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Contents
Appendices 31
1: Agencies represented at the IPA workshops 31
2: Who’s on the IPA Behavioural Economics Task Force (BETF) 31
We’re all Choice Architects now
When I became President of the IPA, I resolved to make the central plank
of my two-year term an inquiry into Behavioural Economics and its
possible application to marketing.
It has always been a mystery to me, since we are an industry that claims to work
on the basis of human insights, how little collective effort we apply to
understanding people and their actions. I saw the IPA as the perfect place to
Rory Sutherland
IPA President establish a culture of investigation which could supply learnings to the industry as
Executive Creative Director a whole – just as the Institute of Aeronautical Engineers presumably serves people
and Vice Chairman,
Ogilvy UK
engaged in aeronautical engineering.
There are several good reasons why our first enquiry into Behavioural Economics
concentrates on this concept.
First of all, it seems that an understanding of ‘how people choose’ is pivotal to the
understanding of marketing. Yet, given its obvious importance, the area of study
has been dangerously overlooked by marketers so far: instead of investigating the
various cognitive and practical limitations to our decision-making abilities
(‘Bounded Rationality’, as Herbert Simon called it), we have lazily adopted a model
for consumer decision whereby brand preference is assumed to translate perfectly
into purchase behaviour.
The standard marketing model seems to assume that we hold a kind of brand
beauty pageant in our heads, simultaneously and even-handedly evaluating all the
options available to us and choosing whichever brand we think most shapely. To
use the language of architecture, it assumes a ‘single room’ approach to selection
– where we line up every option and finally arrive at an optimal solution, with
appropriate weightings for all the variables involved in the decision.
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We’re all Choice Architects now
The appeal of various routes may depend not only on where we want to go, but
on what we have seen on the journey so far. And we may choose to turn left or
right not based on which route is ultimately better 100 yards on, but based only on
what we can see 20 feet ahead of us.
The bounded way we make decisions serves to create spectacular biases – which in
many cases may colour people’s judgment long before any individual brand even
comes into play. To use alcoholic drink as an example, there are absolutely
magnificent sherries and fortified wines available, yet because we unthinkingly
make a category decision to turn right as soon as we see the sign pointing left to
‘Sherry, Port and Madeira’ we will mostly never get the chance to discover a
Methusalem, a vintage Bual or a great Manzanilla. Equally, although most wine is
dismally bad, because we instinctively turn to the wine aisle when hosting a party,
we will end up forcing lacklustre red wine down our guests’ throats, when
everyone in truth would have been happier drinking Pisco Sours – which never
even entered our frame of consciousness.
(I use this ordering bias to my own advantage when I go on holiday. Just as a great
sherry can cost less than a bad wine, a good villa on the unfashionable island of
Madeira costs less than a bad villa on the fashionable island of Ibiza.)
Birds Eye has been a victim of the same phenomenon. It did not matter how high
the quality of individual brands of frozen food might be, middle-class housewives
had stopped turning down the freezer aisle in supermarkets – rejecting a whole
category. (This in itself should force us to ask a question. When so many decisions
take place before the consumer has even reached the level of brand selection, why
does almost all marketing activity seek to influence brand perception alone? Why
are there so few category campaigns for frozen foods, vests, sherry and other
overlooked and unfashionable categories?)
Of course, other brands have cleverly profited from the framing effects of Choice
Architecture. Indeed, if you can reinvent your comparative set, you can transform
your fortunes. Anyone with a Nespresso machine may pay a 2500% premium for
their coffee per cup – but because the comparative set seems to be Starbucks
rather than Nescafé (and helped by the fact that we don’t buy Nespresso in a jar)
we don’t seem to mind. Equally, Rolls Royce found the best way to sell their
£300,000 cars was not at car shows (where they seemed expensive) but at yacht
shows where, alongside an $8m yacht, they seemed like a bargain.
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We’re all Choice Architects now
Then there is the question of immediacy bias – that in taking any decision we are
disproportionately affected by the ease and attraction of the first step, rather than
by the long-term consequences of the decision.
This is why channel preference exercises such a powerful effect on our behaviour.
