While it is no secret that Americans love holidays, what we’re spending on Halloween this year might spook you.Americans are expected to spend a record $9.1 billion on the holiday this year, a more than $700 million increase compared to spending in 2016, according to a recent report.“The crowds have been wonderful this year, they seem really into it,” said Bill Frazetta, owner of Frazetta’s Costumes in East Stroudsburg.According to the [...]
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السبت، 28 أكتوبر 2017
Effective Frequency: Why Ads Might Impact You More Than You Think
Yesterday, I published an article entitled The Commandment of Treating Yourself, in which I lauded the virtue of caring for yourself but pointed out that it was a virtue that’s easily manipulated by advertisers to convince you to buy things you don’t really need. In the end, I concluded that the most powerful form of self-care is time, and the way to find that isn’t through buying products, but through smartly de-committing.
One thread that really runs through that article – and others that I’ve written before on how marketers and advertising can manipulate you – is the simple idea that marketing actually works. Many people simply don’t believe that it does. They are of the belief that they’ve seen every advertising trick in the book and that they don’t even see the ads any more.
However, what most people don’t realize is that marketers account for that exact mentality. They really, truly don’t mind if you don’t notice the advertisements. At all.
Recently, I came across a quote from a well-known book on advertising called Successful Advertising by Thomas Smith. This passage indicates clearly why marketers really don’t mind that you don’t notice ads most of the time.
“The first time people look at any given ad, they don’t even see it.
The second time, they don’t notice it.
The third time, they are aware that it is there.
The fourth time, they have a fleeting sense that they’ve seen it somewhere before.
The fifth time, they actually read the ad.
The sixth time they thumb their nose at it.
The seventh time, they start to get a little irritated with it.
The eighth time, they start to think, ‘Here’s that confounded ad again.’
The ninth time, they start to wonder if they’re missing out on something.
The tenth time, they ask their friends and neighbors if they’ve tried it.
The eleventh time, they wonder how the company is paying for all these ads.
The twelfth time, they start to think that it must be a good product.
The thirteenth time, they start to feel the product has value.
The fourteenth time, they start to remember wanting a product exactly like this for a long time.
The fifteenth time, they start to yearn for it because they can’t afford to buy it.
The sixteenth time, they accept the fact that they will buy it sometime in the future.
The seventeenth time, they make a note to buy the product.
The eighteenth time, they curse their poverty for not allowing them to buy this terrific product.
The nineteenth time, they count their money very carefully.
The twentieth time prospects see the ad, they buy what is offering.”
Now, let’s step back for a moment and think about what actually constitutes an ad.
An ad might take the form of a normal advertisement – a page in a magazine, or a banner ad.
An ad might take the form of a glowing “news report” about the product.
An ad might take the form of a Facebook posting or a Twitter posting inserted into your news feed.
An ad might take the form of a product placement within a program that you’re watching, one that the camera just happens to focus on for a second or two.
An ad might take the form of a testimonial from an actual friend of yours, one who is trying to perhaps start a multi level marketing “business” like Amway or take advantage of some affiliate marketing.
An ad might actually run across a bunch of those things, all at once.
The thing is, most marketers understand that you tune out a lot of ads. You don’t notice most of them. That’s why they rely on repeating ads over and over and over again – if you notice only a small percentage of advertisements and product placements and Facebook insertions and news reports, if they create a ton of those things, you’ll eventually notice some of them and the idea will be placed in your head.
Humans are very good at spotlight focusing, meaning that they pay a lot of attention to a narrow thing at any given moment, and most of the time ads will fall outside of that spotlight of focus. However, sometimes ads slip into that spotlight, no matter what we do, and if we notice a particular ad enough, it’s been shown over and over again that we’ll think more highly of that product and are more likely to buy it.
Advertising works. Marketing works. If it didn’t, companies wouldn’t invest billions into advertising and marketing.
