where they are sitting! Brilliant! We are tentative for it to be released over here... another addition to our social interactions! 

Ticketmaster with Facebook social plug-in

With all this focus on social interaction and the fact that Facebook has an army of data available to them, they have a lot of well-targeted advertising propositions. Facebook in fact  have their own targeting tool, whereby any member on the public can list to advertise on Facebook. The targeting is so specific that you as a user can enter in a demographic and Facebook will generate the number of people available in that demographic - the below picture shows that there are 9,697,280 men aged 25-44. This can be a perfect addition to any on-line advertising campaign whether it needs to be very specific or generic targeting.

Facebook Targeting Tool

The only difference with advertising with Facebook, is the creative has to be right. A Facebook profile is a very personal thing to many people, where loud adverts would not be welcomed. Instead, Mark Zuckerburg has made a point that advertisement on Facebook cannot be intrusive - the adverts have to blend into the profile and cannot be obvious - the picture to the left shows a good example from Ben and Jerry's. At the moment you have many adverts down the right hand side of the profiles which are by no means inconspicuous, but Facebook is starting to get clever with their advertising.... if a user becomes a fan of a page or expresses a 'like' for a certain product, that brand can create adverts that will appear in their news feed - equally they can do this even if they have not become a fan but likely to like the brand. In terms of the creative, content is everything! The most successful adverts on Facebook are usually video content or photos - this creates a better reaction from their audience and in turn has the opportunity for huge amounts of earned media. 

Brands can also create pages for their consumers to engage with, this is the only chance where brands can have a much deeper conversation with their customers. This is a brilliant opportunity to build brand relations and get people to 'fan' your brand. Obtaining 'fans' though, are not the be all and end all as some brands focus to heavily on getting fans - the focus should also be driving people to purchase your product and keep them returning.

Some successful pages are the Skittles Pages http://www.facebook.com/skittles?ref=ts and Kit-Kat Chunky http://www.facebook.com/kitkatuk.

It is fair to say a lot got learnt at our trip to Facebook and we wish them the very best of luck in this exciting time for them.

Lesson 12: The legend is true, Sean Parker (founder of Napster) removed the 'The' from the title 'The Facebook'. 

Fiona, me and Chiara at Facebook, London