Martin Lindstrom's Buyology: why every idea you ever had about why we buy won't be changed by what you read here.

Sydney-based author Martin Lindstrom’s Buy-ology might have made a brief appearance on the New York Times bestseller list in November buoyed by some good reviews, but by my standards and those professional marketers, strategists and critics of neuroscience around the world, its a mishmash of spectacularly insubstantial claims drawn from a single set of research experiments backed by cribbed online references and enthusiastic, anecdotal and sometimes annoying marketing evangelism. 



The whole premise of Buy-ology is that brand and purchase decisions are not made on any rational basis but by stimulation to certain sections of the brain. Lindstrom’s neuromarketing experiments use two types of brain-scan technology - functional magnetic resonance imaging (fMRI) and SST, an advanced form of electroencephalography (EEG) - to test how various marketing stimuli can affect the subconscious. While the book quotes a number of well known research studies and runs to over two hundred pages, less than a quarter is actually devoted to detailing and recording the results of its four experiments, its the entire basis for his argument.

So here’s the four earth shattering results Lindstrom claims may set off “the biggest branding revolution in 50 years”. It will save you buying this book.

The first experiment, using SST-ECG measured the impact of product placement in television programming and finds that “ we have no memory of the brands that don’t play an integral part of the storyline of a program”. The second, using fMRI on cigarette smokers, tested the effects of “overt, direct and visually stimulating images” and its relationship with subliminal advertising, finding that its iconography and images themselves not logos that actually stimulate purchase behaviour. The third experiment using fMRI tested whether “sports, and sports heroes activate the same areas of the brand as religions did” showed “the emotions we experience when we are exposed to strong brands” is similar if not “almost identical” to the emotions generated by religious symbols. Finally, his fourth experiment, using fMRI on an unknown number of subjects (Lindstrom forgets to tell us how many participated in half these experiements) was designed to “determine whether a signature sound – like the Nokia ring tone – makes a brand more less attractive”. The shocking result: most brands do well when “sound and vision are combined in a congruent way”. Unless you’re Nokia because after a decade or so of use, its ringtone now has a strong aural disassociation. Lindstrom found this result so disturbing he had to give the company a call and tell them!

Lindstrom claims all these “controversial” and “spectacular” findings come from a three-year, $7 million experiment testing 2081 volunteers in the US and Europe (he says they were also from Japan and China but I can’t find these in the results). Buy-ology doesn’t substantiate either the costs or the length of the study period. For example, the commercial cost of fMRI can be around US$525 per hour with standard scans taking around an hour. New fMRI scanners cost anywhere between US$1m and $2.3m and portable scanners around US$2m, so perhaps he had to buy a scanner or two but I seriously doubt this. The point is that he only conducted three fMRI experiments on at least 65 people. Also the standard cost of an ECG scan in the US can range from U$100 to more than $500, depending on the purpose and type of test i.e., asleep or awake, invasive vs non-invasive electrode implantation. Lindstrom’s was non-invasive and his 400 subjects were awake. You do the math.

Untested is Lindstrom's discussion of mirror neurons, behavioural priming and somatic markers, which he tries to draw a line from his own experiments via some scholarly studies he found online. But Lindstrom’s experiments do attract an even bigger question about neuroscience and marketing – whether this kind of research is actually a useful predictor of behaviour. Lindstrom might be fairly certain of this science but most critics of the use of such limited research insist it's too early in the field of neuromarketing to draw these kinds of absolute conclusions. According to Sheffield University School of Psychology Professor Lawrence Parsons, “we don't really know what we are seeing when we watch the brain work. Is it the thing itself - the thought, the flash of insight - or just an aspect of it, the bark rather than the dog?”

It’s clear to me Lindstrom’s claims require substantial research to draw any probable link between the outcomes of these experiments and predictors of future purchase behaviour. Right now his results just show a degree of correlation between stimulation and behaviour, they don’t prove a single basis of causation.

Last year I read a New Yorker article on the roots of psychopathy, describing how researchers have being using a portable fMRI scanner to scan the brains of US prison inmates to uncover the basis of psychopathy. It suggests that if a “biological basis for psychopathy could be established” then pharmacological treatments could be developed. Might not similar treatments be developed for behaviours such as impulse buying and mall rage? These experiments have been conducted for years and have drawn the kinds of accusations which put them in the same category as nineteenth century phrenology. Yet, unlike Lindstrom, none of these researchers dare draw any final conclusions. The field, like neuromarketing is so new, researchers believe they will need more to spend the next ten years and maybe another 10000 scans linked to prisoner DNA, biographical data and case histories before anyone thinks the data makes sense.

In one interview last year Lindstrom said, “If I wrote a serious, heavy book, no consumers would read it” and a trawl through Amazon reader reviews on Buy-ology will confirm that. A Some advertising agency planners might like this book and a few business and industry people might be gobsmacked, but you won’t read anything here you don’t already know already or can’t find online. But if you like this kind of marketing sooth saying the globetrotting Lindstrom will be in New York and San Francisco in March presenting his exclusive Buy-ology symposiums, digging “wider and deeper than it was possible in the book alone, into the research findings and their implications for marketers and advertisers”. I can’t wait.

This review was also published in Marketing Magazine Australia blog on 19 January .

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See this is the future of television2: new broadcast business models need airing.