Effective frequency explains why you often see the same ads over and over again, spread in various forms across your television, your smartphone, your computer screen, the middle of the programs you watch, and even sometimes in the words of your friends. It’s because, as the quote above makes clear, repeating a particular message and showing a particular product over and over eventually pushes people over a threshold of knowing about the product and desiring the product enough to buy the product.
There is no exact recipe for effective frequency. Sometimes, only a single exposure to an is enough. At other times, it can take many exposures to an ad. The Business Dictionary defines it as “Advertising theory that a consumer has to be exposed to an ad at least three times within a purchasing cycle (time between two consecutive purchases) to buy that product.”
John Philip Jones, an emeritus professor of advertising at Syracuse University, said in a 1997 paper: “Effective frequency can mean that a single advertising exposure is able to influence the purchase of a brand. However, as all experienced advertising people know, the phrase was really coined to communicate the idea that there must be enough concentration of media weight to cross a threshold. Repetition was considered necessary, and there had to be enough of it within the period before a consumer buys a product to influence his or her choice of brand.”
The important thing to remember here is the core concept. Effective frequency simply refers to the idea that a person has to be exposed to an ad many times for it to be effective, partially because many ads are unnoticed and partially because repetition of the noticed ads embed them in your head. So, advertising firms repeat ads, place products, and stick other forms of marketing for a product everywhere until you notice them – and you eventually will.
I’ll give you a recent example of this. In my spare time, I read a number of websites related to personal development. I listen to podcasts on the topic, read forums on the topic – in short, I really enjoy learning about it and reading what others have to say about it.
The thing is, whenever someone wants to pitch a product at people interested in personal development, you can tell because that product pops up everywhere. That doesn’t mean that the product is bad per se; it just means that someone involved in the product believes in it enough to spend a lot of money on a marketing campaign. They either think it’ll make a ton of money in the short term or that it’s the start of something that will last for a very long time.
A recent example of this is Leaderbox. It’s one of those subscription box services that have popped up in the last few years, but this one is being run by one of the foremost podcasters in the field of personal development, Michael Hyatt. The box comes out monthly and contains two books on leadership and personal growth, along with supplementary materials and a private online discussion forum.
Don’t get me wrong, there’s nothing particularly wrong with this product. I think that the sticker price on it is excessively high, but the content seems compelling – it’s effectively a well designed book club for leadership and personal growth books.
For me personally, it’s something that I would describe myself as semi-interested in. I love to do deep readings of those types of books, taking notes and looking at what I can apply to my own life, but I vastly prefer to just get such books from the library (which is free, far better than the high cost of Leaderbox) and read them at my own pace. This lets me choose my own books, read at my own pace, and best of all, it’s free. So, the idea of Leaderbox is something I’d call semi-interesting to me, but not enough that I’d actually buy it.
The advertising campaign for Leaderbox, however, is extremely effective. Mentions and ads for Leaderbox kept showing up again and again in the things that I look at. I probably missed the first half-dozen references to it. Then, at some point, I saw it on a website that I was reading and I thought, “Hmm… that seems interesting.” Then it popped up somewhere else. And somewhere else. Then a few people mentioned it in a discussion forum that I participate in. Then a particular podcast I listen to talked about it a little.
Thus, my awareness of it snowballed.
The funny thing was, this repetition gradually inched me from something I wouldn’t consider at all to asking myself whether I actually was interested in it and whether or not it would qualify as a business expense and whether or not I could sensibly afford it.
Why did that transition happen? Honestly, it was effective frequency. The fact that it kept popping up over and over again forced it onto my radar when it otherwise wouldn’t have had a single thought from me.
Again, remember, I’m not bashing Leaderbox in any way. I’m simply pointing out that it has a very effective marketing campaign behind it, one that lifted a product out of what would have been vague awareness and apathy from me to actual consideration of the product. That would never have happened without an effective marketing campaign.
So, what can you do about effective frequency? If it’s a given that you will eventually be exposed to multiple impressions of a particular ad campaign, what can you do to keep that campaign’s influence on your spending at a minimum?
