Understanding Behavioral Economics in Social Video Commerce

In our continued series on psychology and online video, I delve into the relatively new field of behavioral economics with Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University and author of the book, Predictably Irrational. I also present my own theory on its special connection with online video, and some tips which online video marketers and eCommerce specialists can benefit from the empirical research findings in Dan’s book.

What’s “Behavior Economics?”

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Short answer: Behavior economics has been described as a relatively new field that draws upon both psychology and economics to better understand human behavior, including consumer appeal.

I read Dan’s book twice and enjoyed it on both a professional and personal level. This is the core them of what makes behavior economics particularly beneficial as a social science for not just academics, but professionals and everyday people: Our judgment and decision making are often neither rational nor in our best interests, but occur as a result of how we have conditioned ourselves to outside triggers. Sometimes this irrational behavior is relatively harmful and even has some positive traits. But more often than we want to admit, it can be counter-productive and even self-destructive if not realized and understood for what it is and why we do it.

“People often misunderstand the consequences of their behaviors and, for that reason, make the wrong decisions.” Says Dan. When it comes to economics, it leads to repeatedly poor decisions with how we shop, spend, and plan our finances – sometimes we find we can’t seem to break the cycle no matter how hard we try.

That’s where behavioral economists and social scientists like Dan come in, to help show with their own empirical studies (many of which are detailed in his book) how this irrational behavior we exhibit is not random and inexplicable, but rather it’s systematic and predictable. In turn, Behavior economics is also meant to help marketers understand how to successfully design environments so that consumers open their wallets.

You can watch all of Dan Ariely’s Predictably Irrational web videos, chapter by chapter. Here’s one of them below, on the influence of arousal.

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The Connection with Behavior Economics and Online Video

As an online video marketer, I would have been interested to read Dan’s thoughts about how different types of media serve as a catalyst for consumer engagement and spending decisions, including with online video.  After all, that is what marketers rely on to engage with consumers when they aren’t face-to-face with them (which is most of the time, of course). To me, this seems to be the weak point in behavioral economics, where empirical tests haven’t yet seemed to offer any comparisons between online video and other media in triggering and repeating behavior in subjects; or for that matter, just a mention about the role of online video in behavioral economics, itself!

So I guess I could take a crack at it here.

Mind you, I’m no academically trained social scientist, and certainly no expert in behavior economics. But I am someone who can make connections between social science and online video (which I would argue is a social science in itself).I believe both marketers and eCommerce specialists involved with online video can really stand to benefit from understanding behavioral economics. Here is my own theory on that connection:

Connection 1: Science

  • Behavior economics is described as a social science
  • “Social video” is its own science

Connection 2: Economics

  • Brand spending, including with online video, is about economics

Connection 3: Emotional Impact

  • Behavioral economics argues that we make impulsive and irrational decisions, including with consumer spending, when we are overwhelmed with emotional feeling.
  • Video is better than all other media at triggering emotional feelings .
  • Brand marketing is also about making an intended emotional impact on consumers.
  • Anything that can cause a degree of emotional impact can also create an equal degree of irrational behavior.
  • Thus, online video is a good catalyst for inciting irrational human behavior (including how we shop and spend online).

Eli Goodman, Video and Search Evangelist, for comScore, Inc. made this statement earlier this year in his presentation, “State of the U.S. Online Retail Economy in Q2 2011:”

“With the obvious synergies between online video and TV advertising as it relates to emotional impact, execution, and the like, online is poised to see tremendous growth in brand spend in the coming years.”

Connection 4: Anchors

Roger shared with me this about Dan’s research on test subjects watching a video that was effective at causing long-lasting behavior change:

“I think it’s important to realize that it wasn’t the effect of the video that was long-lasting, but the internalized emotion/belief. A key part of the effectiveness of the video in behavior change was that the subjects then wrote about their feelings immediately, and further locked in their attitude with a decision in the game.”

My own video marketing colleague, Kevin Nalty, followed that same study, and added in his article on willvideoforfood.com this comment:

“The emotional carryover from the video and writing exercise markedly altered their behavior on the unrelated money decision.”

So I’ve expanded on that with my own theory that can benefit marketers and eCommerce specialists: When people have the opportunity to share a video and their feelings about the video online immediately, it further locks in their attitude. Video is good at triggering the response, and being online facilitates the “locking in” of the emotion/belief. This can also explain why people are more drawn to online video. Not just because it’s video, but also because being online can trigger and lock in emotional behaviors more than a “passive” video experience can.

My 2 Tips (so far) with Behavior Economics Applied to Social Video Commerce

Again, these are just my own theories applied from the research conclusions drawn by Dan Ariely in his book, Predictably Irrational. (I tried to do a more extensive interview with Dan, but he mentioned to me that he had to fly off to Peru!) Nevertheless, I think these are some ideas worth considering if you’re doing, or planning, any video marketing and eCommerce activities with online video.

Tip #1: Understand the Laws of Attraction.

If you want to make yourself or someone featuring your product, service, solution, or brand in your online video really stand out, have them appear just slightly more attractive than someone else.  This doesn’t just mean pairing up with someone who may have slightly less attractive physical characteristics, but mannerisms (including conversational skills).  Dan says in his book, Predictably Irrational: “The way the mind is wired: We are always looking at the things around us in relation to others… We like to make decisions based on comparisons… by our very nature we are wired to compare.”

Tip #2: Catch People at a Point of Arousal

Now you might think I’m talking about the obvious situation of creating a sexually-charged video… But actually, there’s more to it than that. What I theorize from Dan and Roger is that marketers should also be thinking of building conversations around (positive) emotionally charged topics, and not just of the sexual nature. From there, they place the online video – the catalysts for those emotional topics, in easily accessible online spaces – web, mobile, etc. – and through social media channels and plugins that easily allow the consumers to share and comment on their experiences, thus locking in their experience.”

This is not so tall of a task, considering that online marketers are experts at following the most recent news and searches online, and building and sharing content and conversations from any emotionally charged news. We have a special ability to not only understand consumer behavior online, but to build emotionally impactful video that is easily discoverable. If you can put that out quickly then you can capture people at a perceived time of arousal, or context in which they might become more easily aroused. Even bigger: That will not only be more effective in triggering an emotional (i.e., impulsive, irrational) response; it will also be more effective at locking it that emotional response.

What Have We Learned, e-Conomists?

Call it my crackpot theory (or maybe several crackpot theories here), but I think there are some valuable lessons for online video marketers, retailers and e-commerce specialists here.  By combining our own knowledge of online video with the research of behavior economists like Dan Ariely, and Neuromarketing researchers like Roger Dooley, we can bump the performance of our programs to the next level. What’s certain is this: there’s nothing irrational about supporting our fellow online video professionals by helping others understand human behavior better.

 

 

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