Neuromarketing What You Need to Know

It was called the astonishing hypothesis by Francis Crick, Nobel Laureate. it is the idea that all emotions, thoughts, and actions, even consciousness, are just the product of neural activity in your brain. This idea holds promise for marketers. It is possible to reduce uncertainty and conjecture in understanding consumer behavior. The field of neuromarketing — sometimes known as consumer neuroscience — studies the brain to predict and potentially even manipulate consumer behavior and decision making. Neuromarketing was once considered a “frontier science” but has seen significant progress in the last five years. Numerous groundbreaking studies have shown its value to marketers.

Despite neuromarketing being accepted as a valid method of marketing, many marketers are still unsure if it is worth the investment. Which tools are the most effective? How do you make it work? Marketers need to be able to identify the various techniques used, their uses in academia and industry, as well as the potential future possibilities.

The Tools for Neuromarketing

“Neuromarketing” is loosely defined as the measurement of neural and physiological signals in order to gain insight into customers’ motivations, preferences, and decisions. This can be used to inform creative advertising, product design, pricing, and other marketing areas. The most popular methods of measuring are brain scanning which measures neural activity and physiological tracking which measures eye movement and other proxies.

EEG and fMRI are the two main tools for scanning the brain. Functional magnetic resonance imaging (fMRI) tracks changes in blood flow through the brain. It is administered while the subject lies down inside a machine that continuously measures time. An EEG (electroencephalogram) reads brain-cell activity using sensors placed on the subject’s scalp; it can track changes in activity over fractions of a second, but it does a poor job of pinpointing exactly where the activity occurs or measuring it in deep, subcortical regions of the brain (where a lot of interesting activity takes place). An fMRI is able to peer into the brain, but it’s cumbersome and can only track activity for a few seconds, so it may miss some fleeting neural incidents. EEG equipment is typically more expensive than fMRI, which can cost around $5 million-plus high overhead. Compared to about $20,000.

The tools for measuring brain activity are more accessible and cheaper. Eye-tracking can measure attention (via the eye’s fixation points) as well as arousal (via pupil dilation); facial expression coding (reading the minute movements of muscles in the faces) can measure emotional responses. Heart rate, respiration rate, and skin conductivity can also be used to measure arousal.

In the mid-2000s, consumer neuroscience became a hot topic. Business school researchers began to show that branding, advertising, and other marketing techniques can have measurable effects on the brain. Emory University gave Pepsi and Coca-Cola to subjects using an fMRI machine in 2004. Researchers observed a consistent neural response when the drinks were not identified. However, when the brand was identified, the researchers observed a consistent neural response. This suggests that the brain’s perception of the beverage has changed. A team of INSEAD’s Hilke Plassmann scanned subjects’ brains as they tried three different wines. Their brains registered each wine differently and had neural signatures that indicated a preference for the more expensive. All three wines tasted the same. Another academic study using fMRI showed that when customers see a price, it may alter their mental calculation of value. The neural data was different when it was displayed before the product was exposed, which suggests two different mental calculations.

Fading Pessimism

Despite promising academic findings, EEG and fMRI devices have not been widely adopted by marketers. Only 31% of 64 individuals surveyed by 64 neuromarketing companies reported that they used fMRI machines. Carl Marci, the chief neuroscientist at Nielsen Consumer Neuroscience, says that he knows of four or five vendors who have made the fMRI their main service offering and they all failed.

Partly, this is because of a general pessimism about the technique’s potential to provide valuable insights beyond what traditional marketing methods can offer. Ming Hsu is a marketing professor at UC Berkeley. In a 2017 article, he wrote that neuroscience can reveal that different prices can produce different results in brain scans. However, simpler methods can also prove to be more effective. A 2005 behavioral study showed that people are less adept at solving problems when they are given energy drinks at a lower price than when they are given the same drink at the full price. Do marketers really need to tell people that their brains react to Coke and Pepsi differently?

Infighting between enthusiastic marketers and cautious academics has not helped to ease pessimism over brain scans. Martin Lindstrom, a branding consultant, published an editorial in The New York Times in 2011 suggesting that iPhone users’ feelings about their phones were similar to romantic love. A letter was signed by forty-four academics to the Times critiquing the editorial.

