You don’t have to be a fancy behavioral economist to use fancy economics insights to arm yourself against the tricks of the trade.
How powerful are cognitive biases in overcoming the best rational efforts of even super-smart folks?
So powerful, in fact, that they’re irresistible in almost all cases – if done right. That’s according to a view by marketing agency guru Blair Enns, in conversation here with his colleague David C. Baker. Tricks that work in a consumer setting also work in a business setting. No one is immune.
Over the years, I’ve been a keen observer of subtle psychological tactics Google has studied, tested, and expertly deployed to lull advertisers to bid higher on each user interaction.
Most of the tricks our team has been uncovering over the years are experienced within the Google Ads interface.
In the interface, I firmly believe that Google’s top minds have done more to activate cutting-edge principles from behavioral economics than pretty much any company in history. Behavioral economics experts like Kahneman and Tversky discovered and catalogued types of cognitive bias that cause us to depart from rational choices. Some of them – here, I’ll relate them back to Google Ads bidding – include:
- WYSIATI or “What you see is all there is.” In the literature, this was initially known as the “availability heuristic.” Google shows you what it prefers you to see. But what it wants you to be oblivious of? These data points might be harder to find. They include irrelevant queries, your brand terms masquerading as high performance on a nonbrand campaign, placements you don’t want in Demand Gen or Performance Max campaigns, channel performance data in PMax, and the list goes on. You need to know where to look for key data and insights.
- Anchoring. As many of you know, even an irrelevant number picked out of a hat can affect what people guess as an accurate number, or what they think of as a fair price. Ever bought that Prada tennis dress for $2,800 when walking into Sporting Life? No? To what degree does that allow the retailer to mark up some mid-priced tennis shoes on a nearby shelf? This numbers game plays out daily within the Google Ads interface. Bringing your innate drive to “do better” and to “get to the essence” is key to advertising success. Let others follow their instinct to “do what’s normal” and to “fit in with the crowd.”
- Framing by Naming. The solution to a problem or one’s impression of different alternatives could, potentially, look different to us semi-rational, easily-swayed humans simply through what word choices we (ahem, Google) use when it’s time to get down to business. Take the campaign name “AI Max.” Would this campaign type maximize the use of beneficial AI in your advertising effort? Would it make sure that your ads show up in AI Overviews or AI Mode? Hardly. But if millions of advertisers think so, Google can better train their systems, while the ROI for those advertisers may lag their more diligent, skeptical peers.
- Overconfidence and Availability Combined. What if the numbers aren’t “the” numbers? What would happen if, on multiple occasions, a company like Google figured out ways of adjusting the performance numbers it shows you? What if, for example, Google begins to use “modeling” to respond to data loss (for example through user privacy settings)? It’s important to understand that “the” numbers are directional. If your platform-stated ROAS is improving, but your company’s P&L isn’t, you might want to give some credence to the latter. When “winning” doesn’t feel like winning, it might be time to dig deeper.
It’s certainly not a fair fight when trying to make a living under the shadow of a multitrillion dollar empire like Google. The fact that for years, they’ve employed a Chief Economist might tell you a thing or two. Few advertisers have the resources to run an entire economics department. But what we can do is to be wise to the types of cognitive bias that lead to human error, and to be aware of the specific techniques Google uses in this regard, specifically to foster inefficiencies in ad spend.
When deploying your ad budget, it’s important to avoid being victimized by shell games. At Page Zero, we’re dedicated to doing just that on behalf of our clients.