Rory Sutherland - Vice chairman, Ogilvy UK

Rory Sutherland is vice chairman of Ogilvy UK and is an expert on consumer behaviour, trends and the influence of the internet. He analyses what branding means, what creativity is, and the value of persuasion over compulsion. He is also technology correspondent for The Spectator, the world’s oldest English language magazine. He is the author of Alchemy: The Surprising Power of Ideas That Don’t Make Sense.

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The future of brands 

We may think we are rational creatures but actually we make decisions largely on instinct and it’s this absence of rational decision-making which makes advertising and brands, so powerful. We often act based on how we feel, rather than on something we think, which is how advertising ties back to behavioural economics.

I think all economics should be behavioural economics. Today, economics is a very strange discipline, where theory is more important than observation. In physics, if you consistently observed a behaviour and you suddenly noticed that the behaviour seemed to conflict with the expected laws of physics, you would investigate it and ask why. In economics, behaviours that completely conflict with theory are put down to human irrationality and brushed aside. Economists today see advertising not as a source of value creation, but as a cost of production to be minimised. They think it’s a necessary evil; the more efficiencies the better. I think that’s completely the wrong way to look at it. I think advertising is an opportunity to create value out of nothing.

If you assume, as an economist might, that the only way to improve a product is to make it objectively better or to reduce the price, you’re imposing huge creative limitations on how you solve the problem. I think that government — having listened to economists — has failed to understand many of the inexpensive psychological tricks it could play. Something can be 'good' or 'bad', entirely dependent on the context in which it’s presented. There’s a Chinese restaurant which was famously successful for being the rudest restaurant in London. Normally, rudeness in a restaurant is a bad thing. If on the other hand, you turn the rudeness from being a downside into a source of entertainment, the very same thing which would be appalling in another setting actually becomes enjoyable.

Train delays are another example. A purist engineer would say that the only way to improve the railways is objective: you need faster, longer and more frequent trains. I’d suggest they make the waiting less annoying through accurate display boards, WiFi on the platform and a coffee shop with seating and tables. If I have a table and WiFi, I don’t really mind spending 20 minutes anywhere, providing it’s in survivable temperature. Do you look at time as a physicist looks at time? Which is that 20 minutes is twice as long as 10? Or do you look at time as a human actually perceives time, which is that it flies when you’re having fun. Magic is impossible in economics and physics, but it’s perfectly possible in psychology.

The 'placebo effect' is underutilised. One solution for our environmental challenges is to produce products that are kinder to the environment, but not tell people. If you produce a concentrate and claim it’s environmentally friendly, people will probably use more of it and be less impressed by the results. But if you reduce the quantity of chemicals and packaging and put the same ingredients in an intricate, more complex-looking tablet, people will think it’s more potent. That’s because we think that intricate things are more potent than simple things. In some areas of medicine where a part of the condition is psychological, like chronic pain, we should probably be trying to maximise placebo. At the moment, science doesn’t try to exploit placebo, it tries to ignore it.

Our perception of the world is heavily laden with presumptions and comparative perception. I hate to say this but it’s true: when we use environmentally friendly washing powder, not only will we assume it’s less potent and therefore use more of it, we will also be less impressed with the results, even if they are objectively identical. When you’re designing anything, you should design for what people perceive, not for what is.

The future of brands and advertising? The industry has to reinvent itself to survive, but I don’t see advertising as a whole as under threat because it’s millions of years old. Plants need to convince bees to visit so they invented flowers; a flower is a weed with an advertising budget. But it will have to incorporate behaviour more, to avoid missed opportunities. After all, just because you can find a reason for something, it doesn’t mean it’s true or right. If we only test and experiment in the areas that make sense, we’re paying a very large opportunity cost. The real discoveries take place left field.