Here are five things that I personally find very effective for reducing the power that pervasive marketing campaigns have in steering my spending.
First, constantly question whether or not a product would actually benefit you beyond what you already have. Ask yourself whether this is something that’s really going to provide anything beyond what you already have access to? If it does provide something “extra,” is that “extra” worth the additional cost?
For example, with the subscription box mentioned above, the only real additional value that I would get for the cost is the reading guide and access to an online discussion forum, one that I could probably start myself. I’d also have the physical books, but I could honestly check them out from the library. Is that worth the high monthly price? Not for me, it isn’t.
Once I broke down what I was actually getting for my dollars, the product seemed less compelling.
The key for me is to compare it to what I already have access to and then look only at the extras beyond that that the product was giving me.
So, for example, if you’re drooling over the latest smartphone, stop and compare the difference between that phone and the one you already have. Is it really sensible to pay $700 for another 0.25″ of screen space and a little bit more storage space for games that you’ll play once and forget about?
When you start looking at things through the lens of what it actually brings you that you don’t already have, a lot of products don’t really look all that great.
Second, buy store brands as a default. My default isn’t to buy a name brand I’ve heard about, ever, when there’s a store brand alternative. I only switch away from that if it’s not actually doing what I want.
That simple move eliminates a lot of the decision making that I’ll do in a grocery store or department store. I don’t have to decide between fifteen different kinds of ketchup. I just buy the store brand and keep moving.
The thing to remember is that it’s when you stop and try to make a more nuanced decision that marketing rears its head. The simple truth is that you remember the name brands and those products and think a little more highly of them thanks to effective frequency, not because they’re particularly good (they might actually be good products, but that’s not why you remember them or think highly of them most of the time).
Third, stop and think outside of your normal situation whenever you’re about to spend money. If you’re about to buy a product in a store, put it down for a few seconds and think about whether you really need it. If you’re buying a product online, close the web browser before clicking on the “buy” button. Give yourself a breather and a change of scenery before buying. This is particularly true if the item is a big ticket item.
Why do this? Simply changing one’s scenery often changes one’s train of thought regarding a particular item. Effective frequency works best when a repeated message carries you on a wave right to that purchase. Stepping out of the situation takes you off of that wave, at least for now.
One technique I like to use is to maintain a “wishlist” of items that I’m really interested in. Rather than buying the item, I add the item I’m excited about to my “wishlist.” I actually keep that wishlist in Evernote so I can add to it no matter where I’m at. This helps because it leaves me with a sense of taking action on that item in the moment, which takes the edge off the desire to buy.
Later on, maybe once every month or two, I’ll review the wishlist. Guess what? I usually discover that almost everything on there has faded in terms of my interest and I feel completely fine deleting almost all of them. The ones that remain are things that I might actually consider buying, but I feel okay doing bargain hunting for those items at that point.
Fourth, spend more time on “slow” media rather than “fast” media. The idea of “slow” media and “fast” media is one that I’ve been developing on my own recently and it’s one that I think is really helpful in terms of controlling effective frequency.
“Fast” media is media that’s delivered quickly in bite-size pieces. Think about short online articles, social media updates, quick segments on 24 hour news channels, any program interrupted by commercials, and so on. Those things are designed to hook your attention for only brief spurts, usually just long enough to deliver the briefest of information and also slide an ad view in there in that burst.
“Slow” media is media that comes in a longer form. Think about books, feature-length movies, television shows that are designed to be binge-watched, and so on. These things are designed to hold your attention for longer spans and are less prone to constant interruption and distraction. Ads don’t interrupt your books when you turn the page and, aside from a bit of product placement, they don’t show up in films or long-form television shows, either.
Spend more time enjoying “slow” media than “fast” media. Keep a book on your phone or in your pocket or purse and read it while you’re waiting or have a few minutes of down time instead of browsing pointless websites. Cancel your cable subscription and get your news from long-form written articles that are well researched. Yes, it takes a bit more effort to focus on such things, but in doing so, you’re taking a major step to knock back the effectiveness of frequency.
