Emotional Intellegence for Digital Advertising

10

October

2016

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It is one of the most horrible things ever, when a scene of your favourite TV-series just ended with a cliffhanger and the commercial break starts. Usually, I ignore the commercials by focusing on other things instead. I find most of them annoying anyway, one of the most important reasons why I do not watch TV that often. However, very occasionally, a commercial grabs my attention because it either seems to show exactly what I feel at that very moment, or brightens up my mood. Unfortunately, as soon as that small masterpiece gets replaced by an annoying commercial of the lottery and I decide to go get some food, I can feel that tiny bit of engagement already fade away. However, it does make me wonder: How can advertisers engage me and other viewers into their commercials, making the break between the cliffhanger and the answer less dreadful?

Unruly discovered earlier this year that advertisers were failing to make people laugh, with hilarity being one of the least common emotions in advertisements worldwide. The best advertisements deliver emotional responses, as proven in several academic and industry studies. For example, a recent study of Nielson Customer Neuroscience shows that advertisements with above average emotional ads score (EEG score) results in 23% higher sales volume. It also found that emotionally engaged campaigns increase brand favourability by 74% and purchase intent by 80%. In reaction to this, Unruly created a new content testing tool that helps advertisers to create an emotional connection with customers, called ‘Unruly EQ’.It combines biometric, neurological, emotional and audio testing methods to evaluate, improve and predict the emotional impact and brand effectiveness of video advertisements. Moreover, it brings together brainwave analysis, facial recognition and music data analysis. This way, advertisers can be in sync with the mood of their viewers and increase viewer engagement. In addition, Unruly launched a series of emotional-oriented private marketplaces (PMPs) that offer video advertisements characterised by a given emotional response, such as Hilarity, Pride and Surprise.

According to Devra Prywes, VP of Marketing and Insights of Unruly, no other company is doing exactly what Unruly is doing, by providing such a “holistic” solution as EQ and the Emotional PMPs. However, it might not be such a bad idea to do so. It might even make me hate the brands advertised in the commercials a bit less. However, let’s not get ahead of ourselves: that might only be possible in an ideal world.

https://unruly.co/news/

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A very sour lemon

3

October

2016

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Remember that time when you bought new shoes online? When it looked perfect on the model, and you could already imagine yourself showing it off to all your friends? The website seemed a bit shady, but hey; they offered an amazing deal! Well, raise your hand if that perfect image was crushed as soon as you got them. I assume that your hand is in the air right now and I have to tell you, mine is as well. Unfortunately, it is a problem most of us has faced once or twice. It is even so common, that economist George Akerlof wrote a paper on it entitled “The Market for Lemons” back in 1970. In his paper, Akerhof (1970) described the lemon problem as a problem that occurs because of asymmetry of information in a market. It goes as followed: When a buyer cannot observe the quality of the product, sellers have the advantage of being able to lower the quality of the product. As a result, the buyer risks to buy a product that is not of the quality he expects (‘a lemon’). Due to this risk, the amount that the customer is willing to pay reduces, which will lead to a decline in the price of the product as well. Consequently, sellers are forced to lower the quality even further until eventually, the lemons of the lowest quality are being sold. Talk about adverse selection!

However, this problem of the lemons goes further than just a pair of shoes: It can even be applied to the media market. The customers in this market are facing the task of assessing whether the news is true or not. Every day, we are bombarded with information, which makes it difficult to find the truth. According to a research conducted by Shleifer and Mullainthan (2005), only someone with access to all news sources is able to get an unbiased perspective. However, no-one has time to read all news sources to form such a perspective. As a result, the quality and accuracy of information is often not assed, which can eventually steer the media market towards a market for lemons (Shleifer & Mullainthan, 2005). This has consequences for professional media outlets as well. It would seem likely that the quality of the news would improve due to more competition from independent bloggers on the Internet. However, this competition is not enough to ensure that the news is accurate. In fact, it sometimes even reinforces reader biases! According to Shleifer and Mullainthan (2005), competition results in lowers prices, but often select information according to reader biases. This way, they are able to please their readers, which will lead to a broader audience and thus profit.

