Tag Archives: Ads

Mass Moralizing

When a McDonald’s ad shows a dad and a young daughter bonding in the drive through lane, all smiles and excitement, it is claiming that eating at McDonald’s with one’s child is a way of giving to the child, perhaps repaying the child for neglect, a way to foster warm family relationships. We do not measure this claim against the real world, we measure it against our desires for this to be true, for it to be possible. (more)

That is Phil Hopkins, author of the new book Mass Moralizing. His main argument is we like to buy from producers who offer sermons with which that we want to identify, even when the connections between product and sermon are very weak. Donating to charity is pretty much the same process. More examples from the book:

In a television add for Jeep … we are shown a series of images, beginning with a close-up of a television remote, and proceeding through shots of various locations in the home, office, and gym in which some for of television is present displaying images the marketer clearly wants us to find both trivial and … representative. … “Jeep … ‘Going’ reality isn’t capture by a hidden camera. It doesn’t come in episodes either. You see, I don’t live to live through anyone, ever. So while everyone waits to see the next best `this,’ or an unbelievable ‘that,’, here’s the reality: there’s no `re-run’ when you’re living in the now. So while you tune in, I’ll be somewhere, getting out.” The final image is a white screen onto which fades a Jeep Liberty … and the words: “i live. i ride. i am. Jeep.” …

A mom and a little boy are shown eating a bowl of breakfast cereal together and the little boy asks, “Mom, did nana ever give you Cheerios when you were a little kid?” The mom responds, Yeah, she did.” The boy asks “Were Cheerios the same back then?” The mom responds … “Cheerios has pretty much been the same forever.” The boy looks contemplative for a moment, then says, “So … when we have Cheerios, it’s kind of like we’re having breakfast with Nana.” The mom … tears up at this point, and she nods and says, “Yeah.” She kisses the boy on the head and says again, “Yeah.” Then the Cheerios branded yellow appears on the screen with the single word: “Love” with a single cheerio for a period. …

The first commercial in the [Be A Pepper] campaign opens with a scene in an urban commuter rail station filmed in shades of gray with the camera focusing on one of the anonymous commuters, pausing and standing as if unsure how to proceed, and holding a Dr Pepper can (the only object with color in the scene). A modified version of the ironic Sammy Davis, Jr song, ”I Gotta Be Me,” begins playing, and the Dr Pepper commuter significantly takes a sip from the can and begins to tear off his shirt and tie, invoking the common superhero motif, revealing a red T-shirt underneath with the slogan “I’m One of a Kind.” The “hero” of our ad then begins to move through the crowd with new urgency and purposive air, again, with no clear destination signified, and an unfocused gaze. … As he passes others, they are inspired to tear off their own outer clothing to reveal different versions of the same “I am ..” T-shirts, sporting slogans that identify them by means of stereotypical categories: e.g., “Dreamer” worn by a street musician, “Cougar” worn by a somewhat older woman in tight skirt and high heels, “Fighter” worn by Paralympics athlete John McFall, … and two T-shirts with the slogan “I am One and Only” worn by identical twins jumping rope. …

Dove … let us hear Florence tell us that beauty is everything. … In allowing her to tell us this, Dove tells us this. Such a claim is not in “debate” with society’s definition of beauty. .. It doesn’t offer a counter argument. It merely encourages us to think ourselves as closer to the ideal than we currently do. … However powerful the messages, though, at best, Dove just shows us the problem, not what we can do about it, at least not directly. Its invitation to buy a bar of soap or a tube of cream in order to help make the world a better place is, unlike FEED or TOMS, clearly secondary, if not even more tertiary, and it doesn’t make it easy to see how its “giving” works. Rather, the Campaign is an explicit invitation to join a moral tribe, one that is configured almost completely on the basis of vague, if powerful, sentiments, and a general agreement with their “concern.”

It should be obvious in each of these cases that viewers are persuaded to associate products with attitudes and outcomes that have little to do with those products, in the absence of such ads.