If I like using text messages and hate using the phone, a service which lets me
order pizzas by text will perhaps triple the number of pizzas I order from you,
versus a phone-only competitor. The hassle of using the phone may be trivial, but
it is immediate.
To my surprise a few days later there arrived a package containing not the ten
envelopes I had expected, but dozens of the things – well over 100. But this wasn’t
the really odd thing. The really odd thing was that, five years later, I had used them
all. Probably 100 of them were sent by Special Delivery. Having these envelopes
increased my use of Special Delivery by about 500%.
I am not sure that this bias does not apply to far more momentous decisions than
what we buy. Women are traditionally more eager to marry than men. Is this
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We’re all Choice Architects now
If people entered the married state not by spending a month discussing floral
arrangements and corsages, but by spending a month being bought cars and
consumer electronics while enjoying plentiful and ambitious sex, would the world
be full of men desperate to marry at 18, while blaming their reluctant girlfriends
for their ‘fear of commitment’?
That’s the wonderful thing when you discover this area of inquiry. The concept of
Choice Architecture, as with so much in Behavioural Economics, is beautifully
scalable – you can use it to answer massive questions, or you can equally use it to
answer life’s trivial details. It’s that which makes it so valuable.
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We’re all Choice Architects now
The simplest examples of this bias are the Primacy and Recency effects. When
listing items to someone there is a bias that makes people more likely to recall the
first thing on the list (the Primacy Effect) and the last thing on the list (the Recency
Effect). This effect is enshrined in advertising practice – it is why spots at the
beginning and end of TV breaks command a premium.
The influence of these two effects is also well-known to anyone who visits
restaurants that inform you of the specials of the day verbally. If you order a special
at all, it tends to be the first one mentioned, or the last. The ones in the middle are
easily forgotten. Is it coincidence that waiters start with the lobster and end with
the most expensive dessert on these lists? (This also explains the agency maxim
when pitching – “either present first or last”.)
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We’re all Choice Architects now
If neutral choice is impossible, then we are all Choice Architects. We are Choice
Architects in our personal lives when we try to influence our children to do right,
when we make arrangements with friends and family or discuss and negotiate
with colleagues. Those of us who work in advertising are also Choice Architects by
profession.
The conclusion made by behavioural economists working in this area is that this
obliges us to consider Choice Architecture. To refuse to be aware of something
that must happen is foolish and likely to be irresponsible.
This is an important rejoinder to those who feel Choice Architecture will only lead
to manipulation. The reverse is true. To remain ignorant of Choice Architecture is
to commit a sin of omission in place of a sin of commission. When we allow the
possibility of a poor decision being made, we do a disservice to the consumer, to
ourselves and to our clients’ brands. Choice Architecture is a responsibility as much
as it is an opportunity – brands do best when their consumers do well – and good
Choice Architecture increases the chance of achieving this.
Thomas Hobson ran a livery stable in Cambridge in the 16th century in what is
now Hobson Street. To make sure his horses were rotated sufficiently he imposed a
simple allocation procedure – riders were given the choice between the horse
nearest the door or no horse at all.
There is no doubt that this had a clarifying effect for anyone finding themselves in
Cambridge and in need of a horse. Although Hobson’s Choice is often used to
describe ‘rough and ready’ choices that favour those setting the terms, it is
important to note that the effect is not simply exploitative or one-way.
This approach means that riders arriving at any time have an equal chance of
getting a ‘good’ horse (assuming the horses’ quality and ability vary enough for
this perception to be useful). In contrast, those who operate a first-come-first-
served approach will be dismissed when customers believe that all the good horses
will have gone.
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We’re all Choice Architects now
It means that rank and privilege do not guarantee a better horse (surely a benefit
to lower ranks in the 16th century). A hard system can be fairer in other regards.
For example, it means that the stable owner is not involved in endless debate and
argument. This makes the stable more efficient, and one would expect that some
of the benefits of this efficiency will be passed on to consumers in terms of quality
or price.
The Choice Architecture of exclusion is more likely to succeed (or at least impose)
in conditions where a supplier has a monopoly or near-monopoly position in a
market. Presumably Hobson would have had to change his practices if Cambridge
was awash with stables offering better horses and operating along different lines.