Even though media outlets seem to have an advantage regarding the problem of the lemons, falsehood in media sources often create public mistrust of these outlets (Shleifer & Mullainthan, 2005)Therefore, I think it is important to identify false information and those who produced this. By exposing this, we can make sure that good quality information will not crowd out the bad quality information. However, we do have to take into account that media consumers identify bad quality information themselves already. They are active in deciding which media outlet they want to use, and do not passively take everything the media feeds them for granted (Blumler & Katz, 1974, as cited by Livingstone, 2000). Thus, they are searching for information themselves. From a marketing perspective, I also think that although Akerhof makes a relevant point with his theory on the market of lemons, it is questionable to which extent it can be applied in practice. Consumers search for trust in the companies they buy their products from and thus actively for information. Companies also actively built a certain image to grantee the quality of their products.

Even though I took a risk in buying the previously mentioned shoes, it does not happen often that I buy shoes through a website I do not trust. We can thus see that although there are situations in which information asymmetry occurs, consumers themselves deal with the problem as well. Eventually, we might be even able to prevent ourselves from tasting that very sour lemon.

References

Akerlof, G. (1995). The market for “lemons”: Quality uncertainty and the market mechanism. In Essential Readings in Economics (pp. 175-188). Macmillan Education UK.

Livingstone, Sonia (2000) Television and the active audience. Formations: 21st century media studies. (pp. 175-195) Manchester University Press, Manchester, UK

Mullainathan, S., & Shleifer, A. (2005). The market for news. The American Economic Review95(4), 1031-1053.

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Technology Of The Week – NU.nl And Blendle

22

September

2016

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At the beginning of the 17th century, the first newspaper was introduced. In the subsequent ages, the news industry has faced enormous changes. In the last century, traditional publishers used a two-sided platform, with two money-side users, namely readers and advertisers. With the launch of the internet, the structure of such platforms transformed since traditional publishers had to respond to the changing business models of for instance NU.nl. The latter is one of the major providers of short online news articles in the Netherlands. The company allows users to have access to a wide variety of topics. NU.nl also uses a two-sided platform, but with only one money-side, the advertisers. The readers are the subsidy-side of this platform, allowing people to use the service without the need of a subscription. The introduction of companies like NU.nl, forced traditional publishers to also provide their news articles online. Causing a transition in the market from paper- to online articles.

Even though a decline in readers can be observed for traditional publishers, still a vast amount of consumers crave for in-depth articles with background information. Blendle, a new online news platform, responded to a customer group which prefers online articles with background information, without the need of having a subscription for traditional publishers. They only have to pay the articles they want to read. In this way users can compose their own newspaper-magazine bundle with the articles they are interested in. On average, users pay €0,20 per article, of which 70% goes to the publisher. The other 30% is revenue for Blendle.

Each business model has its own advantages and disadvantages. The advantages of NU.nl are the free offering of a wide variety of topics, providing users to absorb a lot of news in a short period, and the possibility to update news and articles at any time. However, the business model of NU.nl also has a number of downsides. Users consume the service for free, so NU.nl relies on income from the advertisement side. Advertisements are based on personal user data, which can be perceived as annoying and as an invasion on someone’s privacy. Lastly, NU.nl lacks in-depth articles, and is therefore not able to serve the whole market.

Blendle focusses on another segment of the market, namely the consumers who wants to read in-depth articles, online. Their main advantage is the wide offering of articles from most traditional publishers. Another advantage is that users do not need to subscribe. However, even though customers can limit their cost by paying per article, the cost of reading one is relatively high compared to traditional media. This is a downside of using Blendle.

Hence, the news market has faced a major change in the last decades which will continue in the upcoming years. The future will disclose which players and business models will remain, and which will disappear.

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