What you don’t know about how advertising changes you

And what you can do about it

Advertising works. It works very well.

So well that a Kantar WARC analysis shows stopping advertising is devastating to brand market share.

At GroupM we estimate that the global advertising market will grow by 19% in 2021. This is after a decline of only 3.5% in 2020 versus 2019. It is growing despite the pandemic and its economic impact.

But why does advertising work? Even though it is critical in business and we invest so much money and effort into it, the blunt truth is that we do not really know why advertising works.

There are a lot of theories about it. The most widespread is the common-sense theory.

Common-sense theory of advertising

‘There are no hidden persuaders. Advertising works openly, in the bare and pitiless sunlight.’ Rosser Reeves 1961

The basic assumption is that advertising gives us useful information that help us make better decisions. As a consumer, you find out that product X solves a problem you have. Or you find out that product A is better than other products in the category because it does Y and Z. Ads provide information for consumer choice.

This appears to make sense. On the surface.

Looking deeper, it’s clear this theory does not match what happens in reality. If advertising worked according to this common-sense theory then at least three things would be different:

1. There would be much fewer products in each category. Everyone would reach similar conclusions about which is the best product and buy that one. The others would go bankrupt.
2. There would be no brands because they are irrelevant information according to this theory.
3. There would be fewer ads and all of them would talk about concrete product benefits and characteristics.

The common-sense theory is invalid. Ads don’t help us choose the best product.

Why do they work then? A popular theory is that of social signaling.

Social-signaling theory of advertising

It states that ads are not about the products’ direct utility. It says that we buy brand X to signal to other that we have attributes associated with that brand. Ads create associations between a brand and socially desirable attributes. As humans we want to signal those respective attributes and thus buy the product.

According to this theory for example ‘sex sells’ because we want other people to think we are sexy.

Does this theory match reality?

Yes in many cases. It is undisputable that as humans we are obsessed with how other people see us. This is an inheritance of how we evolved: as hyper-collaborative animals. Many brands are status symbols that people buy to signal to other people.

Yet it fails to explain all of advertising. It does not explain promotions and most sales campaigns. It does not explain purchases that we do not signal to others (e.g. weekly grocery shopping). It does not explain purchases that we keep secret (e.g. sex toys, weight loss pills, junk food).

This theory is a partial explanation. We propose there is a larger, more comprehensive theory which includes social signaling as one of its manifestations. This theory starts with System 1 and System 2.

System 1 and System 2

The Nobel prize winner Daniel Kahneman is considered by many the father of Behavioural Economics. In his book Thinking Fast and Slow he shows that humans have two types of decision making systems: the ‘imaginatively named’ Systems 1 and 2.

System 2 is conscious, rational, deliberate. It makes decision by weighting options and thinking of consequences. It is also slow, difficult and indecisive. Your brain’s need to conserve energy minimizes how often you use it. In consequence only 5% of our behaviour comes from System 2 decisions.

The rest of 95% of behaviour comes from System 1. This is unconscious, associative and instantaneous. These are split-second decisions and intuitions for which you appear not to think about. Most of the time you don’t even know the real reasons for your decisions if asked about them.

Most human behaviour comes from System 1 decisions. Advertising works because it influences this system.

System 1 decides what you buy

How does System 1 decide which brand to buy? Something makes you want to buy from the respective category. System 1 chooses the first brand that comes to mind for which you have a good opinion. If it’s available, you buy it. If it’s not, then it reconsiders. It is that simple.

All advertising influences System 1. Why? Because of the way in which System 1 works.

You don’t choose the best product, you choose the one that comes first to mind which you do not hate. Thus it’s more important to create mental availability than to convince consumers of the superiority of the product. It is almost the opposite of our naive common-sense theory that advertising helps people make better decisions.

Remind me that product X exists and I am more likely to think of it when I want to buy from that category. That’s the essence of advertising.

Any ad, no matter how bad, has some effect. If you see the ad, then it invades your mental space. It primes System 1 in its direction. This supports the saying that ‘There is no such thing as bad publicity’.

Of course, the effectiveness of ads varies greatly. Advertising campaigns aim to get as many people exposed to the ad as possible. And to make ads that capture attention and have an unconscious impact that is as big as possible.

Knowing this, how can you protect yourself from advertising?

It is no mystery that advertising is not good for us. Companies do not spend money for our good. They spend money to sell products, regardless of the impact. Cigarettes are an obvious example, but not the only one. Most foodstuffs are harmful. Much of the finance industry exists to convince people to spend more and get loans. In general, advertising exists to make us buy stuff we don’t need.

You might say that you are not influenced by ads. That is an illusion. Ads influence System 1 which is below your conscious. You cannot know how ads influence you. You might critique some especially bad ads or appreciate artful ones. But that is not their real effect. Most of them work without us even knowing they do.

But we are not powerless. Understand how System 1 makes decisions and you can take steps to avoid untoward influences.

My book is mostly about this: the algorithms that drive our unconscious System 1. I call it PaleoRobot because they are the product of natural selection in a paleolithic environment. The key to minimizing its negative decision is asking questions.

When it comes to advertising, you should ask yourself some questions about each product and service that you intend to purchase:

1. Social: are you buying this for others to see you bought it? If it has lower value if nobody ever knows you bought it, then you are influenced by social signaling.
2. Craving: are you craving to buy it? Would you be happy tomorrow that you bought and ate/drank/smoke this product today? If not, then it is manipulating your dopamine pathway to crave it.
3. Stress: do you feel in any way stressed/anxious/unsettled and are buying the product in the hopes you feel better/less stressed? If yes, then you are buying for stress-coping. However, except maybe some wellness apps and professional services, most products bought for stress-coping provide some immediate relief, but with long-term harm. Examples include most food, drugs, entertainment.
4. Fear: is there a sensation of fear that would be reduced by buying this product? If yes, then this fear might have been induced rather than your own conclusion.

Magical solution

These questions can be complicated. There is however one thing you can do to reduce unnecessary shopping from advertising:

Delay the purchase.

Don’t buy it now. Buy it tomorrow, if you still want it. Except for groceries and emergencies, all purchases can wait one more day.

This trick works because System 1 is for the very short term. It does not plan for the future. So if your purchase is a System 1 decision to buy a product you don’t need, then it will disappear by itself. If you were manipulated into wanting something, the desire goes away on its own if you merely do nothing.

Disclaimer: I am not saying all advertising is bad. There are useful products and services. I am saying that advertising influences us without us knowing. This is harmful in itself. I aim to uncover how our minds work so that each of us can decide his or hew behaviour.

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