Limiting choice
Even when the austere measures of Hobson’s Choice do not apply, minimising and
limiting choice is often a key element in the successful construction of Choice
Architecture.
Many globally successful brands have thrived by limiting their offer to a single
product, often in a single format. Take WD-40, Red Bull or Angostura Bitters, for
example. These brands can and do draw strength from enforcing simple choice
architectures. They sharply define the brand’s offering to the public. It helps them
focus what the business must deliver to support the brand.
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We’re all Choice Architects now
This wisdom points to a clear area of application for Choice Architecture – the
analysis and desirability of brand extensions. When brands proliferate choice they
risk the adverse cost of presenting a poorly conceived Choice Architecture.
Thinking of poor Choice Architecture as a cost on a brand acts as a useful counter
to the belief that brand extensions are a ‘free’ way of exploiting a brand. The costs
of brand extension are well-known: they risk switching people to the new variant,
encouraging cannabalisation, or confuse people to the point where they switch
away from the brand altogether. Choice Architecture lets us see these not merely
as undesirable side-effects, but highly likely outcomes given the way choice
actually works.
Consider, for example, a food brand that has an original product high in fat. In
response to the consumer desire for a healthier lifestyle the brand introduces a
low-fat variant. The brand hopes to benefit from increased sales as a result of
increased consumer choice. However, it may have failed to factor in a parallel,
widely held consumer belief that low-fat variants may not taste as good.
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We’re all Choice Architects now
The brand’s Choice Architecture now contains two products that both say
unflattering things about each other – the new variant says the original is
unhealthy; the original reminds consumers that the new variant will not taste as
good. The company behind the brand should not be surprised if public regard for
the brand diminishes overall, and some consumers opt out altogether. Consumers
react not only to the new product, but to the new information about the relative
values at play in the market.
This second effect can be just as powerful as the isolated effect of encountering a
new product. It is, of course, a double-edged sword. Poor launches confuse and
dilute meaning in a market. Strong new products redefine a category, guiding
consumers and establishing lucrative leadership for brands. The mistake comes
when brands concentrate on their advantage in a brand extension, and not the
consumers’ needs. This is to measure the power of a brand by its ability to do
anything. Conversely, consumers value a brand’s ability to do some clearly defined
and understood things well. (The re-branding of struggling TV channel UKTVG2 as
‘Dave’ shows how powerful a renaming can be to Choice Architecture. Without
Dave could there have been the sublime success of Dave Ja Vu – a simple but
effective brand extension.) 1
This example also brings out another important lesson – even when Choice
Architectures are very simple they are still dynamic, and prone to outside
influences. Each new element of choice ripples through the system, often with
unintended consequences, unless we understand the potential repercussions.
These patterns may be complex and bewildering. It is tempting to retreat into the
safe and linear view of brand preferences formed in splendid isolation. This at least
feels manageable. But it is a blinkered refuge that fails to see the world as it is.
Default choices
Another fundamental principle of Choice Architecture is the default choice. The
suggestion that there is a standard choice is a powerful influence for many people.
1 “UKTV – Dave: The Home of Witty Banter”, Hannah Yelin, Jonathan Wise, Clare Phillips, Mills Willis, Emma Boston, Liz Chandler,
Luke Hales, Julia Jordan, Sarah Goldman and Selma Ali, Institute of Practitioners in Advertising, Gold, IPA Effectiveness Awards 2008
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new rules will presume individuals are willing donors (although family will still need
to give final permission). This so-called ‘soft’ opt-out will greatly increase the
availability of organs and follow the higher patterns seen in, for example, Spain
and Belgium. 2
When faced with complex decisions – whether the complexity is moral, medical,
commercial, social, personal, etc. – people look for cues to norms and typical
behaviour to understand what to do. Default choices are one such cue. People,
not unfairly, feel that typical choices are more than likely good choices.
Similarly, when faced with difficult trade-offs between price plans or offers,
consumers are hugely reassured if there is a guarantee that their option will
default to the cheapest available in the absence of any decision. They do not want
to feel that defaults will work to cost them money. People look to defaults as
safety nets. People are best served when default options are set to protect their
best interests (and, where possible, those best interests are the ones people would
choose for themselves).
