Updated: May 26, 2021
More than $600 billion is spent every year on advertising alone. Every day we are bombarded by advertisements – for cars, insurance, phones, restaurants, and more - each desperately competing for our hard-earned dollars.
We see and hear ads everywhere: billboards, commercials, pop-ups, podcasts, radio, email, and snail mail. And now with the rise of search engine, browsers, and phone apps advertisers are able to use our habits, locations, and interests to create laser-focused ads to niche audiences.
It’s easy to view ads as the background to our lives. But the reality is that we are influenced by ads far more than we would probably care to admit. Advertisers are masters at using human psychology to their advantage. It’s very likely you’ve made a purchase this simply because of the gentle persuasion of one of these five tricks that advertisers use.
1. Scarcity Marketing
Have you ever been booking on a travel site and seen a pop-up that says “only two left at this price”? Have you ever gotten an email a one-day-only sale at your favorite retailer? These are classic examples of scarcity marketing. The purpose is to get you to feel that you’ve been given a unique opportunity – one that you must take advantage of before it’s gone. Advertisers want you to make the product seem almost inaccessible so that you will feel fortunate to have bought it at all.
Disney used scarcity marketing for years with their “vault” system. They would make classic Disney films available for purchase on DVD or VHS for a limited time before putting them back into the “vault” and only bring them back out for retail years later. This system worked well for many years but in the age of streaming and content libraries Disney has since shifted their strategy by offering all of their movies on Disney Plus.
2. Getting Their Foot in the Door
Advertising is a numbers game. The vast majority of people will ignore any given ad and will never buy the advertised product. But research has shown that when you can get a potential buyer to engage with the product, even if it’s just for just a few seconds, your chances of making the sale go up significantly. So advertisers often look for ways to “get their foot in the door”.
This is why when you go to the car dealership, the salesperson will ask you if you want to take a test drive. They understand that if you get in the car and actually get a feel for how much nicer it is than your current vehicle then you will be much more likely to buy. It’s the same reason why streaming services offer 30-day free trials, why restaurants hand out free samples, and why clothing stores provide fitting rooms. Once you’ve tried it and liked it, you are much more likely to buy.
3. Fear of Missing Out (FOMO)
This is the age-old problem of trying to keep up with the Jones’. If everybody else is going to be there then I don’t want to be left out. Remember in school when somebody was going to have a really cool birthday party and you hoped you got invited? This “FOMO” is a powerful motivator and one that advertisers use all the time.
Have you ever seen an ad that reads something like this: “9 out of 10 people prefer _______ (Old Spice, Crest Toothpaste, Dove chocolate, etc.)”? Or maybe companies will say it this way: “Over 1 million customers have seen results with ________ (Proactiv, Ancestry.com, Rogaine, etc.). These statements appeal to our FOMO. This is the same reason why social media platforms like Facebook, Twitter, Instagram, and Tik Tok can grow exponentially in a matter of a few years. As people realize more and more of their friends and family are on these sites then they don’t want to miss out on the shared experience it offers.
When the fear of missing out is combined with this next advertising trick, it can become a powerful combination.
4. Introducing Time Limits
Cue the Jeopardy music.
Have you noticed that there’s an added pressure when a time limit is introduced? Try to name as many U.S. states as you can in two minutes. Without a time limit, your mind is at ease and you are able to think clearly and deliberately. But when a time limit is involved, all of the sudden your calm demeanor collapses and your mind begins to race frantically.
When we are forced to make a quicker decision, it becomes harder for us to think clearly and rationally. This is why we are more likely to buy something that we don’t actually need if we perceive that we are missing out on a good opportunity.
It's also the reason why every infomercial sounds the same: “Call in the next 10 minutes and we’ll double your order! That's two chia pets, two ShamWow’s, and two Snuggies all for just $49.95!”. Starbucks and McDonalds introduce time limits by offering seasonal products like the Pumpkin Spice Lattes and Shamrock Shakes that you can only buy during certain months of the year. Retailers like Amazon introduce time limits by offering special “one-day” sales like Prime Day or Cyber Monday.
These time limits encourage us to make impulse-based decisions in the moment. Many times we buy things that we wouldn't buy otherwise simply because we felt pressured by the time limit that was introduced.
We tend to rely more heavily on the first piece information we are given in comparison to subsequent pieces of information. This is a psychological phenomenon known as “anchoring”.
Let’s say you’re shopping for some new shirts. You see one that you like and notice that the price tag says $100, but just below it is a red sticker that says 50% off. You were only planning to spend $30, but since this is a $100 shirt that you can get for only $50 you decide to buy it. This is anchoring. In your mind, you viewed that shirt as a $100 shirt because that’s the first piece of information you received about it. By comparison then, $50 is a great deal. But if the price tag had simply read $50 you may not have bought it at all because you would think of it only as a $50 shirt.
Sometimes stores will utilize the trick of anchoring by suggesting a higher volume purchase i.e. “Get 10 for $10”. Each unit is $1 but by anchoring the number 10 in your mind it makes you more likely to buy in larger volume.
Other times, businesses will use anchoring to create a context for how you should value a particular product. They will purposely price one product high to make a similar product look appealing by comparison. For instance, an amusement park may sell medium-sized fountain drinks for $5 and large-sized fountain drinks for $6. Most people will buy the large because they reason they’ll get 30% more soda for only $1 more. But of course the more important point is that you’re paying $6 for a soda!
How to Avoid these Advertising Tricks
· Maintain a monthly budget and stay within your limits – if you don’t have financial guardrails it will be much easier to fall for these advertising tricks and overspend where you don’t need to
· Use the 24-hour rule – don’t make a major purchase (more than $100-200) without waiting a full day. Often you will realize it’s not as important as it felt in the moment.
· Do your research – if you have a good understanding for what a reasonable price is then you will be less susceptible to marketing tricks like anchoring or scarcity marketing.
· Create a savings plan – if there is something you want to buy begin saving up to pay for it in cash. This will help you avoid making a impulsive decision and also force you to guard the amount you spend because you are much more aware of the cost of saving.