Life lessons from an ad man | Rory Sutherland

The Value of Intangible Assets in Advertising

Introduction to TED and Advertising

• The speaker introduces himself as an advertising professional attending TED for the first time, humorously referencing "TED Evil," a fictional counterpart that funds TED.

• He reflects on the negative perception of intangible value created in advertising, which he describes as perceived or badge value.

The Future of Material Goods

• The speaker presents two choices for a future with fewer material goods: living in poverty or increasing the importance of intangible value.

• He critiques a costly engineering solution aimed at improving train travel by shortening journey times instead of enhancing the experience.

Perception vs. Reality

• Suggesting an alternative approach, he proposes using top models to enhance train journeys through luxury experiences rather than just efficiency.

• He questions why society focuses on solving tangible problems when many issues are rooted in perception, introducing the concept of placebos.

Placebo Education and Its Implications

Concept of Placebo Education

• The speaker discusses how education may not be about actual learning but rather about creating a perception of having received quality education.

• This notion leads to unwarranted self-confidence that can contribute to success later in life.

Historical Example: Frederick the Great

• He shares an anecdote about Frederick the Great's efforts to promote potato consumption among Prussians by branding it as a royal vegetable.

• Despite initial resistance, this marketing strategy led to widespread underground cultivation due to its perceived value.

Innovative Marketing Strategies

Ataturk's Approach

• A comparison is made with Ataturk’s clever strategy regarding veils in Turkey, showcasing lateral thinking over direct prohibition.

• This highlights how relative value and perception play crucial roles in societal acceptance and behavior change.

Conclusion on Perceived Value

Advertising and Behavioral Economics

The Subjectivity of Value

• All value is subjective, emphasizing that individual perceptions shape how we view worth.

• Persuasion can be more effective than compulsion; for example, smiley faces on speed signs trigger emotional responses and change behavior better than fines.

Behavioral Insights from Speed Regulation

• New speed signs cost less to operate than traditional cameras but significantly reduce accidents, showcasing the power of behavioral nudges over punitive measures.

• Italy's unique approach to penalty points (starting with 12 and losing them) leverages loss aversion, demonstrating a different cultural understanding of behavioral economics.

Historical Context of Value Perception

• In Prussia during the early 1800s, citizens exchanged jewelry for cast iron replicas as a symbol of sacrifice in war, illustrating how symbolic value can surpass material worth.

• The status associated with cast iron jewelry in Prussia highlights how societal values can shift away from traditional notions of wealth.

Social Pressures and Economic Behavior

• Shakerism exemplifies an early environmental movement where visible displays of wealth were discouraged, leading to egalitarian social structures.

• Products with high messaging or intangible value often promote equality; denim serves as an example where symbolic meaning outweighs material cost.

Cultural Reflections on Value

• Andy Warhol’s observation about Coca-Cola illustrates its democratic nature—everyone has equal access regardless of status.

• Traditional views equate real value with labor and materials; however, modern perspectives recognize the importance of intangible contributions in a diverse media landscape.

Evolution of Media and User Engagement

• The past media environment was monopolistic; today’s user-generated content allows individuals to create and share their own narratives.

• Food culture reflects this shift: "Food 2.0" emphasizes sharing experiences rather than just consumption.

Contextual Communication in Modern Society

• Contextual communication plays a crucial role in marketing; local products like Pernod are tailored to specific cultures but may not translate well globally.

The Power of Persuasive Technology

The Role of Interface in Decision Making

• The speaker emphasizes that persuasive technology is a powerful tool, suggesting we need to explore how to use it intelligently.

• An example is given about a hypothetical red button that saves money when pressed, illustrating how interface design can significantly influence saving behavior.

• The speaker critiques the marketing industry for promoting impulse buying while neglecting opportunities for impulse saving, highlighting the importance of changing decision-making interfaces.

Case Study: Shreddies Advertising Campaign

• A case study from Ogilvy Canada features Hunter Somerville's innovative approach to rebranding Shreddies cereal by introducing "Diamond Shreddies."

• The campaign demonstrates creating intangible value without altering the product itself, showcasing creativity in marketing strategies.

• Audience reactions reveal confusion over the new shape but also highlight how perception can be altered through clever branding.

Philosophical Insights on Value Creation

• A debate arises regarding consumer perceptions and preferences between square and diamond-shaped cereals, emphasizing subjective interpretations of value.

• Research from the American Institute of Wine Economics indicates that perceived quality often correlates with price rather than actual enjoyment, underscoring the role of perception in consumer behavior.

Appreciating Existing Values

• The speaker advocates for recognizing and valuing existing products and experiences rather than constantly seeking new innovations.

• A quote suggests that our job is to make familiar things feel new again, which aligns with enhancing appreciation for everyday items through social networking and shared experiences.

Final Thoughts on Value Perception