There are, therefore, two things of note in relation to default choice. First, no
Choice Architecture is fixed; people can and do learn how to interpret, resist and
play systems. If they feel the default choice is against them in some significant way
people can and do change their behaviour. Second, default choices are strong, but
not insurmountable. A brand seen to abuse such default choice will be punished in
the long term by some, or all, of their customers. A prime example is the growing
constituency of people unwilling to submit to the series of occasionally
disadvantageous choices low-cost airlines frame so as to raise revenue, e.g. fees
for using credit and debit cards. While some may embrace the transparency of the
charges and enjoy working out how to get the lowest possible fare, for some this
series of punitive defaults create a barrier.
2 Although default choices can guide behaviour they should not be seen as a panacea. Those looking for a nuanced discussion of the
importance of having supporting infrastructure and the like in place should look at ‘The potential impact of an opt-out system for organ
donation in the UK: an independent report from the Organ Donation Taskforce’ published in 2008.
3 There are some business models that do not rely on happy customers. These are based on the expectation of there only being a
single encounter. Examples include tourist trap restaurants, clip joints, bootleg perfume vendors, spammers, confidence tricksters and
hustlers of all kinds. It is salutary to note that these are simply illegal or attract aggressive regulation (e.g. many countries reliant of
tourism try to regulate prices and practices to remove the threat of tourists being ‘ripped off’ and this damaging the destination’s good
name). No-one likes people who abuse Choice Architecture.
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Extra choices
Behavioural Economics provides many examples of the impact of extra choice on
how people choose. The most celebrated example is that produced by Dan Ariely,
and based on a subscription offer to The Economist. 4 However, this example
needs careful consideration before it is applied to marketing and advertising. The
simple lessons it appears to offer are, in fact, complex and therefore worth
examining at some length. Here is a recap of the experiment:
Faced with a two-way choice between an online subscription for $59 and a print
and online subscription for $125, 68% of people choose the cheaper offer.
However, when a third option is introduced, the outcome is changed. The third
offer is a print only subscription for $125.
Needless to say, no-one chooses this offer. Everyone willing to spend $125 wants
to get the now ‘free’ online subscription.
What is counter-intuitive, at first, is that now 84% of people choose this option
and only 16% of people choose the online only subscription. The third choice has
the effect of re-framing the other offers.
For The Economist this means the total value of subscriptions from 100 subscribers
rises from $8,012 to $11,444 – an increase of 43%.
What does this mean for the consumer? Presumably they are happy with their
choices in both scenarios. They have chosen a subscription which represents good
value for them. As they are asked to, people try to make the ‘best’ decision. In the
first set-up most people choose to reduce the cost of the subscription by altering
the media in which they consume it (getting the lowest price is the ‘best’ option).
In the second set-up most people pursue value for money, choosing the extra
value of having two ways to access the magazine (getting more at a higher price is
now the ‘best’ option).
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We’re all Choice Architects now
The truth for the serious marketing practitioner lies in the reverse direction when
we consider how sensible and expected these decisions are.
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This experiment is a narrow and closed example. People are asked to consider
which subscription they would choose. They are not asked to consider whether
they really want a subscription. They are not encouraged to think how likely they
are to read the magazine. They are not encouraged to think what else they could
do with the money. Yet in real life all these options are likely to assert themselves.
This would reduce the power of the dummy option. Our lessons should come from
the Choice Architectures that are open to a greater or lesser degree. The lessons of
deliberately closed Choice Architectures do not fully reflect the decisions our
consumers must make.
Many retail outlets are designed to create closed Choice Architectures as far as
possible. Car dealerships only sell one brand of car, despite the fact the consumer
might find a stockist of multiple brands of a particular format (e.g. estate cars)
more useful. As a result most car buyers expect to visit more than one dealership.
Likewise, pubs typically only provide a single brand of stout, cider or lager – and at
one time they excluded real ale altogether. This practice so offended beer drinkers
that they formed the Campaign for Real Ale and obliged pubs to carry guest ales.
The popularity of shopping malls is, in part, because they allow people to easily
move between retail outlets devoted to one brand. Although we can work to
optimise choice architecture within our own brand it is more difficult for Choice
Architecture, on its own, to influence how consumers relate to competing brands.