Here someone who writes music lyrics saying something similar: logic has little to do with when we embrace the lyrics of a song:

Music and words together exist in the end in an older realm of magic and enchantment, a place where the nursery rhyme and the church hymn and the pop single all meet. They work as spells do – that is, either entirely, or not at all. We sing and the magic door swings open, or it doesn’t, and there’s no explaining it. … Music is so emotionally overwhelming that it pushes the discursive and explanatory roles of language aside – and it is part of the job of the libretto writer to get out of its way. …

Small fragments of sound and sense strike our hearts as shrapnel strikes our skin. They lodge and wound us, independent of their intended trajectory. The audience responds or it doesn’t. The audience is less like a crew of supercilious analysts and more like a magnet set to one pole or the other. … Our minds make meaning out of music by not making too much meaning out of it. One learns as a librettist to tiptoe to the edge of argument, and then back off to the limbo-land of implication and indirection. (more)

Since other people who hear the same ads and songs tend to make the same vague associations that we do from them, our instincts do help us by telling us what songs, products, charities etc. to associate with in order to make good impressions on others. (Hopkins says the same goes for stories, media articles, and school lessons, which rely on the same process). The problem is that this often has little to do with the actual affects of using products, donating to charities, etc. If you wanted to have accurate beliefs about those things, well all this should just terrify you. Unless you are some kind of alien, unmoved by what moves most folks, you have to realize that your mind isn’t at all set up to infer the true affects of using products, or donating to charities, etc. Beware, and avoid hearing the siren’s song, or the siren’s ad.

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Why Do Firms Buy Ads?

Firms almost never have enough data to justify their belief that ads work:

Classical theories assume the firm has access to reliable signals to measure the causal impact of choice variables on profit. For advertising expenditure we show, using twenty-five online field experiments with major U.S. retailers and brokerages ($2.8 million expenditure), that this assumption typically does not hold. Evidence from the randomized trials is very weak because individual-level sales are incredibly volatile relative to the per capita cost of a campaign — a “small” impact on a noisy dependent variable can generate positive returns. A calibrated statistical argument shows that the required sample size for an experiment to generate informative confidence intervals is typically in excess of ten million person-weeks. This also implies that selection bias unaccounted for by observational methods only needs to explain a tiny fraction of sales variation to severely bias observational estimates. We discuss how weak informational feedback has shaped the current marketplace and the impact of technological advances moving forward. (more; HT Bo Cowgill)

More striking quotes below. The paper offers management consulting and nutrition supplements as examples of other products that people rarely have sufficient evidence to justify. In fact, I wouldn’t be surprised if this applied to a large fraction of what we and firms buy: we buy because others say it works, and we don’t have data to disprove them.

More striking quotes:  Continue reading "Why Do Firms Buy Ads?" »

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In Praise Of Ads

As Katja and I discussed in our podcast on ads, most people we know talk as if they hate, revile, and despise ads. They say ads are an evil destructive manipulative force that exists only because big bad firms run the world, and use ads to control us all.

Yet most such folks accept the usual argument that praises news and research for creating under-provided info which is often socially valuable. And a very similar argument applies to ads. By creating more informed consumers, ads induce producers to offer better prices and quality, which benefits other consumers.

This argument can work even if ads are not optimally designed to cram a maximal amount of relevant info into each second or square inch of ads. After all, news and research can be good overall even if most of it isn’t optimally targeted toward info density or social value. Critics note that the style of most most ads differs greatly from the terse no-nonsense textbook, business memo, or government report that many see as the ideal way to efficiently communicate info. But the idea that such styles are the most effective ways to inform most people seems pretty laughable.

While ad critics often argue that ads only rarely convey useful info, academic studies of ads usually find the sort of correlations that you’d expect if ads often conveyed useful product info. For example, there tend to be more ads when ads are more believable, and more ads for new products, for changed products, and for higher quality products.

Many see ads as unwelcome persuasion, changing our beliefs and behaviors contrary to how we want these to change. But given a choice between ad-based and ad-free channels, most usually choose ad-based channels, suggesting that they consider the price and convenience savings of such channels to more than compensate for any lost time or distorted behaviors. Thus most folks mostly approve (relative to their options) of how ads change their behavior.

Many complain that ads inform consumers more about the images and identities associated with products than about intrinsic physical features. We buy identities when we buy products. But what is wrong with this if identities are in fact what consumers want from products? As Katja points out, buying identities is probably greener than buying physical objects.

So why do so many say they hate ads if most accept ad influence and ads add socially-valuable info? One plausible reason is that ads expose our hypocrisies – to admit we like ads is to admit we care a lot about the kinds of things that ads tend to focus on, like sex appeal, and we’d rather think we care more about other things.

Another plausible reason is that we resent our core identities being formed via options offered by big greedy firms who care little for the ideals we espouse. According to our still deeply-embedded forager sensibilities, identities are supposed to be formed via informal interactions between apparently equal allies who share basic values.