As television audiences and ultimately revenues from traditional advertising continue to erode, free-to-air (FTA)network broadcasters need to move towards new business models, better embrace brand opportunities and adopt increasingly newer technologies.

While in Australia and throughout the rest of the western world, network television is still widely regarded as the best means to deliver the highest number of eyeballs for an advertiser. Increasingly this view is being challenged. First, by the decline in core audience numbers and secondly, from generational abandonment by would-be viewers who can now source their information and entertainment needs from a variety of media sources that sit outside traditional FTA business models.

While the ownership models of FTAs have changed, revenues have remained high and consistent for the past decade and there continues to be increasing aggregation to more whole-of-media models (where media ownership laws permit), there is little change in the way current revenues are realised.

Globally FTA networks are still stuck in a late 1940s model of advertising and sponsorship (worse still are newspapers whose models are more 18th century) barely moving beyond offering air-time to sell soap powders since the first broadcasts in the 1930s.

In 2007 total Australian FTA advertising revenues rose to $3.7 billion, an increase of only 8% from 2006 (ThinkTV/Free TV Advertising Revenues, 2008). Pay or subscription TV with revenues of $275 million, deriving around 92% of revenue from subscription, appears to have also stalled at 27% penetration in Australia despite advertising growth of around 29%. However, this seems unlikely to rise, even with adoption of personal video recorders (PVRs) such as TiVO or Foxtel's IQ.

Against this total Australian internet advertising revenues increased 34.5% to $1.34 billion. According to AdNews online advertising revenues represented the fastest growing media sector, only surpassed by total print media at $4.7billion and total TV revenues.

While FTA’s obviously enjoy a predominant position in Australian and other global media consumption in 2007, the 8% increase in advertising revenue can mainly be attributed to rate card increases.

And while they have sort to extend their brands and access to online advertising dollars through joint ventures with predominately US owned portals. Jointly, the combined media of Nine MSN, Yahoo7 and News Digital media have a market share less than 15% of the total online advertising market.

It is now generally accepted that audiences for FTA are in decline and this is likely to worsen. Between 2001-5 it was 1.4% annually or 5.6% compounded, leading the charge is the 16-39 demographic, who have declined almost 17% in absolute terms across the same period.

The flight from FTA viewing reflects a broadcasting landscape that has become less about centralised technology and more about access viewers or users have and engagement to content via a variety of platforms and devices.

In March 2008 the Boston Consulting Group warned FTA networks were in danger of losing significant revenue because they were not connecting with viewers but in reality there was no significant change throughout 2008.

So rather than fear the move away from traditional models that have changed little since the birth of television, FTA broadcasters may find embracing the brave new world is not the death knell but an opportunity for new business models and revenue streams through better brand and audience engagement. There are four I believe could work.

1. The Social Network model

This model is around a network portal where a consumer can get their information, social and entertainment needs met in one place. This would allow someone to manage, distribute and mix and match media as it is loaded onto a device of choice and share this directly with communities of interest. In the future, a FTA may look a lot more like a cross between FaceBook, Google and YouTube. The Social Network will also enable advertisers to target individuals directly or as a group and more precisely as they will choose to self identify, often on the basis of receiving free content or because they want to know about an advertiser’s product. This makes them both highly valued and a targeted set of eyeballs for an advertiser and enhances revenue opportunities.

2. The Long Tail

FTA networks have been relatively poor in optimising their return from commissioned and original programming. In a long tail scenario, an FTA could both bundle and sell branded programming of any vintage and in any classification via aggregator stores of their own creation or through established outlets such as iTunes, Amazon and Hulu. All of this could be contained within variant pricing models, dependent on the nature and type of of viewer demand.

3. Contextual programming device neutral

In much the same way YouTube is now streaming to a variety of mobile devices and most recently TiVo, contextual programming model derives its income from a pay per view independent of the device. This will enable the FTA networks to maintain control of content as the content it will continue to be stored by the network or its proxy and stream to the chosen device. Further, viewers may choose to receive advertising in exchange for lower content charges. This is way beyond current deals done on offer for mobile television by mobile phone carriers in Australia with the most recent examples, Vodafone’s newly launched Mobile TV or Telstra's BigPond TV.

4. Increased branded merchandising and branded product placement in original network owned programming

US research company PQ Media estimated that Australian companies spent A$137.8 million placing products and brands in TV programs and films in 2005. Australia is the third-biggest product placement market in the world. Against total revenues, contribution for branded merchandising and products this represents less than 0.4% . In 2007 US product placement grew by an estimated 31% with projected spending of $3.79 billion across film and television. In the branded merchandise area, even the lowly SBS network made $48m in 2007 from business interests, including branded merchandise versus $37m from advertising. There are massive and unrealised potential opportunities for FTAs to exploit this area - both in building their own brands (an area they seem to overlook), in network owned production and through product placement opportunities.

While most FTA networks are unlikely to publicly acknowledge their diminishing returns for their advertisers, they urgently need to look at new business models which better identify what and to whom they are delivering and where they can attact new income streams. Up to now FTA network business seems to have ignored the massive changes which have occurred in the rest of media and other sectors, perhaps because their product has continued to be delivered free into low cost devices. So while FTA network owners and shareholders may see some comfort in rising advertising revenues, what does seems inevitable like an inverse version of Moore’s law, is change and like newspapers, some kind of arresting demise.