Advertising and Economics

April 24, 2012

Advertising has come a long way since the 1940’s. Back then, when press was used heavily, ads were not focused on much more than the product’s USP. During the Mad Men era of the 1960s, agencies realised the importance of a brand’s ‘personality’ and ad campaigns became a lot cleverer. The famous Volkswagen ‘Think Small’ campaign is a good example.


In the past number of decades different theories have shaped the thinking behind brand communications. In the 1970’s, social psychology became influential, and the role of the planner was recognised as hugely important. In the 90’s, agencies began to pay attention to the fact that consumers aren’t entirely rational, and that emotion plays as much a part in decision making as logical thinking.

Behavioural economics has emerged as a major influence on advertising today. Drawing on principles from both psychology and economics, it allows us to understand that people are predictably irrational. People make decisions not just to attain the best possible outcome for themselves, but because the decision requires the least amount of effort, or results in little confusion.

Take for example the ‘Count me in’ campaign which was launched on Operation Transformation earlier this year. With a goal of getting calories displayed on menus in restaurants, it was targeted towards making it easier for people to make healthier decisions. With the minimum amount of effort.

Consider also the online world. Leading the consumer straight from a display ad to a page where they can purchase is a lot more likely to result in a sale than a complicated purchasing process.

Integral to the world of communications is understanding the consumer with some level of sophistication. Without careful consideration of how decisions are made, messages will be lost. As theories continue to evolve, it’s essential for both clients and agencies to pay attention.



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