But if we accept that people want what they want, and just seek to get them more of that, we should praise ads. Ads inform consumers, which disciplines firms to better get consumers what they want. And if you don’t like what people want, then blame those people, not the ads. Your inability to persuade people to want what you think they should want is mostly your fault. If you can’t get people to like your product, blame them or yourself, not your competition.

Added 10a: Matt at Blunt Object offers more explanations.

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Advertising Podcast

Katja Grace and I did another podcast, this time on advertising. Audio here.

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Brands Show Identity

Marketers have long noticed puzzlingly high levels of brand loyalty:

Consumers appear to have high willingness to pay for particular brands, even when the alternatives are objectively similar. The majority of consumers typically buy a single brand of beer, cola, or margarine, even though relative prices vary significantly over time, and consumers often cannot distinguish their preferred brand in blind “taste tests”. Consumers pay large premia to buy homogeneous goods like books and CDs from branded online retailers, even when they are using a “shopbot” that eliminates search costs. A large fraction of consumers buy branded medications, even though chemically equivalent generic substitutes are available at the same stores for much lower prices.

Brand loyalty is big barrier to innovation, and an important reason why inefficient firms manage to survive so long.

Brand preferences create large entry barriers and durable advantages for incumbent firms, and can explain persistence of early-mover advantage over long periods

In the latest American Economic Review Bronnenberg, Dube, & Gentzkow offer new clues:

Variation in where consumers have lived in the past allows us to isolate the causal effect of past experiences on current purchases, holding constant contemporaneous supply-side factors such as availability, prices, and advertising. … 60 percent of the gap in purchases between the origin and destination state closes immediately when a consumer moves. … The remaining 40 percent gap between recent migrants and lifetime residents closes steadily, but slowly. It takes more than 20 years for half of the gap to close, and even 50 years after moving the gap remains statistically significant. … The relative importance of brand capital is higher in [product] categories with high levels of advertising and high levels of social visibility. (more)

This ad effect is puzzling because:

Large literatures have measured the effects of advertising, but these studies often find no effects [of ads on sales], and the effects they do measure are estimated to dissipate over a horizon ranging from a few weeks to at most five or six months.

Let me suggest that an important use of brands is to create and signal identities. We create a coherent understandable idea of the kind of person we are, integrated with the kind of products we use, and we prefer not to change that concept, so that others can continue to rely on their expectations about us. We are willing to pay higher prices, and neglect info about quality, in order to keep a persistent style and appearance. So brands are naturally more important for products we use that others see more, and where ads have made connections to identity more salient.

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No DVR Ad Effect

Digital video recorders don’t reduce the (possibly zero) effect of ads.

For years, digital video recorders like TiVo, which give viewers the option to skip commercials, have had television advertisers worried. But a study … rebuts the conventional wisdom that the recorders (DVRs) dampen sales. … Matching … each household’s shopping history one year before and two years after the TiVo’s arrival, the researchers found no effect on the purchase of advertised brands, even among those who used DVRs the most. (UofC Magazine Jan’11p25; the study)

Remember: the usual empirical result when people study “how does A influence B” is “no effect.”

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Professors Progress Like Ads Advise

A system designed to advise a captive audience about the features and quality of available products would look a lot more like Consumer Reports than the world of advertising we see.  But this situation isn’t especially puzzling – we understand that neither those who make ads nor those who watch them have product information as their primary goal.   Ad makers want to sell, and ad watchers want to be entertained.   

Observers often have trouble, however, understanding how academia could consistently fail to achieve useful intellectual progress.  Since academia is such a decentralized competitive system, people figure that any failures to make progress must be the unavoidable error that appears in any system designed to explore the unknown.  Since we can’t know what we will discover until we discover it, complaints about progress are compared to second-guessing Monday-morning quarterbacks.   

But in fact, academia is no more about making useful intellectual progress than advertising is about informing consumers.  Professors seek prestigious careers, while funders and students seek prestige by association.  Academics talk and write primarily to signal their impressive mental abilities, such as their mastery of words, math, machines, or vast detail.  Yes, contributing to useful intellectual progress can sometimes appear impressive, but the correlation is weak, and it is often hard to see who really contributed how much.   Progress happens, but largely as a side effect.   