Finally, be aware that effective frequency exists and notice it. Simply being aware of a marketing trick takes away at least some of the power. When you notice that you’re seeing the same messaging over and over, recognize it for what it is. It’s just effective frequency at work. It’s just an ad agency using one of the oldest tricks in the book.
Again, pointing back at that example with the subscription box, it wasn’t until I realized that they were using effective frequency that I really began to question why the concept was slowly becoming more intriguing to me. Simply being aware of the trick being used takes away some of the magic, just like understanding the sleight of hand of an illusionist eliminates the mystery.
That’s the real secret to piercing the veil of many advertising tactics, not just effective frequency. Watch for them. Be aware of them. Take steps to distance yourself from them. The more you do that, the less effective those tactics become.
Good luck.
The post Effective Frequency: Why Ads Might Impact You More Than You Think appeared first on The Simple Dollar.
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How to Get Out of Debt Faster: Balance Transfer or Payday Loan?
Anyone who’s ever found themselves overextended on debt knows what a precarious financial situation that can be. When unexpected costs pile on top of existing debt, it can push a borrower’s finances over the limit. That’s when it may be tempting to take out a payday loan.
The Consumer Financial Protection Bureau defines a payday loan as “usually a short-term, high-cost loan, generally for $500 or less, that is typically due on your next payday.” Essentially, payday loans — also known as cash advance or check advance loans — are designed to cover sudden expenses while borrowers are in between paychecks.
Here’s how payday loans work:
- You visit a payday lender and agree on an amount.
- You write the lender a post-dated personal check for the said amount, plus fees, to be cashed on a specified date. On average, the typical term is about two weeks.
- When that date arrives, the lender cashes the check.
Simple enough. But if you don’t have enough money to repay the lender on time, then interest kicks in. Payday loans usually involve very high annual interest, or APR (annual percentage rate). According to the CFPB, the typical two-week payday loan comes with a $15 per $100 finance fee. Sounds like a 15% interest rate, which doesn’t seem too bad, right? Think again. The personal finance experts will tell you that the annual percentage rate on that “two-week” loan is nearly 400%.
And what happens if you can’t pay the loan back in two weeks? Many payday loans “roll over,” so in two weeks you’ll owe even more. And so it goes.
Whether you’re covering a sudden expense or paying down existing debt, most personal finance experts will tell you payday loans should be an absolute last resort. There are plenty of alternatives, including payment plans, credit card hardship programs, and balance transfer credit cards.
First, use The Simple Dollar’s debt payoff calculator below to determine your payment plan:
CURRENT PAYOFF PLAN
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ACCELERATED PAYOFF PLAN
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How Much Could You Save With a 0% Balance Transfer Credit Card?
SAVE IN PERIOD
You may be able to transfer all or a portion of your debt to a balance transfer credit card that offers 0% interest for an introductory period. The box below shows how much money you could save if you transferred all of your debt to this card, and shows the monthly payment you would need to make in order to pay off the entire balance by the end of the introductory period. The Chase Slate(r) card offers 0% interest for 15 months and 0% transfer fee when you transfer your balances within the first 60 days of account ownership.
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How payday loans and balance transfers stack up
Let’s say Alex owes $1,000 in credit card debt. On the week he plans to start paying it off, his car breaks down, and repairs cost another $1,000. Now Alex has to deal with two costs. How to pay?
The choice between a payday loan and a balance transfer gives him these options:
- Take out a payday loan and commit to paying off the $2,000 he owes, plus fees, in a short period of time
- Put the additional $1,000 for the car repairs on his credit card debt, then transfer the combined $2,000 to a balance transfer credit card with 0% introductory APR, and pay it off bit by bit over time
At first glance, the payday loan may seem like the better short-term option. But here’s what happens in either scenario:
| If Alex Chooses… | |
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| Payday Loan | Balance Transfer with 0% Intro APR |
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| Payday Loan | Balance Transfer with 0% Intro APR |
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APR and fees
It’s important to note that interest is not separate from a loan’s APR. Interest is an additional cost paid for the right to borrow money in the first place. (And it’s usually how the lender makes money.) APR is short for Annual Percentage Rate, and it refers to the total cost of a particular loan, including fees and any other extra costs. While interest and APR aren’t one and the same, interest contributes to a loan or debt’s overall cost and thus is considered part of its APR.
