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How emotions rule spending

By Natalia Kuznetsova-Rice
Realeyes emotion measurement. Emotions rule spending.

In his bestseller “Thinking, Fast and Slow” Daniel Kahneman addresses a phenomenon that could be a Golden Key to distinguishing performing ads versus non-performing ones. How to tell an ad that would bring real-life outcomes, expressed in dollars? Here's how:

Let’s start with an example that seems to be remote from economic decision making but bear with us. Imagine you’re asked: 

How much would you contribute to save an endangered species? 

This is a difficult question. Like most of the people in Kahneman’s research, it’s most likely that you have subconsciously substituted this question with an easier one: 

How much emotion do I feel when I think of dying dolphins? 

This question is much easier to answer. Essentially, you’ve substituted a difficult question “What do I think about it?” with an easier one “How do I feel about it?” This is one of the heuristics used by System 1, which role is to make quick and effortless decisions in order not to overload rational and analytical System 2. But the story doesn’t end there. Apparently, the intensity of feelings one feels towards dying dolphins is matched with a size of a contribution one is likely to make to save them. ‘Feelings and dollar contributions are both intensity scales.’ Kahneman explains.
 
Intensity Matching is a function of System 1 that connects feelings with financial actions. If you feel strongly about something, you’re more likely to invest into it. Kahneman calls it "the automatic process of the mental shotgun". Realeyes’ emotion measurement data, based on thousands of videos and millions of faces tested, confirms it with full confidence: the higher the emotional engagement with a video, the more likely a viewer to invest into a brand. It can be expressed in social activity increase or more directly, in sales lift.
 
Intensity Matching  is a function of System 1 that connects feelings with economic actions.  If you feel strongly about something, you’re more likely to invest into it. Kahneman calls it "the automatic process of the mental shotgun". Realeyes’ emotion measurement data, based on thousands of videos and millions of faces tested, confirms it with full confidence: the higher the emotional engagement with a video, the more likely a viewer to invest into a brand. It can be expressed in social activityincrease or more directly, in sales lift.

Most of the purchasing decisions will be made by System 1, which will match an intensity of emotion towards a certain brand with a willingness to spend 

When it comes to making purchasing decisions that are not crucial or life-changing, such as choosing a type of a detergent or even a type of a car, those decisions will be made by System 1, which will match an intensity of emotion towards a certain brand with a willingness to buy. Sometimes System 1 will ask System 2 for a rational verification (like in the case of a car), but rational analysis will not commence without an emotional response being there in the first place.

Is the intensity of your brand engagement up to the game? Let’s find out.
 
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Additional Reading
If you want to know more about Daniel Kahneman’s theory. According to his theory, our behavior is governed by System 1 and System 2. 

System 1 generates impressions, feelings, and inclinations. It operates automatically and quickly, with no effort or voluntary control. It generates a limited set of basic assessments and, among other cognitive heuristics, substitutes an easier question for a difficult one. 

System 2 allocates attention to the effortful mental activities that demand it, including complex computations. It’s associated with rational choice, analysis, and concentration. It verifies what System 1 submits for verification. Because System 1 is about cognitive ease, it’s also associated with good mood, intuition, and gullibility. A hard-working and System 2 that carries the weight of cognitive strain and increased effort, rather inconveniently also brings sadness, vigilance, and suspicion. If you start preparing your annual report in a cheerful mood, you rarely finish it feeling the same – that’s System 2. But when you’re asked “What’s the capital of France?”, you’re very likely to keep your cheerful mood because answering this question is no effort, which is a business of System 1. Because System 2 is always doing the hard work, it’s slow, reluctant, and depleted. 

If System 2 has the slightest chance not to take up on a new task, it won’t. Needless to say, any of us is overwhelmed with choices and decision making in our personal, social, and work lives and that is why most of those decisions are outsourced to System 1’s heuristics. Heuristics are mechanisms allowing to use cognitive shortcuts to address those endless decision-making requests. One of the shortcuts is substituting a more difficult question with a simpler one – instead of asking ‘What do I think about it?’ we ask ourselves ‘What do I feel about it?’

by Natalia Kuznetsova-Rice