Two reasons may explain why this skepticism could soon disappear. The science has improved rapidly over the past five years and is now able to confirm some of the bold “mind-reading” claims made by Lindstrom and other neuromarketing pioneers. Michael Platt is the director of the Wharton Neuroscience Initiative. He says a team from the University of Pennsylvania is close to proving that people actually love their phones as Lindstrom claimed. Brain scans will become more popular as the science gets more established and more neuroscience PhDs leave academia to work in the industry.

Neuromarketing Techniques: An Overview

Neuromarketing is a complex field that requires special equipment and skills beyond what most companies can afford. Executives who are interested in engaging one of the many providers of neuromarketing services should be able to identify the key features and distinguishing factors of each technique.

A number of academic studies have shown that brain data can be used to predict future product success more accurately than traditional market research tools like focus groups and surveys. Emory researchers found that brain activity measured using fMRI during music listening was significantly related to a song’s popularity three years later. However, when people were asked about their feelings about the songs they heard they did not predict how many sales they would make. Brain scans of participants who viewed antismoking ads predicted call volume to hotlines for smoking cessation. Traditional surveys of ad effectiveness didn’t. Stanford University’s fMRI was used to better predict the success of crowdfunding and microloans on the internet than traditional surveys. The success of movies was predicted by Northwestern neuroscience and business professor Moran Cerf. This team used EEG readings from audience members to predict the outcome with greater accuracy than traditional methods.

These studies show that neuromarketing is more effective than traditional methods, which are notoriously flawed. For instance, people don’t always share their memories, feelings, and preferences. People have a poor recall. They lie to please others or because they are embarrassed. The way a question is asked can influence their perceptions. Platt states that “what comes out of our mouths doesn’t always reflect what’s happening in our brains.” Although market testing can help overcome these shortcomings, it can also prove costly and risky. It can alert competitors to innovation and can only be done late in the development process when production and distribution systems have been established. Compromise approaches like conjoint analyses and simulated markets all require a compromise between quality and cost. These problems seem to be obviated by “Neuroforecasting,” which Brian Knutson, a Stanford neuroscientist, has called the predictive power of brain data.

Facial coding and eye tracking help increase the impact of creative content.

These techniques are still not included in standard marketing tools kits because they are expensive and difficult to use. Uma Karmarkar, a neuroeconomist from UC San Diego believes that brain scans are worth the cost in high-stakes situations, such as a product launch by a large consumer goods company. Marketers should find it exciting that only a few people can predict the response of a large customer base. Cerf concurs: “Neurofecasting is a viable competitor when you account for the time, effort, and cost of traditional methods of getting to the individual’s viewpoints.

Measurement of Physiological Signals

However, these advances have not stopped neuromarketers from adopting cheaper tools such as facial coding and eye-tracking. Nielsen, for instance, is a leading consultancy in a competitive field. It uses eye-tracking to ensure customers’ attention is on the right things at the right times and places (a logo, for example) and facial coding in order to ensure an ad triggers the response it intended (though Nielsen doesn’t use any of its tools alone).

The insights that physiological tools can provide — whether someone is feeling strong emotions, paying attention to the content, or remembering it — are extremely useful in designing advertisements. Horst Stimp, from the Advertising Research Foundation, says that good creative is essential for effective advertising. There is clear evidence that neuroscience-based research methods can make advertising more efficient.

However, many academics prefer brain scanning over physiological proxies to aid their research. Knutson says, “My general opinion is that the farther you are from the actual brain the more difficult your measurements will be.” However, physiological measurement techniques will continue to be popular in the industry because they are more reliable, less costly, require less technical knowledge, and can be easily paired with traditional marketing tools such as focus groups, surveys, and implicit association measures (for example: how long it takes to answer a question).

The Neuro Sell

So should companies invest in neuromarketing — whether through brain scans or cheaper techniques? Some have already: Time Warner and NBC have had neuromarketing units for many years. Recently, technology companies like Microsoft, Google, and Facebook have also established units. Karmarkar states that most companies cannot afford to have near capability in-house. However, smaller businesses can partner with specialist consulting firms.

Experts warn, however, that neuromarketing vendors oversell their services. Cerf said that there is still a lot to be done in the field and that more than 50 companies have approached him with “neuroscience offerings” seeking his endorsement. He says that he only found six companies that met a standard that I consider useful for managers.