This is where the art of positioning kicks in. Although brand owners can act as
Choice Architects, they need to remember that people are not obliged to choose
within the architecture they present. They can simply choose to shop elsewhere.
The real power of Choice Architecture is not its ability to coerce, but its ability to
persuade people that this is the best way to choose. The marketer’s skills are tested
when positioning a brand or offer within the context the consumer experiences it
– and making that brand stand out in the consumer’s own terms. Choice
Architecture gives new vigour and validity to the vibrant instincts Ries and Trout so
ably expressed in their papers in the 1970s. 5
5 See Trout, J., (1969) ‘“Positioning” is a game people play in today’s “me-too” market place’, Industrial Marketing, Vol.54, No 6,
(June 1969), pp.51-55. Ries, A. and Trout,J. (1981) Positioning, The Battle For Your Mind, Warner Books – McGraw-Hill Inc., New York.
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enshrine Choice Architectures. In all of these there is very little hidden about the
Choice Architecture. On the contrary, it is something open and easily accessible to
consumers.
At launch Daewoo promised buyers that their showrooms would have fixed prices
and no salesmen. For people for whom the rigmarole of car purchase with pushy
salesman and haggled prices was a deterrent, this new form of Choice
Architecture in the car market (the pricing equivalent of Hobson’s Choice) was
powerfully attractive. 6
Direct Line promised customers a better price by cutting out the middle man, but,
at the same time, they only sold their own products. What consumers saw, and still
see, is a clear Choice Architecture that promises value while it rejects the
traditional broker’s promise of finding the perfect product through wide choice. 7
The easyJet approach, where you can bypass the travel agent – but only by visiting
a site which sells only easyJet flights – is another example of people willingly
forsaking choice in return for some other incentive. So, too, are schemes such as
Amazon Prime and Ocado on Demand, where customers pay the company up-
front for a free-delivery saving which will pay back only if they use the service
heavily.
6 “Advertising That Builds Strong Consumer Brands? That’ll Be The Daewoo”, Rachel Walker & Chris Forrest, Institute of Practitioners
in Advertising, IPA Effectiveness Awards 1996.
7 Direct Line also shows the effect of shifting channel on the number of people using a brand. See “Direct Line Insurance: Direct
Marketing & Brand Building is Possible”, Andrew Ingram, Institute of Practitioners in Advertising, IPA Effectiveness Awards, 1992.
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The importance of Choice Architectures also explains one of the great phenomena
of marketing in recent years – the growth of the price comparison site. These sites
have produced some of the most liked (comparethemarket.com) and most disliked
(gocompare.com) campaigns of 2009. The online and digital environment means
consumers demand the ability to choose between offers and brands. This creates a
series of brands that exist only to enable these comparisons (bewilderingly, some
offering to compare the comparisons).
The role of an agency to not only help design the comparison so it fulfils
consumers’ needs, but also to make sure that consumers make the right choice
between comparison sites themselves, is indicative of what the future holds.
Right choices
Many of these are also examples of the distinction Barry Schwartz makes between
maximising and satisficing when making choices. Maximising is the desire to
always make the best possible decision. This can lead us into complex Choice
Architectures that allow us to appraise and evaluate every possible variable.
If you want to consider how complex this could be, imagine you are buying a
laptop computer. Even if you stick to a basic list of salient points – price bracket,
size, speed, memory and operating system – before you choose a brand, you will
find each possible combination producing dozens of possible options. Even
apparently reducing these by picking one brand over the others will still produce
many options. This is frustrating for the consumer, but what is more frustrating is
that much of the labour used to make these decisions will not help people make a
noticeably better choice. What is more, the misspent effort in getting to their
eventual selection undermines their confidence in their final choice.
8 For an insight into how the economics of the digital world collide with the traditional tasks of advertising in this market read
“Comparethemarket.com – where love was the answer”, George Everett, Account Planning Group – (UK), Silver, Creative Strategy
Awards, 2009
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choice you need and that will leave you content, not necessarily the choice that is
objectively perfect.
Brands we know, when they work well, let people feel satisfied with their choice.
