The higher up in a company you are, the more favorably you view that company. This represents a single, tiny example of bias—or prejudice in favor of or against something. However, it isn’t just upper management that is biased. On some level, everyone is biased. You might be aware of your own bias, at times reckoning with thoughts or decision making that isn’t entirely objective or reasonable.
Or maybe you don’t accept your own bias, instead believing you are completely objective all the time. That’s fine, but marketers (and scientists) don’t share your perspective. The marketing industry not only acknowledges that each and everyone one of us is biased, but exploits specific forms of it to increase sales and make advertising efforts more impactful.
As public concern around privacy continues to grow, and regulation looms over the data economy, the online tools of influence marketers rely on to identify and communicate with customers are under heavy scrutiny. Consent has been a critical component of the consumer data privacy conversation, with legislators and the public demanding more accountability and clarity around how personal information is gathered and used.
All this begs the question: What exactly have consumers agreed to?
We live in a mixed up world chock-full of fake news and bias. Understanding the mechanics behind advertising can help prepare us for a future where customers are more critical of how their data is being used, and governments are more involved in how data is collected, processed and stored. Below we explore how marketers use forms of cognitive bias to boost sales, as well as what these practices can teach us about the future of marketing responsibly.
What is cognitive bias and why do marketers care about it?
Cognitive bias is an umbrella term for faulty patterns of thinking that lead individuals to make irrational decisions. For example, the common idiom “jump on the bandwagon” is a reference to the bandwagon effect, a form of cognitive bias where people adopt or do something simply because others are doing it. We can observe the bandwagon effect in trends spanning fashion, music, diets, elections and more.
Understanding how specific cognitive biases work can inform marketing strategy and approach, as well as enable businesses to exert more influence over their customers’ choices—leading to better conversion. Obviously, influencing customer thoughts and decision making is the end goal of most marketing. But using cognitive bias is about more than creating advertising campaigns or messaging that resonates with consumers. It requires understanding how the human mind functions and strategizing around common flaws in human thinking.
What are examples of cognitive bias in marketing?
Looking at specific examples of cognitive bias, and how marketers can use it in practice, demonstrates how commonplace these tactics are.
Choice-supportive bias or post-purchase bias
Choice-supportive bias describes the human tendency to remember our decisions as better than they actually are. This involves hyper-focusing on the positive attributes of things that we choose, and the negative attributes of things we do not choose. Marketers understand that after someone makes a purchase, they are biased toward their own decision.
This form of cognitive bias helps explain why sales conversion funnels are filled with positive affirmations. Messages like “Great choice!” immediately after a transaction occurs, as well as gentle reminders about the “2 items still in your shopping cart” are designed to get consumers thinking about products they themselves selected, reinforcing bias toward their own choices.
The decoy effect or asymmetric dominance effect
Another form of cognitive bias popular in advertising is the decoy effect, also known as the attraction effect or asymmetric dominance effect. Anyone who has ever questioned concession pricing at movie theaters is all too familiar with the mechanisms behind the decoy effect. This pricing tactic is designed to convince customers to change their choice between two options by introducing a third choice that is asymmetrically dominated.
To help demonstrate the decoy effect, consider the following prices for concession stand popcorn at a movie theater:
- Large: $7
- Medium: $6.50
- Small: $3
Which would you choose? Presented with this pricing scheme, more people are likely to perceive the $7 dollar large as the best value and purchase it. However, if the medium (decoy item) is removed the overall value proposition of the large diminishes greatly:
- Large: $7
- Small: $3
Under this pricing scheme, more people are likely to purchase the $3 small. The medium choice exists solely as a point of comparison, and the pricing scheme is designed to push people toward the more profitable $7 large.
The decoy effect allows advertisers to completely alter how consumers perceive value, and is prevalent in pricing for a wide variety of products—including software pricing models. These examples only scratch the surface of how advertisers leverage the way we think to get us to spend more money and feel good about our consumption. For more specific types of cognitive bias and how it pertains to marketing, this article outlines 67 different varieties of it.
Dark patterns are everywhere online
It isn’t just cognitive bias that advertisers use to get people to open up their wallets: Websites and apps exploit FOMO—fear of missing out—as well as basic human desires and instincts. As consumers generate seemingly endless amounts of personal data (and advertisers happily gobble it up), the tactics that take advantage of how our minds operate have grown increasingly personalized and sophisticated.