Many balance transfer cards offer an introductory APR of 0% between 15 and18 months, and typically a variable 10-25% afterward. So if Alex manages to pay off his $2,000 balance transfer within the intro APR period, he’ll be able to do so without incurring any interest. If he doesn’t finish paying down his debt before the introductory APR period ends, whatever remains of the $2,000 balance transfer would be subject to higher APR.
Balance transfers often require a fee of 3-5% of the amount transferred, meaning that if Alex transfers his entire $2,000 to a balance transfer credit card, he would pay a $60 to $100 fee.
Because payday loans have to be repaid quickly, they’re designed with notoriously high APRs, again, averaging around 400%. Payday loan APRs can be fixed or variable depending on the lender, but typically debtors incur fees of $15 to $30 per $100 borrowed.
If Alex agrees to a payday loan of $2,000 the finance charges put the actual cost of the loan at around $2,300. Since Alex has to take out a loan to cover his debt in the first place, it’s unlikely he’ll have enough funds to cover the original amount, plus extra. If Alex doesn’t have the funds in his account by his next paycheck, his payments are considered delinquent, and the payday lender will begin charging interest with a high APR.
Once Alex is late, his payday loan lender may offer a “rollover” fee, also known as a renewal fee. Rollover fees typically cost around $45 and simply delay paying back the loan. Payments do not contribute to principal or interest owed. So, if Alex were to pay a rollover fee on his payday loan, he’d be paying an extra $45 to extend the due date until his next payment period.
Credit check
As with any other credit card, balance transfer credit cards require a credit check before approval. The better Alex’s credit is, the more a chance he’ll have of being approved.
Payday loans often don’t require a credit check before approval. Instead of using FICO or other established credit score institutions, lenders utilize a custom creditworthiness score based on the information borrowers provide.
Even if Alex has bad credit, he might be able to get a payday loan, no questions asked. But if Alex manages to pay off his payday loan, his credit score might not go up. If he’s delinquent, his score might go down. Some payday lenders report late payments to major credit reporting agencies.
Other debt consolidation and management options
In addition to balance transfers, alternative methods of paying off debt include:
Assistance programs
Many credit card issuers offer financial hardship and payment assistance programs, including Discover and American Express. Before you consider a payday loan, call the Customer Service number for your credit card issuer and see if you can negotiate a lower interest rate or extended payment plan.
Debt consolidation loan organizations
If you have debt with multiple lenders or creditors, consider a debt consolidation loan company.
These organizations allow borrowers to lump different streams of debt together, often with a lower interest rate. You’ll have fewer debts to worry about and a chance to improve your overall financial health.
Payday loans or balance transfers: Which is better for me?
At first glance, payday loans might seem like a quick and easy solution for borrowers to receive emergency funding in a pinch. However, high APRs and fees, combined with a short repayment term, can make it all too easy for borrowers to get caught in a debt trap.
Balance transfers, on the other hand, offer a less risky way to manage credit card debt. If there’s an emergency, using a credit card and then transferring the debt to a balance transfer credit card to pay it down monthly is a viable option.
A balance transfer card allows you to pay down debt gradually without a lump sum coming due in a matter of weeks, and making timely monthly payments is a great way to rebuild your credit.
Payday loans should only be used once you have exhausted every other option. If you do take out a payday loan, prioritize that debt above all others, and pay it off immediately.
The post How to Get Out of Debt Faster: Balance Transfer or Payday Loan? appeared first on The Simple Dollar.
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