What we tend to underestimate is the amount of effort people have to go through
to make a choice. We discount not only the time it can take, but the emotional
effort that can be involved. It is not just, for example, that filling in an application
for a mortgage is complex, it is also emotionally fraught – it is, after all, an
agreement to borrow an amount of money it will take most of your working life to
repay. We need to understand and reflect this. In particular, we need to
understand the role Loss Aversion plays – in other words, to what extent people
make choices not in pursuit of the very best, but in a bid to assuredly avoid the
dreadful. (McDonald’s is almost never the best restaurant in any large town but, in
a strange town, it is almost certainly the best place to eat if your main concern is to
avoid food poisoning or wallet-gouging extras.)
Better choices
The main opportunity for the advertising industry is to understand how Choice
Architecture can help consumers make better choices.
It is clear from the examples cited that Choice Architecture impacts product
design, packaging, distribution, sales, promotions, incentives to trade, and
advertising. Choice Architecture helps refine the content and context of the entire
marketing decision-making process. It reconfirms that no element should be
decided without reference to the way consumers actually think, rather than how
we would like them to think.
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Four workshops were conducted at the IPA in the weeks commencing 16th
and 23rd November 2009. Over 120 people attended from a wide spectrum
of agencies. In three of the four workshops, participants were first
introduced to the concept of Choice Architecture and the main principles
relating to the topic, then divided into six groups in order to explore
different areas of opportunity and varying sets of barriers.
Janet Hull
IPA Consultant Head of The first exercise played to the positive and required them to think about what
Marketing Choice Architecture could do for them. The second played to the negative and
asked for their views on what needed to change before they could become
successful Choice Architects. Both approaches were investigated in relation to six
areas: briefs; client relationships; inter-agency relationships; creative work;
evaluation; and remuneration.
The fourth workshop, with creative directors and creative group heads, was more
discursive and led by Rory Sutherland, with the support of Nick Southgate.
Most importantly we learned just how great a provocation to our industry Choice
Architecture is. Thinking about Choice Architecture forces us back to the simplest
and most fundamental challenge we face – to influence choice.
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It is, therefore, a challenge to the oldest media where one might be selling off the
page, and to the newest digital channels where one is often selling on the page.
We can no longer see ourselves as the people who inform decisions. We create
decisions, we guide people through decisions. We can make decisions easy and
intuitive – or make them difficult and effortful.
No-one in the industry can afford to ignore this provocation to see our challenges
anew. In the boardroom there needs to be the will to embrace new understanding,
and the confidence to shed the old. On the office floor executives embroiled in the
day-to-day production of advertising can use the insights of Behavioural
Economics and Choice Architecture to bring new insight and focus to every detail
of what we do – potentially adding value far beyond the role of creative
communications.
These workshops and this document are part of the IPA’s intention to support this
change throughout the industry. They are not intended as answers, but to
demonstrate the pertinence and vigour of the questions Behavioural Economics
lets us ask about our industry.
The main themes coming out of the workshops are explained below.
Choice Architecture gives us a new way to understand the role and influence of
brands. It helps us to see that brands are not just what we choose, but that they
also help us structure and understand the choices consumers make.
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This feels like a more robust and far-reaching framework for understanding
brands. The value of brands is more than just the sum of relationships they own
with individual consumers. They are also parts of the architectures of choice that
guide and influence consumers’ decisions. Working with this understanding
enhances the role and importance of advertising not only to reach consumers, but
to shape the world that consumers occupy. Without brands, whole categories
would struggle, as consumers need the clarity and reassurance brands provide to
find shopping in these categories tolerable, or even possible.
Choice Architecture reminds us that it makes what people do on their own terms
should be our central concern. It is how they choose that is important (as opposed
to how they receive and interpret a message, how they recall that message, etc.).
Focusing on Choice Architecture puts a more tangible outcome at the heart of our
thinking and drives out interim and proxy communication outcomes.
It is also essential in a digital age, where the stimulus to purchase, and the
purchase itself, can be bridged together in seconds. Digital agencies have already
done much to understand this territory. However, much of the internet’s economy
remains (a part, it should be noted, that does without agencies) little more than an
amplified impulse economy. The future lies in solving age-old human problems of
choice, such as easy and cheap access to up-to-date information (a problem
potentially solved by Wikipedia), browsing products in an order that interests you,
and not in one determined by the physical storage requirements of the stock
(Amazon’s simple advantage over bookshops, whose stock is only accessible one
way), or bringing together buyers and sellers effectively (the problem eBay solved)
and letting them securely exchange payments (the problem PayPal solved).
