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Cautiously Optimistic

Social media for better communication and a better life

Posts Tagged ‘advertising

Getting Nudged at the Gas Station

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A book I can highly recommend is “Nudge: Improving Decisions About Health, Wealth, and Happiness” by Richard Thaler and Cass Sunstein. I even included a link to their blog on my blogroll.

I have to confess that I didn’t seek out the book on my own. Rather, I was assigned to write a book report about it in a consumer behavior class I took in grad school.

But boy was I glad I read it. The authors lay bare the ways that companies gently guide consumers to behave, and consume, in ways that are more profitable for them.

Nudges are not outright coercion, just subtle prompts that rely on mental inertia to do their work for them.

Amazon.com is famous for nudging customers toward ordering at least $25 worth of merchandise in order to qualify for free shipping. You don’t have to; they’re just letting you know.

But once you’ve ordered the minimum in order to get free shipping, the checkout page nudges you toward paying the standard shipping fee. You have to actively select free shipping in order to get it. That’s how nudges work. They rely on people taking the path of least resistance.

Recently I was filling up the tank at a gas station and realized I was being nudged.

A nudge toward paying for premium gas.Note how the cartoon finger is pressing the button on the right (click to enlarge), which of course is where the super-premium gasoline is dispensed. I was free to press any button, but I bet that just enough folks take the path of least resistance and select the most expensive grade of gas. Why not? It’s so easy. But taking the path of least resistance is often the most costly path.

So stay aware of how companies “helpfully” suggest options, and remember that no one has your best interests at heart the way you do.

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Written by Charles Primm

August 22, 2012 at 12:25 pm

A Reality Check for the Biz Side of Facebook

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Facebook logoThe eMarketer newsletter is reporting that Facebook’s global advertising revenues will exceed $5 billion in 2012, up from $3 billion in 2011. Just over half of this year’s revenues will come from US advertisers, the report says, which is interesting because Facebook itself reports that approximately 80 percent of its active users are outside of the US and Canada.

So although only providing around 20 percent of the user base, US-based advertisers are expected to pump in a little more than half of all the site’s total ad revenues.

It sounds like a lot of money, and it is.

But to put that in perspective, $5 billion in revenues doesn’t even crack the top 200 list of global companies.

This list from Wikipedia, backed up by references including corporate annual reports and the Financial Times Global 500 list, shows that US-based retailer Walmart had revenues of $421 billion as of 2011. The next four on the list are oil companies: ExxonMobil ($370 billion), Royal Dutch Shell ($368 billion), BP ($297 billion), and Sinopec ($289 billion).

Filling out the bottom of the list at number 205, with 2010 revenues of $40 billion, was information technology giant Cisco.

So while Facebook is certainly showing strong revenue growth, it has a long way to go to match the true titans of industry.

And next year, it may not even be able to match the titan of the Internet, Google. Another eMarketer report predicts that Google’s online ad business will roar past Facebook in 2013 and 2014, at least in the US.

So the next time you’re in Walmart, checking Facebook on your smartphone, just remember that the company that Sam Walton built is earning over 400 times as much revenue as the company that Mark Zuckerberg built. And that’s just this year.

Follow me on Twitter at @charlesprimm.

Written by Charles Primm

February 23, 2012 at 7:02 pm