“Wait, babe, don’t leave just yet!” A full-screen popup appears on attempt to leave the Princess Polly website, offering you a 10% coupon in hopes that you’ll stay and make a (now discounted) purchase. On Amazon, millions of products are neatly categorized and presented alongside similar alternatives, creating the illusion of choice without the decision fatigue of sifting through countless options. Online retailers these days have plenty of clever ways to increase consumer spending on their sites: Americans spent $602 billion on e-commerce last year, which is 16% of total retail sales and increasing each year. But these strategies play on our natural instincts and are borderline manipulative, raising questions of what constitutes simple strategy versus unwanted coercion.
Digital marketing isn’t inherently evil — companies have to advertise and set up their websites somehow — but these strategies play on our natural instincts and are borderline manipulative, raising questions of what constitutes simple strategy versus unwanted coercion. Until governments address this distinction with policy, we can better equip ourselves to online shop for personal fulfillment rather than companies’ profit if we understand these specifically engineered strategies and use proven tactics to counter them.
Before you even make it to these sites, you’ve likely been inundated with social media messaging dictating which sites you choose to shop at. Brands have been updating their marketing strategies for the digital age, learning the optimal role of social media within their campaigns. One study finds that just “liking” a brand on facebook, or equivalently, following them on Instagram, doesn’t translate to increased fondness for a brand. In other words, consumers already know what brands they like when they follow those brands on social media, and following itself doesn’t increase fondness or purchases. This makes intuitive sense, as we consider the brands we’ve liked on facebook or followed on Instagram — I follow @kungfutea on Instagram for their occasional giveaways, and maybe you follow the Wendy’s Twitter for their iconic witty replies. We follow brands we already like, and posted content doesn’t change our behavior. Additionally, consumers’ friends don’t place much weight on Facebook likes, but more meaningful endorsements like an in-person recommendation will change their behavior.
Researchers suggest that this is because “liking” requires less personal investment, compared to watching a video. Thus, for a brand to appeal to modern consumers, it needs to engage you with its social media content, not just earn a follow. A user isn’t truly engaged unless they’re liking posts, watching YouTube videos, or remembering the name of a brand that’s popped up on the Explore page. We’ll look at two ways today’s brands build their engagement: brand personality and influencer marketing.
Creating brand recognition and engagement to ultimately increase sales requires proper use of social media. Specifically, a brand needs a personality. According to a Stanford study, purely increasing “reach,” or the number of followers, doesn’t increase engagement. Instead, companies found more success with “brand building” rather than “performance marketing” posts, which means more human-like, less corporate content.
“When a company says, ‘Hey, here’s a coupon for 20% off,’ it gets very little engagement,” says Nair, a Stanford marketing professor who worked on the study. “When it uses what we call ‘brand-personality’ content — essentially, when it talks to users in ways that simulate a human being — it gets lots of engagement.”
Content that appears human and relatable, even content we know is sponsored, appeals to a human desire to connect with others who are similar to us. Social media marketing that seems humorous, relatable, emotional, perhaps laden with memes and internet slang, will appeal to us the most, leading to likes, comments, and shares. This leads into our next topic — what could be more relatable than other, ordinary humans?
An up-and-coming research field, influencer marketing is “a marketing technique in which companies partner with people with specialized knowledge, expertise, authority, social position, and/or personal relationships that enable them to have influence over others to co-produce marketing messages to promote their brands via offline and electronic word-of-mouth,” according to Harvard Business School research. Essentially, traditional advertising no longer works for over 50% of millennials and Gen Z-ers who block or avoid ads, so companies speak through entities we trust: our friends, our peers, and influencers.
Researchers anticipate $15 billion spent on influencer marketing by 2022. It works because Millennials and Gen Z-ers are receptive to ads containing real people and stories, humor, or music. Personally, I’d rather buy a foundation stick that another teenage girl in California says makes her skin look dewy than one that I’ve seen advertised on TV. It makes sense to base our buying habits on others’ positive or negative experiences, and we like to keep up with cultural trends through the internet. TikTok is the latest platform for this, with “TikTok made me buy it” videos and articles flooding the internet recently and mainstream brands like Chipotle, Nike, and Fenty Beauty running sponsored content on the app.
However, consumers and casual viewers of digital content should be aware of what a sponsored post really is: an advertisement. I’d caution consumers to separate the objective aspects of the product from the “experience,” things like personal fondness for an influencer or unrelated aspects of their lifestyle that you want to emulate. It can feel like buying an influencer’s clothes or tech equipment will induct you into that group, which appeals to our community-oriented human nature, but influencers have mixed motivations for promoting these products, which may not reflect their actual preferences.
After brand loyalty and engagement have been established, more tactics are in place to maximize revenue on online retailers’ websites. One notable way these sites increase revenue is by redesigning choice architecture, or subtly nudging consumers towards certain behaviors by reframing the choice. Choice architecture was first popularized by Thaler of UChicago’s Booth School of Business and Sunstein of Harvard Law School, and has since become a cultural point that executives and governments alike use to improve and counteract people’s natural inclinations. For example, in countries with opt-out organ donation, there’s a drastic increase in participation as compared to opt-in. Similarly, employees save more when they commit to a future increase in their savings rate, (i.e. after they’ve had a raise), so eventually the additional money becomes savings and employees never feel like they’re “losing” money.
Here are four major ways online retailers reframe choices to get you to spend more money:
- Defaults and The Decoy Effect: with things like purchasing plans, there’s always a default “recommended” option, often made to look better by putting it next to dummy options.
- Giving positive feedback: Some websites have pop-ups like “great choice!” once something is added to your cart, or more subtly, the site is designed for ease of buying, like Amazon’s One-click and many clothing sites’ Quick Shop option. Another seemingly annoying form of feedback proves effective: one Stanford study found that retargeting, those ads that follow you around the internet after you leave a website, increase your likelihood of returning to about 15% and are most effective in the first 2 days.
- Structure Complex Choices: Consumers want the illusion of choice, but are actually deterred by too many choices. Retailers relieve this effect by breaking down plenteous choices into specific categories with a few similar items to compare. You get the feeling that you’ve thoughtfully picked the best option, when retailers have predetermined the subset of options displayed in the first place.
- Incentives: Many common strategies come to mind: $25 to get free shipping, labelling “Best Sellers,” bundling items together, and suggesting “frequently bought together” items. Bundles often exploit a decision making fallacy where a smaller item seems relatively cheap compared to an expensive item you’ve purchased. (For example, a $50 SD card from Best Buy seems reasonable to buy with your $1000 laptop, even if cheaper SD cards can be found from a quick Google search.) Another incentive we don’t often consider is non-salient costs, which involves intentionally highlighting aspects of a product that you wouldn’t otherwise encounter. For example, sustainable packaging or donating a portion of proceeds to charity appeal to ethics, not the product itself.
In an age where millions of tons of textile waste are generated each year and Americans spend at least $18,000 a year on non-essential goods, it’s worthwhile to think twice about what you’re buying and the ways digital marketing may be impacting that. Even being aware of subtle strategies to get you to spend money is an effective counter, as this Harvard Business Review article notes that behavioral nudges become fruitless once the user is aware of them. Another strategy is considering “anticipated regret,” the potential negative recollection you will have after buying a product, before you buy. This study finds that anticipated regret makes users less likely to fall for the decoy effect. Essentially, thinking fallacies occur when you seek justification from others — “this seems like a really good deal that would be foolish to pass up” — but the effect is removed when seeking justification only from yourself — “do I think this is worth the money?” There’s no need to stop online shopping altogether, but you can endeavor to shop effectively by your own standards, properly armed against brand manipulation.