Building on our earlier work into behavioural biases, we summarise a large body of academic literature to explore the mechanisms behind consumer attention, understanding and behaviour. We build this into a framework for understanding how consumers process information in the form of advertisements, divided into three stages: See, Interpret and Act. We then apply our findings by looking at what the science says about an advert that may be unclear, unfair or misleading.
In See, we find that attention may be predicted by the relative salience of information and is also affected by consumers’ motivation and intentions. For example, those searching for a house are more likely to notice mortgage deals.
In Interpret, we find that certain ways of presenting information, particularly those which play on consumers’ behavioural biases or which involve percentages may impede understanding and have the potential to mislead consumers in certain circumstances.
In Act, we see that consumers may be influenced into action through techniques which encourage reliance on heuristics or emotion, rather than reason, and the problems this may cause.
Throughout, we offer fictitious examples of adverts to illustrate the behavioural points we observe and suggest further areas for research which can guide our actions.
Authors: Paul Adams and Laura Smart
The authors work in the Behavioural Economics and Data Science Unit in the Strategy and Competition division of the FCA.
Event: From advert to action
To further explore the behavioural science behind financial promotion and the academic, industry and regulatory viewpoints on this subject, the FCA are hosting an event on 29 June 2017 at the London office.
Speakers will include:
- Rory Sutherland, founder of the behavioural interventions agency Ogilvy Change
- Joe Gladstone, assistant professor of consumer behaviour at UCL School of Management
- Laura Smart, co-author of this occasional paper
This event is intended for advertising and compliance professionals from regulated financial services firms, and other promotion regulators. Space is limited and attendance is restricted to one per organisation in the first instance.
Please complete the online registration form by 9 June 2017 to apply for your place.