Marketers are being assisted by industry groups to assess the effectiveness of different neuromarketing techniques. In 2017, the Advertising Research Foundation published an extensive academic study to determine whether neuroscientific methods were more accurate at predicting market behavior than traditional methods such as focus groups or implicit association measures. Scientists from Temple University and NYU compared traditional marketing studies with a range of “neuro”, including eye-tracking, heart rate, and skin conductance. Subsequent analysis revealed that fMRI was the best method to predict market behavior, but other methods are useful for increasing creativity and effectiveness.

Although it may sound creepy, consumers are already being influenced by neural manipulation.

To take advantage of these tools, companies that seek to partner with specialists should carefully manage their engagements. Karmarkar suggests that companies hire in-house neuroscientists for oversight of the work to ensure high-quality input from neuromarketing consultants. Cerf suggests that a checklist is helpful in ensuring high-quality input. Is any of the consulting’s methods, data, or tools published in peer-reviewed journals? The subject pool is representative of global brands. Are the consultants able to combine scientific and marketing knowledge? Are they able to show a track record for success? Can they show that they can offer insight beyond traditional methods?

Changing Minds

Marketers have always been more concerned than just measuring consumer preferences. They also seek to influence them. Researchers in neuroscience are exploring whether brain activity can influence purchase decisions. This area of research is both exciting and ethical. These are just a few of the ways that neuroscience could be used to influence consumer behavior in the future.

Improved segmentation. Marketers need to identify which segments of a population are most likely to be contacted by their advertising and branding efforts. This segmentation is usually done based on demographics (age, wealth, etc.) or psychographics. Segmenting consumers by brain differences may prove more effective: A study done by neuroscientists at INSEAD revealed brain differences among people who are easily influenced and influenced by marketing cues.

Sleep nudging. Neuroscientists discovered that our sleep patterns are open to manipulation. In 2015, a study showed that smoking was reduced when smokers were exposed to the smells of cigarettes and rotten eggs in “phase 2”. This is when the body prepares for deep sleeping. Similar studies have shown that certain products and behaviors can be promoted or increased in preference.

Hormone manipulation. Brain activity is influenced by neuromodulators — brain hormones (such as testosterone, cortisol, and oxytocin) and neurotransmitters (chemical messengers) that allow brain cells to communicate with one another. Researchers are studying how neuromodulators affect consumer behavior. They found that consumers who were given testosterone in 2015 had a higher preference for luxury brands. The researchers speculated that luxury goods are social markers, and testosterone can make people more sensitive to status.

Temporary neuroinhibition. Transcranial magnet stimulation (TMS), machines that use magnetic fields to stimulate and depress nerve cells in brains, temporarily “knocking off” certain areas much like a brain injury. TMS was used by neuroscientists to suppress activity in the posterior medial cortex. This resulted in people being less conformist. Moran Cerf worked with people whose fear and disgust were suppressed or amplified in order to determine if they had different responses to things that might be frightening (insects or long-term catastrophes). Also, to find out what messages can be used to encourage people to interact with these things, such as to eat insect-based food, which is a good source of protein with low environmental impacts.

While neural manipulation might seem a bit creepy or even dystopian to some, its defenders argue that marketers use tactics to influence customers without their knowledge. Michael Platt, whose group organized a conference in neuroethics, said that if a man sees a truck advertisement with a sexy model standing in front of it he will be influenced even if he isn’t aware. To have these conversations, we should involve people in law and consumer protection. However, I am not alarmed at all.” He and others pointed out that neuroscientific tools are currently nearly impossible to physically modify people’s brains.

Other forms of manipulation, however, are subtle. Cerf said that his greatest concern is the lack of transparency about what’s going on in neuroscience labs at large companies, especially tech giants like Amazon, Google, and Facebook. Some companies have been under investigation for conducting experiments without consent. This includes the 2012 manipulation of mood states by Facebook users through their newsfeeds, without notifying them. Cerf states that “my concern is if they go rogue.” They are already hiring neuroscientists from my lab and other labs. Yet, I and other academics have little insight into their work. I joke when I say that tech company will introduce an EEG to link with their home-assistant devices. This is when we should all panic.

While marketers struggle with ethical ambiguity, many start-ups in Silicon Valley are trying to make brain imaging more accessible and less expensive. Cerf states that fMRI could be portable and affordable. He and others agree that the research into the minds of consumers is continuing at a rapid pace. Marketers should keep up to date with the latest science.

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