evagation: Nudge by Richard H. Thaler and Cass R. Sunstein

When I Grow Up, I Want to Be a Choice Architect

Does your Web site nudge visitors towards the path you want them to take? If your abandonment rate is high, your prospects might be overwhelmed by too many options. If you aren't seeing the traffic volumes you used to, maybe your site is being grouped in with some bad company. There are proven psychological phenomena which explain these effects that you should know in order to improve your results.

A recent book by Richard H. Thaler and Cass R. Sunstein, Nudge, offers many prescriptive suggestions for implementing choice architecture constructs to improve health insurance selection, 401k participation, and school vouchers. Choice architecture refers to the context in which one makes a choice. The idea is that by controlling that context, a choice architect can help people make better choices, improve decisions about health, wealth, and happiness and will make the world a better place. They do so by mitigating against some common problems that are faced when making a choice—procrastination delays, information overload, and stress reactions amongst others.

But when someone helps people make better choices, for whom are they better? The preferences of the choice architect influence the design of the choice mechanism, but can a choice architect be counted upon to design something that is truly in everyone's best interests? The choices that come out of such a scheme will be clearly better for the choice architect—whether they improve other people's lots in life is debatable.

Fortunately, marketers need face no such qualms: our job is to increase revenue. So we can leave the ethical questions of whether governmental choice architecture is a good thing or not and instead ask, "Can choice architecture help my search marketing plan?" And, joking aside, a positive revenue stream means a good employment forecast, and most agree that this is a good contributor to health, wealth and happiness. (If you do want to find out more about Thaler and Sunstein's 'libertarian paternalism' and government interventions as described in nudge, I recommend Taming Your Inner Homer Simpson by Dahlia Lithwick on Slate.)

So with that in mind, score your latest SEO or SEM effort against these factors and see how you rank (1 point for each yes):

Anchoring bias is a mental crutch used by people to project unknown values based on known values. Thaler and Sunstein use the example of a person trying to guess the population of Milwaukee: one who starts guessing based on the population of Green Bay ends up with a very different guess than someone who starts extrapolating based on the population of Chicago. Big box retailers have mastered this by placing their store brands right beside the name brands to encourage customers to use the name brand as their point of reference. Placing your search ads into results that anchor them favorably will benefit you. For example, promoting your low-carb whole-wheat pasta alongside search results for the carb count of white pasta induces people to compare your skinny pasta to the full-figured version. Consider instead what might happen when advertising your pasta alongside carb-free search results; now it doesn't compare so favorably. Does your search marketing help your target market start from your preferred basis as a point of reference to your product or service?
Availability bias works to magnify the importance of nearby events and minimize far away events. This is the same principle that guides newspapers to lead with the story of the school bus accident and put the foreign airline crash deeper in the paper. (For younger readers: newspapers are those large paper documents printed daily with ink and photos on them that detail some but not all nearly current events.) Does your search marketing relate to the local market, or is it so abstracted that your target audience can't connect to it?
Representativeness bias is the tendency of people to assign the common characteristics of a group to individuals that they infer as being part of that group. At its worst, this results in racial profiling. Marketers can use this for a halo effect to garner favor through association (or a horns effect, which results in disfavor through association). As mother said, people judge you by the company you keep. Search engine marketing that places your air purifier product ads amongst other allergy abatement products might convert better than placing it amongst the results for the allergens. Does your search marketing avoid association with unsavory sites and marketing practices, or better yet position you within spaces that give you a positive association?
Unrealistic optimism is the tendency of individuals to misjudge the likelihood of positive or negative outcomes for themselves. Thaler gives an example of having a class of MBA students judge in which decile their grades would fall; generally less than 5% expected to be in the lower median, although obviously half of them will be below average for the math to work. Online dating sites show great competence in this area, doing well even as 50% of marriages end in divorce. Does your site help prospects to maintain their optimism by, for example, avoiding overlarge disclaimers and confirmation activities?
Gain apathy and loss aversion bias refers to the experimentally demonstrated aversion that people have for loss and the relative unlikelihood they have to move from inertia in order to access a gain. One experiment which demonstrates this bias involved giving out free coffee mugs to half of a group of students. The free mug receivers wanted roughly twice as much money to sell their mug as the non-mug receivers were willing to pay. Any conference attendee recognizes this phenomenon—just try bartering with someone who got the screaming monkey slingshot. They can't be parted from the freebie. (But are you willing to spend an hour listening to the pitch to get one yourself?) Amazon.com makes use of this with their "gold box" offers: the item is yours at that price for a limited time, and they play on your aversion to losing it if you don't act right away. Does your search marketing make an offer that is easy to get and painful to lose?
Status quo bias describes the well-known general tendency of people to stick with their current situation (explaining, perhaps, why 50% of marriages don't end in divorce). Traditional direct mailers banged their heads for years against the difficulty of getting recipients to take the call to action. Search marketers have it easier in that our audience has already taken the first step to be actively looking for us—their status is "actively seeking" and they are likely to stay there, unless you can move them along. "Default options thus act as powerful nudges. In many contexts defaults have some extra nudging power because consumers may feel, rightly or wrongly, that default options come with an implicit endorsement from the default setter," say Thaler and Sunstein, and it is true in my experience. Driving your search marketing towards an already configured device with a full complement of accessories—instead of to the configuration tool—thus builds on the status quo bias which inclines the prospect to make the purchase with the default options. Does your search marketing use defaults to move your target market from prospecting to action?
Framing bias reveals that individuals are more likely to accept recommendations stated positively and reject actions that are stated negatively. Telling a friend that 9 out of 10 seat-belt wearing people survive a car crash is much more likely to get him to start wearing his safety belt rather than telling him that 1 out of 10 seat-belt wearing people die in a car crash, even though the quantitative information is identical. Does your search marketing strategy frame your options properly to account for framing bias?

Your grade:
0-1 Time to rethink your approach.
2-3 Perhaps you're just getting started, or are you dealing with legacy choices?
3-4 Nice job! Refine your program and reap the rewards.
5-6 Great work—keep it up, and enjoy your leadership position.
7 Get in touch with Mike, perhaps you'd like to write for the Biznology blog?

Now you've got your score and some ideas for re-examining your search engine marketing activities. Don't forget that ethical marketing is good business sense. Don't take any of these ideas to a ridiculous extreme if it leads you into questionable practices. Thaler and Sunstein recommend a simple guiding principle for determining whether your nudge crosses the line or not: transparency. You should be willing to explain (or defend) your nudge in a public forum if it comes to that. This "headline ethics" standard is that if you wouldn't want to see your name publicized widely in association with the tactic, don't do it.

also published at http://www.mikemoran.com/biznology/archives/2008/10/when_i_grow_up_i_want_to_be_a.html