Continue reading "Professors Progress Like Ads Advise" »

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Calibrate Your Ad Response

Imagine you are about to watch a car ad.  You now have expectations about various aspects of the car, including its reliability, comfort, acceleration, cool factor, and so on.  These all combine into your total estimate of how much the car would be worth to you.  After you watch the ad, your expectations about many aspects may change.  You may think it more cool and reliable, but less comfortable and slower.  Sometimes you will think the car is worth more, and some times less, than you thought before.

If you expect that watching a car ad will tend to make you like that car more, raising your car value estimate, you are biased!  You should adjust your reaction tendencies until you expect no average change in your value estimate.  It can be reasonable to react positively to the fact that a car company choose to show you a car ad, but only if you react negatively when they choose not to show you an ad.

This is a very general result: you should expect any piece of information to make zero average change in any estimate of yours.  This applies to any aspect of any product, applies to any kind of ad or pitch, and any kind of signal or or clue you might get about anything.   

Why would car companies show ads to well-adjusted ad watchers?  Because even if ads do not change average estimates, they can increase estimate variation.  If most people’s estimates are below the threshold for wanting to buy the car, then increasing estimate variation should increase the fraction of people who want the car enough to buy it.  If most people already think a product is good enough, however, its sellers should avoid showing variation-increasing ads to well-adjusted watchers. 

For a two-sided contest, such as a political race or legal trial, the tentative loser wants variation-increasing pitches, while the tentative winner avoids such things.  So, a side’s relative silence can signal its confidence in being a tentative winner.

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No Death of a Buyerman

Do ads bias beliefs?  Many think so, and want to regulate ads.  And yes, many ads don’t seem to offer much useful info.   Here are four ad theories:

  1. Exploiting bias – the small leaks of our ancestors’ biases are now torn into gaping holes.
  2. Burning money – a company willing to waste money on ads signals confidence in its product.
  3. Identity – ads associate a product with a personal style, with which people want to identify.
  4. Hidden info – if you look closely, you will see that ads do in fact have lots of useful info.

Here is important clue:  Every transaction has both a buyer and a seller.  Yet we hear much more about salesmen, and how to sell, than we do about buyermen and how to buy.  There are few thoughtful plays about "The Death of a Buyerman" or books on "How to be won as a friend and influenced by people."  Why?

Buyers are usually more uncertain about their value than sellers are about their cost.  So both sides tend to talk about buyer value.  Thus to the extent that individual ability is relevant, whether a sale happens is more clearly a signal of seller ability than of buyer ability.  This suggests a fifth ad theory:

5. Seller signaling – buyers and others like to see and affiliate with impressive sellers.

Just as we like to see and affiliate with sports stars, musicians, actors, writers, and professors, we like to see and affiliate with people who have impressive abilities associated with sales.  Watching ads or listening to a salesman’s pitch may be like watching a sports star, and buying a salesman’s product may be like getting a star’s signature or t-shirt.   

Under this theory, we need no bias to want to watch ads that tell us little about a product, and then buy that product.  There might still be reasons to regulate such ads, but they would not be reasons of bias. 

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Ads that Hurt

In some earlier posts I talked about the idea that advertisements can be privately profitable for firms but still be socially harmful due to uninternalized negative effects on their targets.  In the comments, Glen Raphael asked me for an example.  Here are a few of my favorites.

1. JIF peanut butter.  The slogan "choosy moms choose JIF" is famous in marketing circles for having been extremely effective.  The reason, of course, is that the implied corrolary to the slogan is "crappy negligent moms who don’t care about their kids give other brands of peanut butter."  The harm here is that it gets moms into the habit of thinking that the place to concentrate their efforts to be better moms involve choice of peanut butter, instead of things that might actually work.

2. Disney.  One could write a whole book about how horrifying Disney is (I think maybe someone even has).  But my specific example is a commercial for Disneyland where the camera is in real tight on the face of an ecstatic awestruck looking kid.  After a few seconds, the parents chuckle knowingly and say something like "Timmy, this is just the entrance, let’s go inside the park."  The idea is that Disneyland isn’t just a fun place to eat junk food and go on roller coasters and stuff, it’s a source of wonder; the very essence of childhood.  The harm here is obvious.

3. Any one of a million beer commercials.  Beer commercials overwhelmingly involve attractive women.  This is either because the advertisers want you to believe that drinking their beer will actually improve your chances with attractive women, or at least they want you to associate drinking their beer with being as attractive to them as you wish you were.  I think it’s pretty clear that encouraging young men to think of women as ornaments that go nicely with getting loaded is not a recipe for subsequent success in matters of the heart, not for the men and certainly not for the women.

I could go on.

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