"We need to broaden the definition of what we do to reflect the new reality of the market place because if we don't create a new model based on human understanding, then we are in danger of using 1950's packaged goods persuasive techniques to solve today's communications problems! With behavioural economics we can align ourselves to a recognizable science..."I'm a great supporter of Rory's campaign to bring science into the marketing world - the field today is too driven by gut feeling, and treats creativity as an end instead of a means. Science lets us clearly understand the business problem, create a solution and demonstrate that it will work.
I disagree with him on one point in particular, but we'll come back to that. In the meantime, I've been reading Sam Delaney's book Get Smashed, a history of the British advertising industry from the 1940s onwards. In this excerpt he's talking about the old model of the ad agency, before the 1960s revolution. You'll see why I was amused to read it:
An agency's overriding preoccupation was to reassure clients that advertising was not a gamble but a science. They even formed an industry group and gave it the grand title of the Institute of Practitioners in Advertising. These were people who wanted to be taken seriously.It's taken a long time for this circle to be closed, but here we are. Advertising creatives in the early 60s got frustrated at the fact that their field was run as a branch of industrial organisation theory; creatives got no credit and no freedom, "account men" ran the company via the golf course, and risks were not to be taken - since everyone knew sales were driven simply by the number of times your jingle was heard on the TV.
Is that what we're to go back to? Of course not. The creative standards that were set in the 1960s and raised in the 1980s have made advertising much more effective, as well as culturally more meaningful and more interesting as a field to work in.
But every discipline benefits from a deeper understanding of its own process. However brilliant a talent - whether it's John McEnroe or David Ogilvy - it can be improved by a theory which shows why that talent can do what it can do. And so the end of this cycle is actually a fusion of two contrasting, complementary approaches: creation and analysis.
Behavioural economics' scientific analysis can direct and channel creativity to achieve specific business outcomes. And the creativity of good copywriters and art directors turns the sterile insights of cognitive experiments into campaigns that engage consumers and genuinely change their behaviour.
In some ways this is no different to how advertising has always worked. Basic, objective principles of awareness, recall, consumer segmentation, brand affiliation and identity have formed the background; these principles have been implemented in creative work which challenges the audience, surprises them, forces its way past their barriers and makes the brand message effective. Behavioural economics now provides another set of principles which can enrich that creative brief.
These principles are informed partly by recent experimental work from Kahneman, Thaler, Loewenstein, Ariely and others; and partly by a background of ideas about cognition - which go back to David Hume and Adam Smith, but particularly surface in the work of people like von Mises. On this subject, I just found Rory's article on "an Austrian school of marketing".
He mentions the idea (important but little-known even among economists) of praxeology:
If you have time, spend a moment investigating praxeology and the Austrian economists (many of whom, confusingly, are not Austrian). Of particular appeal is that 1) They are great believers that value is and can only be understood subjectively; 2) They reject most forms of research, believing that humans are too self-conscious not to have their behaviour affected by the very act of observation and 3) they won't use maths, since human desire is too complex to be expressed numerically. Our kind of guys, in other words.Two out of three isn't bad. Value is certainly subjective; and human behaviour is absolutely affected by observation.
But the third point, in fact, is the main reason why the Austrian economists haven't got anywhere. They really think you can do science without numbers. This is not true. Science that is not quantifiable is not falsifiable, and therefore doesn't count as science. The Austrian school, for all its valuable insights, tries to do economics in the Aristotelian mode, by argument, rhetoric and demonstration; and not in the Euclidean mode of logical and measurable proof. If marketers try to use behavioural economics in this way, they'll slip back into the morass of random assertion, driven by feelings and whoever has the loudest voice; this is probably quite fun, but it isn't science.
You might think it's obvious that human behaviour can't be explained mathematically. But it's easy to disprove. If I threw the average account executive out of a plane (and believe me, I'd love to) I could predict exactly what his behaviour would be, to an accuracy of about three significant figures. Naturally there are some details that are difficult to model - would he ask God's forgiveness for all he's done to his clients and colleagues, or just swear profusely at me until I can't hear him any more? - but there are plenty of very predictable things about us.
This is just as true of cognition, beliefs and desires as it is of physical movement. There is indeed a complexity that makes the task difficult, but also a regularity that makes it - within limits - very possible to predict what people want and how they'll behave.
This quote, from an earlier Rory article in praise of Cambridge, takes a braver position:
The problem we have faced as an industry is that we have been forced to become an excessively arty industry for want of a science to call our own. Many mathematical and scientific areas - most notably economics - have traditionally relied on models of human behaviour so reductionist and rational that they leave no room for human understanding at all. So, spurned by hyper-rational economists and accountants, we have reacted in one of two ways: either we have clung hopelessly to the "overt rational persuasion" model of advertising as a desperate attempt to make sense of what we do, or else we have overcompensated and taken up allegiance with flower-arrangers, choreographers and fashion-designers and claimed that this is simply a business that can only be understood emotionally. Neither stance, to be frank, does us much good.Cambridge Rory needs to stand up a little more to Austrian Rory. This would not be without precedent: in the history of economics, a previous Cambridge man did very well in establishing his ideas against an Austrian contemporary. Both views, of course, have pieces of the truth, and the combination is very powerful indeed.