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are balkanised into the different spheres of influence wielded by each agency –
digital agencies talking the language of digital, traditional agencies the language
of TV and press, and so on. Instead, a language that deals with the outcome of
consumer choice and the Choice Architectures of specific markets would serve to
align how different agencies discussed what they were aiming to achieve.
This levelling of the playing field is welcomed by all agencies. Traditional agencies,
typically the owners of ‘The Big Idea’, see it as an opportunity to work more
usefully with disciplines normally (but wrongly) sidelined as the owners of ‘Small
Ideas’. Non-traditional agencies see it as an opportunity to shake off their
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Cinderella status and be properly regarded for their contribution to the overall
marketing effort.
This external validation is incredibly seductive and potentially powerful. In the past,
advertising has always had to insist on its validity, but now it will be able to prove
its validity (and this can in time be bolstered with support from other areas
including, for example, neuroscience, social sciences and network theories).
If the industry can interpret and understand the insights of Choice Architecture
this will be fundamental to what we offer clients. Understanding such
fundamental truths is of obvious value to any business that needs to deal with
people. Human understanding is a stronger basis for our business than
understanding of communications and advertising. It is also a useful alternative
offering to the high-level business advice offered by accountants, lawyers and
management consultants, none of whom have such a fine appreciation of
consumer behaviour.
Better collaboration
The skills of problem solving are distributed throughout the agency and found in
all departments – be they account management, creative or planning (or even
elsewhere in production, art buying, finance, IT, etc.). This distribution is only
extended when working in multi-agency teams.
The creative process does not reflect this distribution. It divides and categorises
problem solving. Planners tend to solve planning problems. Creatives tend to solve
creative problems. Media agencies tend to solve media problems. This can prevent
different departments and different agencies from being able to fully contribute to
problem solving.
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What is useful is that Choice Architecture has clear benefits if adopted. It therefore
demands that agencies find ways to redefine the creative process, so that
departments are fully exploited and better collaboration is fostered both within
agencies and with partner agencies.
Better briefs
Marketing and communications have become pre-occupied with the 'Big Idea'.
What is striking about many Behavioural Economics examples is that the ideas are
rather small – changes in timing, changes in framing, changes in order, either
reducing or increasing effort involved.
■ How do you know when your brand is succeeding? How do you know when your
brand is failing?
■ Why do people use your brand? If they didn't use it, what would they do?
■ What is it that people like about using your brand? What are the rewards and
delights of using your brand?
■ What is it people dislike about using your brand? What are the frustrations and
barriers to using your brand?
■ What are the most important metrics in your business – and why?
■ What do you not measure about your business that you would like to measure –
and why?
There was optimism that Choice Architecture’s clarity and insight, and its closeness
to real behaviour, would drive people to develop processes (either with or without
briefs) that would focus creative energy on solving the problem at hand with a
minimum of distraction to the effort towards solving the process of the brief itself.
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the role and cost of media rather than to understand people. Agencies’
relationships with the research community are often mediated through proxy
measures used to hold the advertising process to account.
Arguably this has become unsatisfactory for both sides. Agencies are proving
themselves against pseudo-measures which leave them always at least one remove
from the real business of influencing behaviour. Research agencies are obliged to
continue using dated measures and methodologies that do not allow the industry
to grow and develop.
Not only could Choice Architecture be an extra product, it could go to the heart of
all our work and thinking. This would give an enhanced value to our thinking that
would make it worth paying for even when it does not involve an advertising or
marketing communications solution. This was felt to be a huge step forward.
Choice Architecture could convince clients that agencies had high-value, non-
advertising advice to give.
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In both the planning and creative groups there was much excitement that Choice
Architecture sat in the overlap between strategy and execution, where the best
ideas are created. It would challenge both creatives and planners to redefine their
roles to grow this overlap. Choice Architecture provides a neutral ground where
this can happen.
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Some key challenges were also raised, and the IPA is committed to
assisting with overcoming all of them.
The IPA is looking to engage the client community to preach the benefits of Choice
Architecture and Behavioural Economics, and help improve the ability of IPA
members to guide clients in these areas. This will help create openness and
curiosity about what these new areas have to offer, though it will be for member
agencies themselves to capitalise on them.
Education
To start to gain from these insights agencies need to educate themselves.
The IPA has a clear role to play in this. We are currently developing training
opportunities around the topics with the aim of not just informing people of the
theories, but helping stimulate agencies in their application, guiding them in the
development of the necessary working practices and making sure that people are
inspired by what Behavioural Economics and Choice Architecture have to offer.
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To this end, we are keen to reach all communities within the membership. This is
already being achieved, but we want to make sure we continue to get
representation from all levels of experience, all disciplines, and all departments
within agencies, particularly creatives, who have shown greater interest in this
project than any IPA initiative in recent memory.
There are already a number of case studies in the IPA Effectiveness Awards
dataBANK that, although not expressed in the terms of Behavioural Economics,
are nonetheless clearly built from its insights. A number of such examples from this
year’s winners are discussed in a chapter in the upcoming Adworks 18 publication,
which will be released in March 2010. Collecting and highlighting these case
studies is something the IPA will undertake, and which will create a near-instant
body of evidence.
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The two key references for this document remain Nudge and The Paradox of Choice:
Nudge: Improving Decisions about Health, Wealth and Happiness (paperback), Richard H
Thaler and Cass R Sunstein, Penguin, 2009.
The Paradox of Choice (paperback), Barry Schwartz, Harper Collins, 2005.
Both books have extensive bibliographies. All of the authors have written other books and
numerous papers, which tend to be of a more technical nature. More can be found at the
authors’ own pages, hosted by their universities. These often contain links to working papers
which contain their latest research:
Barry Schwartz home page: http://www.swarthmore.edu/SocSci/bschwar1/
Cass R Sunstein home page: http://home.uchicago.edu/~csunstei/
Richard H Thaler home page:
http://www.chicagobooth.edu/faculty/bio.aspx?person_id=12825835520
Thaler in particular has also become something of a public figure. His lectures can be found
online. For example, this appearance at the 56th Annual Management Conference includes
two videos: http://www.chicagobooth.edu/news/2008ManCon/01-thaler.aspx
IPA materials
The IPA is committed to exploring the ways in which Behavioural Economics can be applied to
agencies, their work, and their clients. To this end we have published some industry-specific
materials around this area, and will continue to do so in the future.
Behavioural Economics: Red Hot or Red Herring? (2nd edition), IPA, 2010
Since 1980, the IPA Effectiveness Awards have been recognised by agencies and clients as
Adland's most rigorous awards scheme, because entrants have to prove to a jury of
experienced clients that their communications strategies have worked in hard business terms.
Recent winners have referenced Behavioural Economics, a trend which we anticipate will
continue in coming years.
IPA Effectiveness Awards: http://www.ipaeffectivenessawards.co.uk/
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The idea of technologies being persuasive at the level of design is explored by BJ Fogg of
Stanford University:
Persuasive Technologies: Using Computers to Change What We Think and Do, BJ Fogg,
Morgan Kaufman, 2003. (Online at: http://www.bjfogg.com/ )
A more sceptical (even dystopian) view is put forward by Jaron Lanier. One of his arguments is
that technology tends to persuade us to be more stupid, mean and cruel:
You are Not a Gadget: A Manifesto, Jaron Lanier, Allen Lane, 2010
(Online at: http://www.well.com/~jaron/ )
Dan Lockton and David Harrison of Brunel University, together with Neville A Stanton of
the University of Southampton, have looked at the application of Choice Architecture to
design. This paper also contains an excellent and useful bibliography:
‘Choice Architecture and Design with Intent’, Proceedings of the 9th Bi-annual International
Conference on Naturalistic Decision Making, Dan Lockton, David Harrison and Neville A
Stanton, 2009.
There is an online Design with Intent site run by Dan Lockton:
http://architectures.danlockton.co.uk/
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Appendix 1 Appendix 2
31
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