The term “dark patterns” was coined in 2010 to describe forms of persuasion baked into user experiences that encourage desired behavior, such as purchasing a product, and discourage unwanted behaviors, such as unsubscribing from something. Some examples of dark patterns could be intentionally hard to spot unsubscribe links buried in a wall of text at the bottom of an email, or “this hotel was just booked” notifications plastered across online travel agency websites that create a sense of urgency around booking a room.
Is using cognitive bias unethical?
While some advertisers certainly use cognitive bias to an extreme, it isn’t inherently wrong to optimize your approach to advertising by adjusting for how the human mind functions. Ultimately, marketing is about not just understanding your audience, but resonating with them on a memorable or personal level. Accomplishing this goal is easier if the mechanisms behind human thinking are included in marketing tactics and strategy.
While it’s difficult to completely eliminate questionable forms of persuasion overnight, some lawmakers are beginning to criticize the methods tech giants like Facebook use to collect user data and convince people to take specific actions.
The Deceptive Experiences to Online Users Reduction Act (or the DETOUR Act) is bipartisan legislation proposed in April by senators from Washington and Nebraska. The bill aims to prohibit online platforms from using deceptive techniques to trick users into handing over their personal information, as well as manipulate them into taking actions they would otherwise not take. Additionally, the proposed legislation focuses on informed consent, or permission granted in the knowledge of possible consequences.
People must be more cognizant of what’s going on behind the scenes in online advertising, and marketers need to take more responsibility for doing the right thing when it comes to the influence they wield over consumer decisions.
Amazon uses a black-box algorithm to recommend “choice” products
A recent example that showcases the difficulties that come with discerning deceptive marketing practices from useful ones is “Amazon’s Choice” product recommendations. Like many marketing techniques, this one came into existence as a means to soothe minds and facilitate purchases.
Overchoice is a cognitive process where people become overwhelmed by the sheer amount of choice available, rendering them unable to make a decision. The world’s largest e-commerce website lists hundreds of millions of products, with the sheer volume of choices virtually limitless. The company recognized this was a problem for consumers and came up with a solution called Amazon’s Choice in 2015.
A beacon of light shines bright across the Sea of Overchoice. (Source)
The idea was to help consumers with overchoice by giving certain products a badge that made them stand out amid a sea of seemingly endless choices. An Amazon spokesperson described the choice label as, “highlighting highly rated, well-priced products ready to ship immediately for the most popular searches on Amazon.” However, BuzzFeed News reported that Amazon puts the label on products that are of low quality, come with troubling defects, or just simply don’t work as advertised.
Consumers may think Amazon’s Choice products are curated and vetted by the company, but in reality the label is applied automatically by a black-box algorithm that considers reviews, price and product availability. The algorithm that awards products the Amazon’s Choice label is the company’s proprietary intellectual property, and therefore unavailable to outside scrutiny.
Even our bias is biased
If you’re thinking, “all these biased people are suckers, but not me—I’m rarely (if ever) biased,” well, there’s a bias for that: Bias blind spot. This form of bias describes our habit of believing we are less biased than other people, or more capable of recognizing our cognitive biases than others.
When thinking about the consequences and impact of manipulative marketing, it is important to avoid focusing squarely on your own personal experiences. Bias is present in all of us, but it doesn’t impact everyone in the same ways. The reason advertisers are able to use it is because it works on enough people to provide a significant boost to the bottom line.
Are flaws in human decision making the best path forward?
Even though decoy items won’t be legislated out of pricing schemes any time soon, business owners can still benefit from asking themselves if tactics that exploit flaws in human decision making are the best path forward. People are increasingly wary of deceptive or aggressive marketing tactics: A recent GetApp survey found 91% of U.S. consumers feel ads know too much personal information about them and 52% use an ad blocker while online.
As people wise up to the perils of unregulated marketing practices and non-existent data privacy protections, businesses that fail to understand why the tides are turning and shift with them might find themselves on the wrong side of marketing-technology history.
More on marketing technology and privacy regulations:
If you’re interested in finding out more about marketing technology and privacy regulations, GetApp has some handy resources worth checking out: