the persuasive power of fake people compulsive...

How technologies from smartphones to social media are used to influence our tastes, behavior, and even habits.

Path of Persuasion

BUSINESS REPORT

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PLUS New Marketing | Voter Algorithms | Health Persuasion | Neuroscience Advertising | Recommendation Engines | Upcoming Events

CONTENTS

The Big Question

New Technologies Persuade in Old Ways

Texting in Mozambique

Pretrial Technology

The Persuasive Power of Fake People

Compulsive Behavior Sells

Research ReportMarketing, Influence, Persuasion

INDUSTRIAL LIAISON PROGRAM EDITION

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The Big Question

Technology and PersuasionPersuasive technologies surround us, and they’re growing smarter. How do these technologies work? And why?

● GSN Games, which designs mobile games like poker and bingo, collects bil-lions of signals every day from the phones and tablets its players are using—reveal-ing everything from the time of day they play to the type of game they prefer to how they deal with failure. If two people were to download a game onto the same type of phone simultaneously, in as little as five minutes their games would begin to diverge—each one automatically tailored to its user’s style of play.

Yet GSN does not simply track cus-tomers’ preferences and customize its services accordingly, as many digital busi-nesses do. In an effort to induce players to play longer and try more games, it uses the data it pulls from phones to watch for signs that they are tiring. Largely by mea-

suring how frequently, how fervently, and how quickly you press on the screen, the company can predict with a high degree of accuracy just when you are likely to lose interest—giving it the chance to suggest other games long before that happens.

The games are free, but GSN shows ads and sells virtual items that are use-ful to players, so the longer the company can persuade someone to play, the more money it can make. Its quickly growing revenue and earnings are a testament to how well this strategy works, says Portman Wills, GSN’s chief information officer. Along with factors such as smart

engineering and creative design, using data to shape persuasive tactics is a key to the company’s success.

The idea that computers, mobile phones, websites, and other technologies could be designed to influence people’s behavior and even attitudes dates back to the early 1990s, when Stanford researcher B. J. Fogg coined the term “persuasive computing” (later broadened to “persua-sive technology”). But today many com-panies have taken that one step further: using technologies that measure customer behavior to design products that are not just persuasive but specifically aimed at forging new habits.

If habit formation as a business model was once largely limited to casinos and cigarette manufacturers, today technol-ogy has opened up the option to a broad range of companies. Insights from psy-chology and behavioral economics about how and why people make certain choices, combined with digital technologies, social media, and smartphones, have enabled designers of websites, apps, and a wide variety of other products to create sophis-ticated persuasive technologies.

How these technologies work and why are the big questions this Business Report will answer.

With new digital tools, companies that might once have been simply hardware makers (such as Jawbone) or service pro-viders (Expedia) are now taking on the role of influencer, attempting to shape the habits of their users by exploiting the psy-chological underpinnings of how people make choices.

While Expedia is trying to design its website so as to trigger someone to visit daily, Jawbone has built features into its fitness bands and other products that executive Kelvin Kwong grandly describes as “using our best understanding of how the brain works to get you to act.” And

Kwong says it’s working. Sending care-fully designed messages to people wearing Jawbone fitness trackers has helped them get an additional 23 minutes of sleep per night, on average, and move 27 percent more, the company says.

Habit Design, which bills itself as “the leading habit training program,” employs game designers and people with PhDs in behavioral science. It says it has created a platform that keeps 80 percent of par-ticipants in corporate wellness programs involved over three months. Traditional programs like seminars or counseling, by contrast, generally lose 80 percent of participants in the first 10 days, accord-ing to Michael Kim, a former Microsoft executive who is now Habit Design’s CEO.

New data-centered models of persua-sion are having an impact not only on new startups but on traditional influencers, from political consultants to advertising agencies. In politics, data consulting firms that emulate the kind of voter modeling, mobilization, and persuasion the Obama campaigns pioneered are multiplying. One model for today’s new type of ad firm is Rocket Fuel, based in Redwood City, California. Staffed by people with PhDs in game theory and predictive modeling, the firm uses artificial intelligence to predict the best ad to show a given customer look-ing at a particular Web page, taking into account data gathered from websites; the browsing, advertising, and purchase his-tory associated with a given shopper’s IP address; and insights into what style of ad works best on a certain website (blue hues are best on Answers.com, for example). Founded in 2008, the company claims its targeted ads generate revenue for clients amounting to two to eight times what is spent on the ads. Last year Rocket Fuel had revenue of more than $400 million.

Marketers argue that there’s potential for all this to benefit consumers, who want better service and more suitable offers. “They expect companies have data on them. They just want it to do something useful for them,” says Philip Wickline, CEO of Zaius, a Boston-based startup building a platform that will allow a com-pany to track customers’ behavior, with their permission, as they interact with it

Insights from psychology and behavioral economics about how and why people make certain choices, combined with digital technologies, social media, and smartphones, have enabled designers to create sophisticated persuasive technologies.

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in stores, online, and in any other context. Armed with this information, companies could better understand the value of each customer and more effectively measure the return on ads or discounts directed at that person.

Given the depth of information about us that tracking technologies generate, and companies’ increasingly sophisticated attempts to affect our behavior, what are the appropriate limits of a kind of persua-sion that can be so well designed as to be nearly invisible? There are already legal

limits on how companies can advertise products. But the government’s own use of behavioral persuasion has led to calls for updated regulations.

Rather than trying to regulate hard-to-spot attempts to get people to form new habits, a more practical solution might be for product designers to agree to adhere to principles like transparency and dis-closure. Requiring a user to sign up to be persuaded—as you very well might in search of better sleep or fitness—could be best. —Nanette Byrnes

Persuasive Texting in MozambiqueInspired by trials that used text messages to change behaviors, a U.K. charity tested whether it could persuade HIV-positive people to attend their appointments.

PROBLEM About 1.6 million people in the southeast African country of Mozambique live with HIV. Antiretroviral therapy can prevent its spread, but only 74 percent of patients who start HIV treatment are still taking the medicines a year later.

SOLUTION In November 2011, the U.K.-based children’s organization ARK began a two-year test of sending text messages to HIV-positive people in urban and rural areas of Mozambique’s Maputo Province to remind them about treatments and appointments. About 15.5 million mobile phones are already connected in the country of 25.8 million people, and use of the technology is growing.

STUDY ARK’s study followed 830 men and women undergoing antiretroviral therapy for an average of 16 months, and 522 HIV-positive expectant mothers until eight weeks after giving birth. Patients were randomly assigned to receive the text reminders or to continue regular treat-ment with no reminders.

METHOD Using a database of electronic patient records, a computer program sent out automated text reminders at times including a week before an appointment, two days before the appoint-ment, and two days after any missed appointments. HIV-positive pregnant women also received educational messages about testing and treatments.

RESULTS The SMS messages helped some patients improve their treatment regimen, but not all. The messages significantly helped urban and recently diagnosed HIV patients stick with treat-ment. Such patients who didn’t receive text messages were nearly twice as likely to fall off the program, failing to consistently pick up drugs or attend appointments. Results at the rural centers were disappointing, possibly because of transportation issues, limited cellular coverage, migration to other provinces, and a limited sample size.

The texts did help persuade mothers to test their newborns for HIV, but overall the pro-gram didn’t make them more likely to complete pre-birth treatment or to give birth in a health center.

NEXT Now that texting has been shown to help some patients, several groups are launching a much bigger messaging program in another Mozambican province. This program could reach 58,000 patients by the time it concludes in 2016. Researchers will examine how cost-effective the trial is, how to improve technology in rural areas, and how best to support patients who are most at risk of not completing treatment.

Q&A

New Technologies Persuade in Old WaysRobert Cialdini, an expert in the science of persuasion, talks about its most modern methods.

● For anyone interested in the science of persuasion, psychology professor Robert Cialdini has been the expert of choice since the 1970s. During his long career at Arizona State University, he has studied everything from the ways blood banks attract donations to the reasons why some people pick up litter and others don’t. Cialdini’s best-known book, Influence, has sold 2.5 million copies worldwide. It remains one of Amazon’s top 500 titles, 31 years after its debut.

Cialdini argues that practically every form of persuasion can be traced back to one of six timeless principles: reciproc-ity, likeability, authority, scarcity, consis-tency, and social proof. It’s human nature to reach for those levers, and to be influ-enced by them, he contends. MIT Tech-nology Review contributing writer George Anders visited Cialdini to discuss what’s changed—and what hasn’t—as today’s influence peddlers use rapidly evolving technologies to ply their trade.

One of your core principles is that if you want to persuade people, it helps to be likeable. Is that still relevant if we’re doing most of our business online? Yes. People often claim that e-mail and the Internet are bloodless. But there are lots of ways to put the humanity back in. There’s a piece of research showing that if you include a cartoon with your open-ing e-mail, you get a better outcome in negotiations. You’re not an opponent any-more. You’re a person who has a sense of humor, and who wants to make this a

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You’re a big believer in the importance of scarcity—or at least the appearance of scarcity—as a way of getting customers excited. On the Internet, supply and choices seem infinite.People can create scarcity with ... an offer available for only a short time. Groupon does it, and quite expertly, too.

Or restaurants that offer one table per night via online reservation sites?Exactly. It’s price be damned. It’s hardly a bargain that you’re trying to get. It’s a distinctive, rare experience.

I’m thinking of Taylor Swift, who responds to lots of her fans via social media. She’s the one singer who still can sell a million CDs. In this case, it’s not scarcity at work so much as another of your principles: reciprocity. Fans feel duty-bound to buy her music in a pricey format rather than settling for cheaper downloads or free bootlegs. Is that

because she’s reached out to them?That’s right. You just don’t feel that you can take advantage of someone who has been a benefactor.

You’ve written about “the unthinking yes”—in which these persuasive tech-niques sweep us along so smoothly that we agree to do things without even reflecting on how we got there. What’s good about automatic responses is that they give us a lot of efficiency. We don’t have to think very much about decisions. We will still do well if we fol-low social proof, or an authority. But the downside is that we’re not thinking. We’re reacting. And it does make us vulnerable to people who counterfeit the evidence.

That said, it’s inevitable. The pace of information is accelerating. We don’t really have the luxury to step back and think hard about the great majority of decisions that we make every day. And so we need these shortcuts.

positive experience. In fact, if you mimic another person’s writing style, that gets better negotiating outcomes too. If the other person uses emoticons, you do too. Or exclamation marks.

You’ve also said for a long time that we heed authorities’ advice. Dentists tell-ing us what brand of toothpaste to buy, for example. Today do you need an advanced degree to be an authority?Bloggers and product reviewers are the acknowledged experts now. I’ve read that 98 percent of online shoppers read prod-uct reviews before deciding what to buy. That’s a mind-blowing statistic. We can’t get 98 percent of people to agree that the earth is round. But now you can find authorities in Turkey or Tokyo or Port-land, Oregon, that we didn’t have access to before.

We’ve always valued social proof. Now the Web has given us access that we never had before to large communities of indi-viduals just like us. That’s revolutionized marketing. Look at Kiddicare, which is an online superstore for baby products. They categorize ratings in all sorts of ways: first-time parents, parents of twins, and so on. You’re going to go to these intensely comparable voices.

In the old days, store executives tried to impose their priorities on you. Kmart announced blue-light specials in hopes that shoppers would stampede toward that part of the store. That’s not the best approach anymore, is it?It’s much more trustworthy when you tell customers what their peers are saying. I trust customers. I don’t trust the store manager.

Isn’t there a risk that we could spend so much time on an island of like-minded people that we never get to see the rest of the world?I worry about this. I think you’re finding it in political attitudes that are becom-ing more polarized. We tend to go only to those places where we hear opinions that we want to hear. We end up reinforcing our preconceptions.

Pretrial TechnologyLawyers are testing arguments and evidence online.

ACADEMIC ORIGINS

Borrowing a tool from social scientists, academic researchers studying jury dynamics now run tests on groups pulled from the online marketplace Amazon Mechanical Turk. One study by Jessica Salerno, an assistant professor at Arizona State University, found that Mechanical Turk mock jurors were more likely to vote guilty when the graphic crime photos shown them were in color.

IMITATION The trial consulting firm DecisionQuest has built its own Web tool with 3.5 million mock jurors. A legal team can use it, for example, to test the impact of different arguments.

TIME In 24 to 48 hours, online jury research can provide the same number of responses that tra-ditional jury research provides in one to two months. Lawyer Michael Cypers recently used online sampling to help a client decide whether to take a settlement offer with a 10-day time limit. It was helpful, he says, to know that the online jurors were skeptical of the fraud claim against his client and not convinced that negligence was involved.

COST An online mock jury exercise can cost $5,000 to $20,000, whereas a live mock jury costs $50,000 to $150,000. Mechanical Turk workers will take a 20-minute survey for as little as $5 per person, explains lawyer Jonas Jacobson, a trial preparation expert.

IMPACT The Focal Point, a firm specializing in the visual presentation of cases, sometime uses online testing to evaluate whether evidence like simple diagrams or 3-D animations is well-recalled and useful in mock deliberations.

LIMITS Cypers says that while this testing is useful, it won’t replace testing with live mock jurors, which offers the opportunity to “look in their eyes and see how they respond.”

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Technology

Fake PersuadersFake accounts can inflate follower counts, suppress political messages, and run stealthy social marketing.

● Advertising revenue is soaring at Face-book and Twitter as consensus grows that people can profitably be influenced by promotional messages woven in between updates from their friends.

But not every commercial enterprise exploiting the persuasive power of social media has set up a corporate account or pays for ads. Fake accounts operated by low-paid humans or automated software have become good business, too. They are used to inflate follower counts, to push spam or malware, and even to skew polit-ical discourse. The tactic appears to be pervasive and growing in sophistication.

On Twitter as many as one in 20 active accounts are fakes. Facebook’s equiva-lent number is a little more than one in 100 active users. Software tools that help you make new accounts in bulk can eas-ily be found or bought online, says Christo Wilson, an assistant professor at North-eastern University who has studied the problem of fake accounts.

One of his students recently tested some of those tools and set up 40 Twit-ter accounts and 12 Facebook accounts in a single day before the companies blocked new registrations from that Inter-net connection. Simple evasive measures would probably have allowed many more accounts to be made. Investors closely scrutinize active user counts to gauge the value and potential of social networks. That encourages sites to ensure that their security systems don’t block legitimate users, says Wilson, making it easier for fake accounts to flourish.

Fake accounts are given a veneer of humanity by copying profile informa-tion and photos from elsewhere around the Web. They can gain fake friends by exploiting human nature and the fact that people on a social network are often

looking for new connections and content. “Choose a picture of a beautiful woman, and all of a sudden people accept your friend request,” says Wilson. Celebrities often have large numbers of fake follow-ers because aping what many real users do is an easy way to make a fake account look legitimate.

Once a fake account is established, the simplest way to make money with it is by quickly inflating the numbers of things like followers or “likes.” It is easy to find sites offering 100,000 new Twitter fol-lowers for as little as $70. Instagram and Facebook “likes” and Pinterest “pins” are also easily bought. Having more followers or likes helps people and businesses look good. It can also influence the algorithms used by social networks or other compa-nies to recommend influential accounts.

Fake accounts have been used in more sophisticated ways to fake social support for something, and to influence real users to join in. The accounts are controlled either by software or by paying Internet users in developing countries a few cents per action.

In 2010, a conservative group in Iowa used automated accounts to send mes-sages supporting Republican candidate Scott Brown’s attempt to win a Massa-

chusetts seat in the U.S. Senate. Thanks to retweets by some real users, the mes-sages reached an audience of 60,000. In Mexico’s 2012 general election, the Institutional Revolutionary Party used more than 10,000 automated accounts to swamp online discussion. Both parties won their races, although it’s not clear what impact these social-media manipu-lations had.

Recently, automated accounts have been seen staging more commercial cam-paigns. A 2014 study of 12 million users of China’s influential Weibo social network, which is similar to Twitter, found 4.7 mil-lion accounts involved in campaigns that try to manufacture word-of-mouth sup-

port for particular products. Most were automated accounts that amplified cer-tain messages, mentioning products or services, from people with large follow-ings (messages likely paid for by the brand behind them). Also last year, automated tweets were part of a scam that inflated the value of penny-stock tech company Cynk to $5 billion in just a few days.

Filippo Menczer, a professor at Indi-ana University, says more sophisticated “social bots” that engage with other users are probably active on Twitter and other networks but escaping detection. Research experiments with such bots have shown that they can successfully gain social capital and even shape the social connections humans make with one another, says Menczer.

As social networks become more tightly coupled to personal spending and wider economic activity, the incentives to use them grow stronger, Menczer says.

In 2014, the security company Bit-defender picked up a social bot using names including “Aaliyah” that was stalk-ing men on the casual-dating app Tin-der. Aaliyah would start a simple, scripted conversation, then ask the victim to play a particular social game, offering her phone number in exchange. The scam

didn’t have a clear business model, but Bogdan Botezatu, a senior threat analyst at Bitdefender, believes it was “a test run for something much bigger.”

The Pentagon’s research agency DARPA, which has its own concerns about what it calls “deception or misinformation campaigns” in social media, sponsored a contest in which teams of researchers compete to detect social bots at work in a Twitter-style social feed. Menczer, who took part, hopes the contest will lead to tools that are better at policing real social networks. “It’s kind of scary that we don’t know how to detect these kind of bots and campaigns if they are out there,” he says. —Tom Simonite

As social networks become more tightly coupled to personal spending and economic activity, incentives grow.

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Profile

Compulsive Behavior SellsNir Eyal is showing software designers how to hook users in four easy steps. Welcome to the new era of habit-forming technology.

● A middle-aged woman sits before a computer screen on the 11th floor of Expedia’s glass-clad headquarters in Seattle. Two electrodes are taped to her brow just above her left eye, two more on her left cheek. A one-way mir-ror reflects her face as she responds to requests issuing from a speaker mounted in the ceiling.

Behind the glass, a researcher directs the test subject as a half-dozen design-ers, engineers, and executives look on in rapt silence. “Okay, Shannon,” the researcher says. “Go to Expedia and start shopping for your trip to Hawaii.” The audience gazes intently at a large video display. A running graph of the elec-trodes’ output trails across the screen. The electrodes on the brow measure contraction of the muscles that activate frowning—a sign, according to the the-ory of facial electromyography, of con-centration, tension, or irritation. Those on the cheek track the play of muscles involved in smiling, evidence of the warm glow of delight that occurs when the brain’s reward circuitry is activated.

Though she has not been told, Shannon has been brought in to test a new Expedia feature, known as Scratch-pad, that the online travel broker hopes will bring travelers back to the site daily between the time they start planning a trip and the day they make a purchase. Scratchpad automatically records the hotels and flights a customer has viewed, allowing users to pick up on previous searches without having to re- create them.

The first part of Shannon’s test is simply finding the Scratchpad button

on the Expedia.com page. She hasn’t found it yet, but when she looks at pho-tos of the Westin Maui, the smile sen-sors spike: a jolt of joy—and potential paydirt for Expedia. The company aims to make the experience of shopping so pleasurable that using the site becomes a habit.

Forging new habits has become an obsession among technology companies. In an age when commercial competition is only a click away, the new mandate is to make products and services that gen-erate compulsive behavior: in essence, to get users hooked on a squirt of dopa-mine to the brain’s reward center to ensure that they’ll come back.

The rise of mobile computing has intensified that imperative. The small screen crowds out alternatives, focusing a person’s attention on a limited number of go-to apps. The ones that get used are the ones people click on impulse while they’re drinking their morning coffee, waiting for the bus, or standing in the checkout line.

For a long time, the methodology for designing habit-forming products was haphazard: build it, put it before the public, and watch it go viral or fade into oblivion. In recent years, though, prod-uct teams have become more deliberate. Principles derived from behavioral sci-ence play an increasing role in software design, creating a demand for experts who can guide developers in the art—and science—of behavior engineering.

Among the most influential is Nir Eyal, an entrepreneur turned user- experience guru who has become Silicon Valley’s most visible advocate of habit-forming technology. His blog, Nir and Far, has attracted more than 25,000 sub-scribers hungry for insights into shap-ing user behavior, and his writing has appeared in both the mass-market pages of Psychology Today and the insider club of TechCrunch.

He has worked for some of the big-gest names in technology (most of whom don’t want to talk about it) and has presented workshops from Nor-way to Thailand. His inaugural Habit Summit, held last March on the Stan-

ford campus, drew hundreds of partici-pants from startups and blue-chip firms alike. Eyal promotes a scheme he calls the hook, a simple set of steps derived from his observation of numerous online products and services and undergirded by a wide range of psychological and neurological research. The hook, he says, is the magic behind Facebook, Google, Instagram, Pinterest, Snapchat, Twitter, and just about every other icon of the consumer Internet. It leads users into a repetitive cycle that transforms tentative actions into irresistible urges.

John Kim, Expedia’s chief product officer, brought Eyal in last year to help the company develop compulsive experi-ences, and now Shannon, the volunteer in front of the computer screen, is test-ing the fruit of their labor.

After several minutes, she still hasn’t discovered the Scratchpad feature. Finally the researcher guides her to its unobtrusive button in the menu bar at the top of the Expedia homepage. Low-level tension registers on the graph at the front of the room—concentration? frustration?—but then she recognizes a picture of the Westin Maui, which Scratchpad captured automatically. A shimmer of delight ripples across the graph. “I like the fact that it saves me time,” she comments. “I’d go back and use this again for sure!”

Eyal’s workshops offer a four-hour immersion in the mechanics of the hook. On a warm spring day several weeks before the Expedia research exercise, he’s getting ready to run a session at the office of Zurb, an airy design studio not far from Apple’s headquarters in Cuper-tino, California. Clad in a plaid shirt that hangs untucked over jeans, he’s coat-hanger thin with eyes that glitter beneath a clean-shaven crown.

He opens with a disclaimer. “I’m not an advocate for creating addic-tion,” he says. “Addiction has a specific definition: it always hurts the user. I talk about the pathways for addiction because the same things that occur in the brain help us do something that can be good.”

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Thus he initiates 67 attendees from companies including Hewlett-Packard, the New York Times, and Samsung into the mysteries of the hook.

It starts with a trigger, a prod that propels users into a four-step loop. Think of the e-mail notification you get when a friend tags you in a photo on Facebook. The trigger prompts you to take an action—say, to log in to Face-book. That leads to a reward: viewing the photo and reading the comments left by others. In the fourth step, you inject a personal stake by making an investment: say, leaving your own com-ment in the thread. This pattern, Eyal says, kicks off a cycle that lodges behav-iors in the basal ganglia, the part of the brain where automatic behaviors are stored and where, accord-ing to neuroscientists, they last a lifetime.

The psychology behind the hook dates back at least to the 1930s, when the American psychologist B. F. Skinner showed that he could induce desired behaviors in animals. Skin-ner is famous for training pigeons to do seemingly intelligent things, like reading signs and following instructions by manipulating the equivalent of Eyal’s trigger-action-reward sequence.

Other researchers have refined Skinner’s theories in the decades since. On the screen behind him, Eyal flashes a slide drawn from the seminal work of Stanford behavior theorist B. J. Fogg. It’s an x-y plane with axes labeled “motiva-tion” and “ability,” a curve tracing a diag-onal smile from upper left to lower right. According to Fogg, a behavior happens when a trigger coincides with both moti-vation and ability—but only in the right proportion. If a trigger consistently fails to initiate the desired action, the the-ory goes, habit designers should aim to enhance the user’s ability. Motivation is hard to influence, because you can’t

make people do what they don’t want to do. Ability is more malleable: simply make the behavior easier to execute.

Still, the reward must promise enough pleasure to drive people to take the intended action. In training animals to execute complex behaviors, Skinner discovered that varying the payoff—from highly desirable to nothing at all—both increases a behavior’s frequency and helps keep it from fading once the rewards stop.

A classic example is slot-machine gambling. The player never knows whether the next pull might bring a $5 win or a $50,000 jackpot. The unpre-dictability of the reward—and the ran-domness of its arrival—is a powerful motivator to pull the lever again and again.

Eyal draws a parallel between Skinner’s variable rewards and the end-less variety to be found on, say, Pin-terest: the user can scroll endlessly, scanning for distinctive items amid a sea of banality. “This,” he says, swiping his finger downward as though scroll-ing a touch screen, “becomes this”—he moves his arm up and down as though he were cranking a slot-machine lever.

The hook’s final stage, investment, closes the loop by “loading the next trig-

ger,” Eyal says, an idea inspired in part by work on game psychology by Jesse Schell, a Disney Imagineer turned Carn-egie Mellon professor. Take Twitter. When you make an investment by post-ing a tweet, a follower’s reply to your contribution triggers an e-mail notifica-tion to your in-box, inciting you to take yet another spin through the cycle.

The workshop hums with activity as the students form small groups to work on their own projects. One of the

participants is an Expe-dia executive named Pooja Vithlani, who is part of the team developing Scratch-pad. (Her title is senior product manager of com-pulsion.) John Kim sent her to learn more about how to apply the hook.

She has a clear sense of the Scratchpad user’s action (shopping for air-line tickets), reward (a handy list of possible travel arrangements), and investment (curat-ing the list by eliminating options that prove obso-lete or impractical). How-ever, the trigger proves elusive. Vithlani muses on the anxiety occasioned by

oncoming holidays and the attendant travel plans. Can she nudge potential customers to check Scratchpad at the very moment they’re feeling pressure to lock in airfares? Relief from the stress of holiday travel might be the bait on Scratchpad’s hook.

Eyal readily admits that many of the ideas he promotes aren’t his own. “I don’t do original research and don’t intend to,” he says over his habitual lunch, a build-it-yourself burger at an eatery near his home in Palo Alto, Cali-fornia. “There’s more research than we know what to do with.”

To his clients, he offers a simple, practical scheme that keeps the ardu-ous process of product design focused squarely on a user’s impulses, desires, D

AV

ID J

OH

NS

ON

TRIGGER

ACTION

VARIABLE REWARD

INVESTMENT

EXTERNAL

INTERNAL

Nir Eyal’s diagram of his habit-forming “hook.”

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and motivations. And there’s a chance he’ll come cheap. He charges some clients a day rate determined by rolling a pair of dice and multiplying the result by 100. “It’s a variable reward,” he says with a sly grin.

Eyal developed his interest in habits early. Born in Israel, he moved with his family to Florida at age three. Eating provided the surest relief from the alien-ation of being a foreigner with a funny name. “My parents took me to a fat camp when I was 12,” he says. He racked up Cs and Ds despite being pegged as a gifted student.

In adolescence he began to shed the pounds and focus on his studies after reading The T-Factor Diet, which emphasized methodology over willpower. The experience showed him how much unconscious impulses influenced his own life, and the power to be gained by working with rather than against them.

Eyal graduated from Emory University with a degree in journalism and eventually landed at Stan-ford’s Graduate School of Business. After Mark Zuck-erberg spoke to the class, “overnight everyone was making an app,” he says.

He realized that all those apps would need a way to generate revenue. In 2008, he persuaded the promi-nent venture capitalists Kleiner Perkins and Mike Maples to fund a company, AdNectar, that would bro-ker the coming wave of socially driven brand mes-saging. He sold the business three years later to social- commerce website Lokerz for a sum that neither party will disclose.

The sale set Eyal adrift. The time, effort, and anxi-ety of running a startup had weakened his closest rela-tionships and added 15 pounds to his lanky frame. Slowly it dawned on him that as mobile devices got smaller, screen real estate shrank and habits became more important. He realized that habits could be at the heart of his next business—and his own rejuvenation.

Throwing himself into studying consumer psy-chology, he devoured research on how products influ-ence behavior. The successful apps he had encountered through AdNectar, he noticed, had in common a cycli-cal feedback loop of user behavior.

Eyal’s fascination with the mechanics of habit-forming technology coincided with a dramatic rise in the Internet’s potential to influence behavior, enabling software developers to manipulate many of the behav-ioral dynamics Skinner and other researchers had identified. Smartphones became a ubiquitous chan-nel for delivering triggers, while apps reduced com-plex actions to the simple press of a button. The social Web delivered a panoply of interpersonal rewards. Game designers began to speak of forming a “compul-sion loop.” Entrepreneurs went from tracking monthly active users to a new measure called “compulsion rate,”

1930sPsychologist B. F. Skinner induces desired behaviors in animals.

1957Skinner and behavioral psy-chologist Charles Ferster pub-lish Schedules of Reinforcement, which describes experiments in which pigeons are shown an “antecedent stimulus” such as a colored light and then given rewards of food when they exhibit a desired behavior, such as peck-ing a spot on the wall, at the same time. In this manner the birds are trained to peck that spot when-ever they see the light. The book contains a key insight: that vary-ing the payoff for a behavior both increases a behavior’s frequency and keeps it from fading once the rewards stop coming. Think slot machines.

1963Psychologist Albert Bandura, with Richard Walters, publishes his social learning theory, which holds that our actions are shaped not only by anticipated consequences but also by what we see other people doing. Eyal will view this as a force in social networks.

1985Psychologists Edward Deci and Richard Ryan introduce self- determination theory, which says that people are driven by three innate psychological needs: auton-omy, competence, and relatedness. Eyal will see this theory, especially the need for autonomy, at work in video games and online reviews.

1990s In monkey experiments, neuro-scientist Wolfram Schultz shows that cues preceding behavior that is then rewarded set the brain on alert for further cues. These cues are what Eyal later calls external triggers. Eyal will argue that effec-tive external triggers form an asso-

ciation in the mind with internal triggers like loneliness or fear.

2002Psychologist B. J. Fogg coins the term “persuasive technology.” In 2009 Fogg will publish a model that describes behavior as the result of a trigger coinciding with motivation and ability, in the right proportions.

2010Game designer and theorist Jesse Schell gives a talk, “Beyond Face-book,” at a conference in Las Vegas. The presentation helps spur Eyal’s recognition of the role of personal investment in cement-ing habits.

2011Behavioral economist Dan Ariely and coauthors Michael I. Norton and Daniel Mochon, both profes-sors of marketing, publish their “Ikea effect” research, experi-ments showing that people value their own creations more highly than others value them. We place a value on the sweat equity we put into creating a YouTube video or a custom playlist on SoundCloud.

2012New York Times reporter Charles Duhigg publishes the bestseller The Power of Habit: Why We Do What We Do in Life and Busi-ness. The book tells readers how to rewire existing behavior using a Skinnerian three-step process of cue, routine, and reward that he calls “the habit loop.”

2014 In his book Hooked: How to Build Habit-Forming Products, Eyal adds a fourth step—investment, which “loads the next trigger” to form a feedback loop—to Duhigg’s basic scheme. His premise is that people grow attached to a behav-ior when they invest their own effort in it.

The Roots of the HookNir Eyal’s methodology draws from earlier research.

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the percentage of users who returned from day to day.

Riding a cresting wave, Eyal devel-oped his ideas on his blog. Eventually he decided to collect his writing into a coherent form. “I set out to write a 30-page document,” he says, “and I ended up with a 256-page book.”

As the manuscript neared comple-tion, Eyal employed the hook to gal-vanize his audience. He sent an e-mail (the trigger) to his blog subscribers inviting them to read the book in prog-ress and critique his work. Nine hun-dred people responded. They received the reward of reading the advance copy, then made the investment of adding their comments on Google Docs. Eyal promised to include their names in the final product, loading the trigger to buy a printed copy and post a review on Amazon.

The scheme worked. Eyal released the self-published edition of Hooked in early January 2014. Within a week and a half, he had racked up 125 reviews, and the book was lodged at the top of Amazon’s ranking of product design books.

It’s the afternoon following Shan-non’s session, and the Expedia team has gathered in a conference room to decide on the next steps. The test sub-ject understood intuitively what actions to take with Scratchpad. The facial sen-sors indicated that she experienced an appropriate psychic reward. She made her investment in a provisional form; Scratchpad added hotels she looked at to the pinboard automatically. (The ability to curate the list is on the draw-ing board for a future update.)

But the trigger remains a glaring issue. Shannon had to be told to click the Scratchpad button. Without a cue, she didn’t even know it was there.

Data has shown that using Scratch-pad doubles Expedia.com’s compulsion rate—in other words, visitors who reg-ister for Scratchpad and use it are far more likely to return to the site within 24 hours than those who don’t. But only a small percentage of visitors actually

use it. More effective triggering could go some distance toward fixing that.

Vithlani has an idea that she thinks might do the trick. She calls it continu-ous shopping. Travel shoppers are often paralyzed because prices shift con-stantly, she notes. Expedia loses sales because people forget what they’ve found in past searches. “Continuous

shopping will give them perfect memory and fresh prices,” she says.

The Scratchpad window would open automatically when a visitor arrived at Expedia.com and offer to track price changes in return for registering. Then prospective customers would receive a daily e-mail telling them whether prices had risen or fallen; they would need to click through to Scratchpad to see the details. “This could develop a compul-sion loop because we’re getting people used to the fact that we remember what they looked at,” she explains.

It would take only a few weeks to implement and test. (A year later, varia-tions of Vithlani’s idea are live on the website, and Expedia reports that using Scratchpad now triples the compulsion rate and doubles the repeat-visit rate.)

Eyal himself is not immune to the siren call of behavior engineers. In an article he wrote for Forbes entitled “Strange Sex Habits of Silicon Valley,” he can-didly laments the impact of mobile devices on intimacy between himself and his wife. Not long ago, upon slip-ping into bed at night, he often found himself reaching for his tablet rather than his spouse. Drawing on B. J. Fogg’s behavior model, he broke the spell by pushing his late-night browsing down the ability scale. He installed a timer that turned off his Wi-Fi router at bed-time, forcing him to switch it back on before he could satisfy his craving for a late-night online fix.

The gambit improved his sex life, but the larger issue remained, he wrote: “The confluence of increased access and greater sharing of personal information, and at higher transmission speeds, has created the perfect storm of addictive technology.”

Eyal’s worry isn’t idle. Slot-machine designers are renowned for inducing

behaviors that resemble addiction, and in 2011 the American Society of Addic-tion Medicine began defining addiction in terms of behaviors that activate the brain’s reward circuitry, whether or not substance abuse is involved.

“The ethics of this have still to be worked out,” says Chris Nodder, author of the archly titled user-experience manual Evil by Design.

Hooked concludes with a chapter on ethics that directs behavior engineers to focus on applications that improve users’ lives and that the engineers themselves find helpful. On the whole, though, Eyal views behavior engineering as a grand opportunity. “Wouldn’t you like to want to exercise without thinking about it?” he asks. “Or save money every day by being more frugal? That’s what this technology makes possible.”

In any case, neuroscience suggests that eliminating the potential for addic-tion would require eliminating pleasure itself. “In the brain, our pleasure center and memory center are in close prox-imity, as though nature wanted us to reproduce and remember how,” explains Howard Shaffer, a Harvard psychiatrist.

A future of smart watches and bio-metrics may make engineering new habits even easier. “Now the interface disappears, which provides all kinds of new triggering opportunities,” says Eyal. “I think we’ll see a golden era—I hope—of habit formation and interesting ways to help people live better lives.”

—Ted Greenwald

“The confluence of increased access and greater sharing of personal information, and at higher transmission speeds, has created the perfect storm of addictive technology.” —Nir Eyal

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Industries

New Technologies, New MarketingThe Internet and social media have profoundly changed how brands are built, customers wooed, and products marketed.

Pat Wechsler serves as an editorial consul-tant to corporations on the production of digital and social branded content and contributes freelance journalism to several media websites, including Fortune.com. None of the companies mentioned in this story are clients or potential clients.

● Amy Pearl was shopping in the Wash-ington Square mall in suburban Portland, Oregon, in the summer of 2012 when she happened by a recently opened Tesla showroom. Her husband, Kurt Alameda, had been a fan of the all-electric car, avidly following its development on the Internet long before vehicles were available. The store had Tesla T-shirts and key chains; Pearl walked in to buy a trinket.

She walked out with something slightly bigger. The company was let-

ting people put $5,000 down to reserve one of the first Model Ss that would arrive in early 2013, and Pearl, who had just received some inheritance money, decided, “Why not?” That Christmas Alameda was given an envelope with an 8x10 picture of the Model S inside. He was elated—he thought it was for a test drive. “He turned the picture over and saw I had written, ‘You can’t take it back,’” Pearl recalls. “He started to cry.”

Like a lot of Tesla owners, Alameda and Pearl love to talk about their car. Online and off, owners have become the biggest cheerleaders for the brand.

That word-of-mouth support is, in a nutshell, how the company markets its cars: no ad agency, no ad campaign, no big dealerships with rows and rows of Teslas to ogle. Potential buyers can see them at the mall or read about them on the Inter-net; many don’t even test-drive the vehicle until after they decide to purchase. Yet this new vision of how to sell cars made Tesla’s Model S California’s third-best-selling luxury car in 2013 and a formi-dable contender in several other major markets globally.

None of the buzz would produce the volume of sales necessary for a new car company to survive in the 21st century were it not for the Internet and, more important, were it not for social media. “Without social media, the big car com-panies would have squashed Tesla,” says Anne Swan, global director for consumer brands at the New York–based interna-tional branding firm Siegel + Gale. “The company would never have been able to get its story out there. Social let them cut through the initial negativity about elec-tric cars and get folks excited and talking about the technology’s potential.”

Where marketing was once a one-way street of information flowing from the brand to the consumer, it has become a

conversation—and as in a conversation, brands now have to actually listen and respond to what the public says.

In a sense, social media has democra-tized the ability to persuade: consumers today have the access and information to help shape the way the public views prod-ucts, companies, and issues. Social media is also leveling the playing field between larger established brands and upstarts. Where a Procter & Gamble or General

Motors could swamp the finite number of media outlets a couple of decades ago with disproportionately large marketing budgets, social media now allows new brands like Tesla—or Uber, Seamless.com, GoPro, or Fitbit—to amplify their mes-sage quickly and efficiently, and often on a limited budget.

Tesla’s approach has shaken up com-petitors, causing the biggest car makers to rethink the retail experience of buying a car, says Jim Stengel, former global mar-keting chief for Procter & Gamble and a consultant to major auto manufacturers.

There is almost no company today that doesn’t concede the need to invest in social media—either by outsourcing the work to an agency or by building an internal capability. Over the next five years, corporate budgets for this work are expected to increase by 128 percent, sug-gest the responses to the CMO Survey, a project led by Duke University’s Fuqua School of Business in Durham, North Car-olina. Currently, social media represents, on average, a little less than 10 percent of the total marketing budgets of the 350 companies that responded to the survey. By 2020, that percentage is expected to grow to just short of 22 percent.

In addition to helping brands gain a following, social media also serves as an early warning system for looming cri-ses, says Christine Moorman, a professor of business administration at Fuqua. “If companies are paying attention, they can catch small things before they become big things,” she says.

Last November, a Victoria’s Secret ad campaign featuring the tag line “The Perfect Body” over a lineup of models fomented a firestorm: close to 30,000 people, mostly women, protested it as pro-moting unhealthy body image.

Without issuing a statement, the com-pany modified the line to the less conten-tious “A Body for Every Body.” In 2013, PepsiCo changed its formula for Gatorade after a 15-year-old girl attracted more than 200,000 signatures on a Change.org petition demanding the removal of the additive brominated vegetable oil, which had been banned in Japan and the Euro-pean Union.

Where marketing was once a one-way street of information flowing from the brand to the consumer, it has become a conversation—and as in a conversation, brands now have to actually listen and respond to what the public says and thinks.

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In February, Nationwide Mutual Insurance led the pack in social posts about its 45-second Super Bowl commer-cial publicizing the number of household accidents that kill children. Unfortunately for the company, only 12 percent of the more than 238,000 posts referring to the advertisement were positive, according to Amobee Brand Intelligence.

So far Nationwide is standing by the commercial and the decision to run it dur-ing the Super Bowl, an otherwise happy, family-oriented event. On its Facebook page, the company posted videos and commentary that said the spot was meant to be jarring.

“It’s a good commercial that really grabs your attention,” says Siegel + Gale’s Swan. “Maybe it wasn’t the best time to air it, but maybe it was. It got a lot more attention from social and media than it ever would have if it ran at another time.”

—Pat Wechsler

Q&A

Voters, Algorithms, and PersuasionAn expert on elections explains that while campaigns have plenty of data on voters, using it to find the voters open to persuasion remains a tough task.

● Analyzing voter data has become a flourishing business in Washington. Democratic campaigns across the country access a voter file in the VoteBuilder soft-ware provided by NGP VAN. Progressive organizations use another database, called Catalist, for general campaigning. The Obama campaign’s top analysts have gone on to form new ventures like BlueLabs, which uses data to find voters and donors, and Civis Analytics, which helps organi-zations use big data to make decisions. TargetPoint Consulting has helped con-servative campaigns target voters at the individual level for more than a decade,

and the Republican National Commit-tee recently formed its own data analysis startup, Para Bellum Labs.

Data analysis is valuable for mobiliz-ing likely voters with reminders to go to the polls. But it is harder to use the data that campaigns gather to accurately tar-get persuasive messages to people who are undecided or might change their minds, says Eitan Hersh, an assistant professor of political science at Yale and author of the upcoming book Hacking the Electorate: How Campaigns Perceive Vot-ers. In a conversation with MIT Technol-ogy Review special projects editor Kristin Majcher, he explains the challenges of accurately predicting which voters will be persuadable—something that can be important in close elections.

You argue that it’s not changes in tech-nology alone that are affecting how campaigns interact with voters, but technology combined with state public-records laws that determine what kind of voter information they have access to. The law is generating all sorts of differ-ent data rules and data access points, and when you change them, you change how campaigns behave. So things like states’ Freedom of Information Acts or open-records laws, or state voter registration [data] policies—we don’t think of them as being so integral to campaign strategy or grassroots mobilization. But these data policies that nobody’s paying attention to have a huge impact on how campaigns decide how they’re going to engage with voters.

Overall, have campaigns become more sophisticated?On the one hand, campaigns now have made big advances over campaigns, let’s say, 20 years ago. On mobilization, cam-paigns know a lot more. There’s just so much research about how to do that right. That’s how we know, for example, that neighbors are better at mobilizing peo-ple than non-neighbors. On persuasion, I would say that campaigns know very little. All of the research seems to be really context-dependent. Like this little novel trick worked right here at this moment

in this kind of campaign, but then it was tried again in a different environment and it didn’t work at all.

Why is it so difficult to figure out what makes voters persuadable?It’s funny—sometimes before an election, pundits say, “Who can possibly be unde-cided about this?” But, you know, who is? It’s hard to find [undecided people], and then if campaigns find them it’s hard to convince them, and once they try to con-vince them it’s hard to measure whether they’ve succeeded.

Modeling persuasion is just really hard. Even the fanciest microtargeting model of persuasion can’t really do a good job … If you think about what kind of data campaigns have about voters—whether it’s their party affiliation, their age, their gender, the kind of neighborhood they live in—none of those variables are really predictive of persuadability, and it’s not because the campaigns are doing any-thing wrong. It’s because persuadability is a psychological disposition that is really hard to predict.

The Obama campaign famously tried to use Facebook to win over voters. Is persuading friends and family effective?The problem with persuading your friends is—no one wants to do it! The kinds of people who want to volunteer for campaigns, they like having the cama-raderie of meeting some other activists that want to do this, and then going to strangers’ houses and talking to strang-ers. That is much more appealing than calling their uncle and trying to convince him to vote for someone that he doesn’t want to vote for.

Predicting persuasion is hard, but campaigns are still using data-mining techniques to try to figure it out. Are they just guessing?Campaigns gather as much data as they can about voters—from neighborhood statistics, individual-level data coming from the commercial world, and from governmental sources, data from prior campaigns. These data are like little hints about a voter’s persuadability. But the

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hints do not collectively add up to a very accurate picture of persuadable voters.

So does that mean all of this data analysis we hear about is overhyped? The Obama campaign was employing social scientists and data scientists and doing lots of experiments, and that is all new and deserving of attention because it’s really interesting, and it’s very differ-ent from what campaigns have been doing in the past. Where I think the hype comes in is in overpromising what this kind of technology can do. It’s clearly not a secret recipe to figure out who’s persuadable.

Case Study

Health Persuasion Gets BetterTo motivate healthy behavior, device companies and employers embrace social tools and insights from behavioral science.

● A 2013 survey by the Centers for Dis-ease Control and Prevention found that barely 20 percent of adult Americans get the recommended amount of exercise each week, which can be as little as three or four hours.

If we’re to overcome this inertia, exer-cise needs to become more psychologically inviting.

There’s nobody more invested in that insight than the makers of wearable fit-ness trackers such as Fitbit, Garmin, Jawbone, and Microsoft wristbands. The consulting group Gartner estimates that 70 million of these devices were sold worldwide in 2014. Manufacturers dream of much bigger sales in years to come, and to get there, they acknowledge, it won’t be enough to pitch the wristbands as a way of tracking your pulse rate, steps taken, or the like. Wider adoption will happen only if people like what all that data can do for them.

Kelvin Kwong, manager of Jawbone’s SmartCoach initiative, says his company is looking to incorporate insights from behavioral science to motivate wearers. Data is just the beginning, he explains. Jawbone wants to send messages to users, probably via smartphones, about ways that they can change their sleep routines or other habits to improve their mood. How and when Jawbone does this won’t be haphazard. He says his company plans to “use our best understanding of how the brain works to get you to act on that.”

Plenty of companies are intrigued. Organizations such as Autodesk, BP, and Houston Methodist hospital have given Fitbits to employees or heavily subsidized the cost. Jonathan Collins, an analyst at ABI Research, estimates that corporate wellness programs currently account for just a few percentage points of overall wearable-device sales but that this fig-ure could surge to more than 10 percent by 2018. Collins estimates that compa-nies helped buy 426,000 wearable fitness monitors for their employees last year. By 2018, he thinks, such corporate purchases could leap to 6.5 million.

Chris Barbin, CEO of Appirio, a San Francisco business software company with 1,100 employees, has made fitness a key part of his company’s culture. An

occasional marathon runner, he owns both a Jawbone and a Fitbit device; he says he checks whichever one he is wear-ing several times a day. But Barbin real-izes that most of his employees aren’t nearly so gung-ho. So while Appirio has helped pay for about 400 Fitbit or Jaw-bone devices that employees use, it has focused even more intently on building up Internet-based chat groups and social tools to make even light exercise seem socially fulfilling.

Getting the right social spirit is “incredibly important,” Barbin says.

Sometimes, that means the carrot of digitally delivered encouragement from employees’ friends, just when motiva-tion is flagging. In other cases, it means the stick of online peer pressure. The net result: nearly half of Appirio’s employees participate in CloudFit, the company’s central online meeting place for fitness initiatives. That compares with a national average of just 24 percent employee par-ticipation at companies offering wellness programs, as calculated by Gallup.

Jeff Temple, who oversees Appirio’s staff training, says he tries to log 20,000 steps a days. He relies on his Fitbit to keep track of how he’s doing. Most of the time, he says, he’s lucky to get in 15,000 steps. Still, Temple says, diligent exercise is an important element of his effort to control his diabetes.

Dianne Shotton, an Appirio project manager who works from a one-person office in northern Kentucky, says that being connected online to peers across the U.S. has made a huge difference in her ability to stick with a fitness program.

In late 2014, Shotton signed up for a program aimed at helping employees avoid adding extra pounds during the Thanksgiving and Christmas holidays. She took advantage of a company-funded initiative that used Google Hangouts to

establish a digital connection with a per-sonal trainer in Indianapolis. For workout routines, Shotton relied on Nike’s Training Club app, which she accessed via her iPad. And for peer reinforcement, she con-nected via Facebook, Salesforce Chatter, and e-mail with other Appirio employees who were enrolled in the same program. “You don’t feel that you’re alone,” Shotton says. “You’re connected with other people who are at a level you feel comfortable with.” The result: she stayed true to her light-eating resolve, making sure she had only one plate of food at holiday feasts.

Exercise needs to become more psychologically inviting. There’s nobody more invested in that insight than the makers of wearable fitness trackers such as Fitbit, Garmin, Jawbone, and Microsoft wristbands.

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is meant to measure the emotional effects of TV’s most expensive advertising, which costs $4 million for 30 seconds.

Known as consumer neuroscience, or neuromarketing, this type of investigation probes people’s unconscious responses to advertising in order to help identify win-ning ads. For instance, the United States Postal Service is working with researchers using imaging machines to see if direct

mail lights up certain parts of the brain that e-mails don’t. Spanish-language broadcaster Univision has paid dozens of young Hispanics to don EEG caps and measured their brain waves while they watched ads in English, Spanish, or Span-glish to better understand their impact.

The idea of neuromarketing started to win wide attention five years ago, although there’s conflicting evidence about how well it works. A 2011 report by the Advertising Research Foundation, paid for by companies including Clorox and General Motors, concluded that the technology was not yet “bona fide adver-tising science.”

The techniques—which include cam-eras that spot facial expressions—are meant to replace pen-and-paper sur-veys or focus groups, in which consum-ers are asked if they can remember ads and whether they plan to buy the prod-uct shown. That business, known as copy testing, is worth about $750 million a year globally and is part of a larger global mar-ket for ad effectiveness research estimated at $2.5 billion, says David Brandt, execu-tive vice president for advertising effec-tiveness strategy at Nielsen.

Since 2011, Nielsen has operated a division called Nielsen Neuro, which uses EEG measurements of brain waves to study ads at 11 laboratories located around the world. According to Brandt, Nielsen has studied more than 100 commercials and linked the EEG results to actual

changes in product sales. The division also carried out the work for Univision, which found that Hispanics reacted bet-ter to Spanish-language ads. Brandt says neuromarketing technologies account for about 4 percent of the copy testing market but are growing quickly.

More than a dozen companies, most of them small, offer neuroscience tools to customers today. Perhaps the biggest

name in the field is Nielsen. The company has earned patents on new types of EEG caps and is trying to come up with cheaper, more portable ways to measure consumer reactions, hoping that if they become as cheap as paper surveys and can be used on a wider scale—in malls, not just in labs—they will come to have more impact.

The Super Bowl project is an annual event for Innerscope, which emerged out of research at the MIT Media Lab that looked at the physiological responses of poker bluffers and speed daters. The com-pany works with several technologies, but on game day it was using a belt to mea-sure subjects’ heart rate and breathing while electrodes taped to their fingers tracked galvanic skin response, some of the same measures polygraphs use to spot the heightened emotions caused by tell-ing lies. At Innerscope, these readings are combined into what the company calls an “engagement trace”—a line that moves up and down as an ad progresses, reflect-ing the viewer’s emotional state, says Carl Marci, a psychologist who is chief science officer at the company. The more emo-tional the viewer, says Marci, the better the chance he or she will remember an ad.

TV companies are looking for tech-nologies that can protect their $78 bil-lion in annual U.S. ad revenue against changing viewer habits and help match the sort of click-by-click tracking advertis-ers enjoy on the Web, says Dan Aversano, senior vice president for client and con-

She arranged exercise routines that she could do at home, if harsh winter weather made it unappealing to drive to a gym for a workout. And when the program was over, she says, she had lost 3.5 pounds.

The payoff for Appirio: an 8 percent reduction in its health-insurance premi-ums in 2015, because the company gen-erated smaller claims than expected last year. Appirio also received a $40,000 grant from its health insurer—double the previous year’s amount—to cover the costs of various new fitness initiatives.

Barbin contends that the twin forces of peer support and team competition do their work regardless of whether employ-ees are fitness zealots or only casual exer-cisers. “I’m always chasing one of our senior vice presidents,” Barbin acknowl-edges. “He’s constantly hammering out 20,000-plus steps a day. I accuse him of strapping his Fitbit to his dog, but I know he’s always walking or pacing when he’s on a phone call. It’s motivating for me to see our internal leaderboards, and to get poked when you are falling behind.

“If the framework is there, and you see other folks participating and get-ting results,” Barbin adds, “then fitness becomes contagious.” —George Anders

Technology

Advertisers Seek Answers from NeuroscienceNeuromarketing promises to measure what people feel when they see ads, but the science is unsettled.

● During the Super Bowl this year, as the New England Patriots and the Seat-tle Seahawks battled in front of a televi-sion audience of 114 million, about 50 volunteers, paid $150 each, sat watch-ing the game in a darkened office. Each wore equipment to measure heart rate and breathing. The research, carried out at the Boston-based company Innerscope,

The techniques—which include cameras that spot facial expressions—are meant to replace pen-and-paper surveys or focus groups, in which consumers are asked if they can remember ads and whether they plan to buy the product shown.

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sumer insights at Turner Broadcasting, the owner of CNN and an Innerscope research partner. “We can bring that into television,” Aversano says.

At its research lab in New York City, Turner has belted up participants who use a smartphone or tablet while watch-ing TV and found that although they looked at the TV less during ad breaks, they remained engaged with the TV audio track. In a report it began circulating last year, Turner recommends that its adver-tisers consider snapping viewers’ eyes back using “sirens, alarms, screams” just before a brand name appears.

While consumer neuroscience pro-vides some interesting clues to design-ing ads, it’s still unclear whether these tools can predict an ad’s ultimate success. Recently, the Advertising Research Foun-dation paid for a large research project at Temple University’s Fox School of Busi-ness in which volunteers watched ads while being measured using four differ-ent neuromarketing technologies: eye tracking, biometric measures, EEG, and fMRI. The results were compared with real-world changes in product sales that had been associated with those ads over two years.

While the study wasn’t definitive, the results show that consumer neuroscience has further to go. Vinod Venkatraman, a researcher who led the Temple work, says the only technology that seemed to pre-dict anything paper surveys couldn’t was placing a person inside an fMRI scanner. If a part of the brain called the ventral striatum lit up while the subject viewed the ad, he said, it seemed to have a strong correlation with the sales figures.

During Innerscope’s test in Boston, one of the 55 ads that performed best by its measures was a spot for Budweiser beer featuring a lost puppy rescued by Clydesdale horses.

But it wasn’t until the final minutes of the Super Bowl, when a touchdown and a last-minute goal-line interception changed the course of the game and its outcome, that engagement really soared. That was probably great for advertisers, but it was completely out of their control.

—Antonio Regalado

Technology

“Everything Is a Recommendation”

The next generation of online recommendation engines is less obvious, but more pervasive.

● When Barneys New York launched a fashion line by the Oklahoma City Thun-der basketball star Russell Westbrook last July, executives didn’t know exactly who would buy those clothes. They didn’t need to. The answers quickly emerged from an online shopping innovation that’s often overlooked: the recommendation engine.

Traditional versions of the technology are simple. Tell Netflix your feelings about a few movies and it suggests more. Read a product page at Amazon and it shows you similar alternatives. These are the tools that helped make those companies huge. But today, new technologies and much bigger arrays of available data are taking recommendation engines like the one Barneys uses to a new place, making them less obvious to the user but more important to website operations.

One example is how recommenda-tions may show up as auto-completing search results. After a shopper at Jenson USA’s online bike shop enters the first two letters of a search for “full face helmet,” the recommendation system displays a list of helmets in an order based on that customer’s profile. At Neiman Marcus, each shopper’s online experience is simi-larly customized according to the person’s behavior on previous visits—and even in the current one.

Better tagging technologies let retail-ers dig more deeply into the specific design details of clothes. That’s how they can highlight new designers like Westbrook to appropriate customers, zeroing in on specific features of his designs. It’s similar to the way Pandora groups sound-alikes to build audiences for musicians.

When more sophisticated recom-mendation engines entice casual brows-

ers with such tailored page selections, the chance they will buy something triples, says Matt Woolsey, executive vice presi-dent for digital at Barneys.

“The old way of making recommen-dations online is about catching up to the customer—you let them tell you about themselves and chase them,” says Woolsey. “We’re trying to use big data to get ahead of the customer.”

The technologies that make online recommendations as well-tailored as a Barneys suit are big-data software like Hadoop and the hardware to run it on, says Joelle Kaufman, chief marketing offi-cer of BloomReach, a startup based in Mountain View, California, that is one of about three dozen vendors in the field.

Location-based data from mobile phones can play an important role, too. Other sources of consumer insight just beginning to inform these new engines’ recommendations can include purchase history from offline stores and social-media history.

A quick run through the Barneys site illustrates how it works. Woolsey and I each went to the menswear page and clicked on the same $150 watch. Since my limited browsing and purchase his-tory focused on less expensive items, I got a list of watches ranging from $95 to $250 as counter-suggestions at the bottom of the screen. Woolsey, who acknowledged cheerfully that he probably dresses better than most reporters, was shown watches costing between $330 and $1,100.

Making this possible are parallel- processing technologies that process massive amounts of data quickly, says BloomReach’s Kaufman. Emerging sys-tems can propose dozens of different algorithms to choose the next page the consumer might see.

At Neiman Marcus, BloomReach’s technology can change what types of clothing appear on the womenswear page after just a few clicks. After Kaufman clicked on three sweaters, a tab for Jimmy Choo shoes disappeared, replaced by a gateway to sweaters on sale.

“That’s instantaneous machine learn-ing,” she says. “Everything is a recommen-dation.” —Tim Mullaney

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Outside Reading

Nudge: Improving Decisions About Health, Wealth, and Happiness, Revised and Expanded Editionby Richard H. Thaler and Cass R. SunsteinPenguin Books, 2009

This book explains how our biases lead to bad decisions, and how institutions can present choices in a better way.

Influence: The Psychology of Persuasion, Revised Edition by Robert B. CialdiniHarper Business, 2006

This bestseller outlines the six psycholog-ical principles underpinning marketing: reciprocity, likeability, authority, scarcity, consistency, and social proof.

“Political Campaigns and Big Data” by David W. Nickerson and Todd RogersJournal of Economic Perspectives, 2014

This academic paper describes how polit-ical campaigns use data to target voters and model the likelihood that people will support candidates and issues.

The Power of Habit: Why We Do What We Do in Life and Business, Reprint Edition by Charles DuhiggRandom House, 2014

New York Times reporter Duhigg describes the science of human habits and explains how we can change our behaviors by understanding what triggers them and why we keep repeating them.

Evil by Design: Interaction Design to Lead Us into Temptation by Chris NodderWiley, 2013

User-experience and design consultant Nodder cleverly shows how consumers can be persuaded by 57 design tactics based on the seven deadly sins: pride, sloth, gluttony, anger, envy, lust, and greed. The book pairs examples of these techniques in action with insights about social psychology.

Designing for Behavior Change: Applying Psychology and Behavioral Economicsby Stephen WendelO’Reilly Media, 2013

Wearable devices and apps promise to change our health, our bank accounts, and our in-boxes for the better, but only if we are self-disciplined enough to use them. This book applies behavioral psy-chology to the process of designing con-sumer products, drawing from author Wendel’s real-life experience developing the finance app HelloWallet.

Coding Conduct: Persuasive Design for Digital Media (website)by Sebastian Deterding

Deterding, an assistant professor of game design at Northeastern University, researches persuasive design and gami-fication, and his website includes videos and presentations on topics like apply-ing game design to public policy and the common pitfalls of trying to make prod-ucts more gamelike.

Hacking the Electorate: How Campaigns Perceive Voters by Eitan HershCambridge University Press, 2015

Yale political scientist Hersh shows that campaigns rely much more on data in the public record than on information about voters’ consumer behavior, and details a large-scale study of Barack Obama’s cam-paign volunteers.

Calendar

Hooked: How to Build Habit-Forming Productsby Nir Eyal, with Ryan HooverPortfolio Hardcover, 2014

Video-game and advertising veteran Eyal attributes a new product’s success to a four-step model that he says companies should use to reel in consumers and keep them coming back for more.

The Business of Choiceby Matthew WillcoxPearson, 2015

The director of Interpublic Group’s Insti-tute of Decision Making discusses how behavioral science illuminates human nature, our choices, and brands.

Social Media Marketing WorldMarch 25–27, 2015San Diegowww.socialmediaexaminer.com/smmworld/

The Marketing Nation SummitApril 13–15, 2015San Franciscosummit.marketo.com/2015/

Ad Age Digital ConferenceApril 14-15, 2015New Yorkadage.com/events/digital-conference/

Brand Strategy ConferenceMay 12–14, 2015San Franciscobrandstrategyconference.com/

10th International Conference on Persuasive Technology (Persuasive 2015)June 3–5, 2015Chicagotrex.id.iit.edu/persuasive2015/Overview.html

#SMWF EuropeJune 8-9, 2015Londonwww.socialmedia-forum.com/

ad:tech asean 2015July 7-8, 2015Singaporeadtechasean.com/

ILP.MIT.EDUMIT INDUSTRIAL LIAISON PROGRAMJULY/AUGUST 2015

BUSINESS REPORT — MARKETING, INFLUENCE, PERSUASION

Programs / Initiatives

Initiative on the Digital EconomyProf. Erik Brynjolfsson, Andrew McAfee, Prof. Sandy Pentland http://mitsloan.mit.edu/ide/leadership/ https://twitter.com/mit_ide

http://mitsloan.mit.edu/ide/ and http://digitalcommunity.mit.edu/welcome

The Initiative on the Digital Econ-omy (IDE) is a major effort focused on the impact of digital technology on busi-nesses, the economy, and society. Drawing on MIT Sloan’s strengths in technology and innovation, its internationally rec-ognized faculty, and more than a decade of research and partnership with MIT Sloan’s Center for Digital Business, the IDE is analyzing the broad sociological changes brought about by the advance and spread of digital technology.

While digital technologies are rapidly transforming both business practices and societies and are integral to the innova-tion- driven economies of the future, they are also the core driver of the great economic paradox of our time. On one hand, productivity, wealth, and profits are each at record highs; on the other hand, the median worker in America is poorer than in 1997, and fewer people have jobs. Rapid advances in technology are creating

unprecedented benefits and efficiencies, but there is no economic law that says everyone, or even a majority of people, will share in these gains.

Technology is advancing quickly, but organizations and skills advance slowly. What’s more, the gap between swiftly evolving technology and the slower pace of human development will grow rapidly in the coming decades, as exponential improvements in artificial intelligence, robotics, networks, analytics, and digitiza-tion affect more and more of the economy and society. Inventing effective organiza-tions and institutions for the digital econ-omy is the grand challenge for our time, and for MIT in particular.

Institute for Data, Systems, and Society (IDSS)Director: Prof. Munther DahlehAssociate Directors: Prof. Asuman Ozdaglar and Prof. Ali Jadbabaie (visiting professor from the University of Pennsylvania)http://idss.mit.edu/

The mission of IDSS is to advance education and research in state-of-the-art, analytical methods in information and decision systems; statistics and data

science; and the social sciences, and to apply these methods to address complex societal challenges in a diverse set of areas such as finance, energy systems, urbanization, social networks, and health.

Spanning all five schools at MIT, IDSS embraces the collision and synthesis of ideas and methods from analytical disciplines including statistics, data science, infor-mation theory and inference, systems and control theory, optimization, economics, human and social behavior, and network science. These disciplines are relevant both for understanding complex systems, and for presenting design principles and archi-tectures that allow for the systems’ quan-tification and management. IDSS seeks to integrate these areas—fostering new col-laborations, introducing new paradigms and abstractions, and utilizing the power of data to address societal challenges.

Social NetworksWith the arrival of new technology plat-

forms for online interaction and real-time communication enabled by the Internet, as well as the proliferation of more advanced sensors and tracking devices, we now pro-duce vast amounts of data every day, detail-ing our lives, preferences, friendships, and health. These technologies have not only dramatically changed our lives, but also promise to transform how we study social

The following is a sample of MIT research in the areas of marketing, persuasion, influence, social media , and related topics.

A report on the same topic by MIT’s Industrial Liaison Program is available to request at the ILP website (Resources/Publications section) at http://ilp.mit.edu/webpub.jsp?brResearch=Y .

For a complete list of research reports by the MIT Industrial Liaison Program, please see the ILP website (Resources/Publications section) at http://ilp.mit.edu/webpub.jsp?brResearch=Y or contact the Industrial Liaison Officer for your company. .

Marketing, Influence,Persuasion

MIT RESEARCH

• Marketing, Influence, Persuasion - 44 pages (PDF)

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http://mitsloan.mit.edu/ide/leadership/

https://twitter.com/mit_ide

http://mitsloan.mit.edu/ide/

http://digitalcommunity.mit.edu/welcome

http://digitalcommunity.mit.edu/welcome

http://idss.mit.edu/

http://ilp.mit.edu/webpub.jsp?brResearch=Y

http://ilp.mit.edu/webpub.jsp?brResearch=Y

http://ilp.mit.edu

mailto:[email protected]?subject=REQUEST; Marketing, Influence, Persuasion&body=Please email me the ILP Research Report on Marketing, Influence, Persuasion

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ILP.MIT.EDUMIT INDUSTRIAL LIAISON PROGRAM

JULY/AUGUST 2015BUSINESS REPORT — MARKETING, INFLUENCE, PERSUASION

behavior and dynamics. Yet a complete answer to the question of how individuals make decisions in groups remains elusive. Such studies necessitate the merging and further advancement of both social sci-ence and data processing and analysis, by studying interactions, exchanges, and dynamics over large networks of intercon-nected individuals. IDSS is ideally placed to play a leading role in this endeavor by blending expertise that spans mathemati-cal systems theory, economics, political science, algorithmic and computational game theory, and network science. IDSS research will address such topics as: 1) Developing empirically grounded theo-retical frameworks for analysis of infor-mation flow, communication, influence, learning, and cascades in social networks, 2) Designing efficient, local, and scalable algorithms for inference with social data, 3) Designing incentive mechanisms for steering behavior towards desired out-comes over large evolving networks, and 4) Developing new architectures for the exchange of information, social interac-tion, and crowdsourcing.

Labs, Centers, Groups

Affective Computing Group Prof. Rosalind Picardhttp://affect.media.mit.edu/

Affective Computing is computing that relates to, arises from, or deliber-ately influences emotion or other affec-tive phenomena. Emotion is fundamental to human experience, influencing cogni-tion, perception, and everyday tasks such as learning, communication, and even rational decision-making. However, tech-nologists have largely ignored emotion and created an often frustrating experi-ence for people, in part because affect has been misunderstood and hard to measure. Our research develops new technologies and theories that advance basic under-standing of affect and its role in human experience. We aim to restore a proper balance between emotion and cognition in the design of technologies for address-

ing human needs.Our research has contributed to: (1)

Designing new ways for people to com-municate affective-cognitive states, espe-cially through creation of novel wearable sensors and new machine learning algo-rithms that jointly analyze multimodal channels of information; (2) Creating new techniques to assess frustration, stress, and mood indirectly, through natural interaction and conversation; (3) Show-ing how computers can be more emotion-ally intelligent, especially responding to a person’s frustration in a way that reduces negative feelings; (4) Inventing personal technologies for improving self-awareness of affective state and its selective commu-nication to others; (5) Increasing under-standing of how affect influences personal health; and (6) Pioneering studies exam-ining ethical issues in affective computing.

Affective Computing research com-bines engineering and computer science with psychology, cognitive science, neu-roscience, sociology, education, psycho-physiology, value-centered design, ethics, and more. We bring together individu-als with a diversity of technical, artistic, and human abilities in a collaborative spirit to push the boundaries of what can be achieved to improve human affective experience with technology.

Lab for Social Machines Prof. Deb Royhttp://dkroy.media.mit.edu/

http://socialmachines.media.mit.edu/about/

http://newsoffice.mit.edu/2014/twitter-funds-mit-media-lab-program-1001

Digital networks have radically increased the speed and scope with which individuals can effect social change, trans-forming the relationship between people and institutions. But the impact to date of this transformation has been more dis-ruptive and ad hoc, as opposed to con-structive and systematic. Existing tools and practices for harnessing the potential of digital networks have failed to sustain a public sphere where institutions and indi-viduals can come together to understand,

learn, and act constructively on societal problems. By building “social machines” that bring system solutions to such criti-cal global challenges as gender equality and literacy learning, the Laboratory for Social Machines seeks to contribute to the creation of the next generation of the public sphere.

MIT Mobile Experience Lab

Dr. Federico Casalegnohttp://mobile.mit.edu/people/federico/

http://ilp.mit.edu/newsstory.jsp?id=20304

http://mobile.mit.edu/

The MIT Mobile Experience Lab uses personal mobile devices to unlock poten-tial in the physical world around us. We seek to radically reinvent and creatively design connections between people, infor-mation, and places. The MIT Mobile Experience Lab’s international team of architects, designers, engineers, and social scientists brings a unique mix of techni-cal and design expertise to the creation of innovative experiences.

http://affect.media.mit.edu/

http://dkroy.media.mit.edu/

http://socialmachines.media.mit.edu/about/




http://mobile.mit.edu/people/federico/

http://ilp.mit.edu/newsstory.jsp?id=20304

http://mobile.mit.edu/

http://ilp.mit.edu

ILP.MIT.EDUMIT INDUSTRIAL LIAISON PROGRAMJULY/AUGUST 2015

BUSINESS REPORT — BANKING, CURRENCY, ECONOMICS, FINANCE

Projects / Papers

Client Perceptions of Financial Advisors on Social MediaDr. Joseph Coughlin, MIT AgeLabhttp://agelab.mit.edu/client-perceptions-financial-advisors-social-media

Financial advisor-client relation-ships are critical to behaviors that opti-mize retirement security. In the Age of Social Media, what characteristics of advi-sors are most important and valuable to clients? The current project seeks to understand how people are sharing their impressions of financial advisors online by scraping social media sites, such as Yelp, for reviews and performing content analysis to quantitatively determine what is top of mind and most of value to clients.

Using Big Data for Effective MarketingYves-Alexandre de Montjoye (MIT doctoral student), MIT Media Lab, in collaboration with Pål Sundsøy, Johannes Bjelland, Asif Iqbal, and Sandy Pentlandhttp://www.demontjoye.com/projects.html

Using big data for effective market-ing is hard. As a consequence, 80% of marketing decisions are still based on gut feeling. This work shows how a principled approach to big data can improve cus-tomer segmentation. We run a large-scale text-based experiment in an Asian coun-try, comparing our data-driven approach to the company marketer’s best practice. Our approach outperforms marketing’s 13 times in click-through rate for a data plan. It also shows significantly better reten-tion rate.

Intermediation, Information, and Diversity in Networks

Prof. Mihai Manea (Economics)http://economics.mit.edu/faculty/manea ;

http://www.nsf.gov/awardsearch/showAward?AWD_ID=1260744&HistoricalAwards=false

Networks are ubiquitous in economic and social contexts. Individual decisions and welfare are affected by local con-nections, as well as by global network architecture. The research funded by this award investigates how the net-works in which agents interact influ-ence outcomes in a variety of market and group activities. There are three distinct projects. The first two investi-gate the impact of network structure on trade intermediation and information diffusion. The third project examines what network features are essential for the persistence of diversity in socially influenced choices.

Tweeting Increases Product DemandShiyang Gong, Juanjuan Zhang, Ping Zhao, Xuping Jiang, 2015http://jjzhang.scripts.mit.edu/

http://faculty.chicagobooth.edu/workshops/marketing/pdf/pdf/Tweeting%20Increas-es%20Product%20Demand%202015_01_07.pdf

Many businesses today adopt tweeting as a new form of product marketing. How-ever, whether and how tweeting affects product demand remains inconclusive. We explore this question with a random-ized field experiment on Sina Weibo, the top tweeting website in China. We col-laborate with a major global media com-pany and examine how the viewing of its TV shows is affected by 1) the media com-pany’s own tweets about its shows, and 2) recruited Weibo influentials’ retweets of the company tweets. We find that both

company tweets and influential retweets are effective in increasing show viewing, but in different ways. Company tweets directly boost viewing, whereas influen-tial retweets increases viewing if the show tweet is informative. However, influential retweets are more effective than company tweets in bringing new Weibo followers to the company, which indirectly increases viewing. Based on the findings, we provide managerial recommendations on tweet-marketing management.

Sloan Executive Education Courses

Communication and Persuasion in the Digital Age (10/21/2015) Instructors: Edward Schiappa, JoAnne Yates

Location: Cambridge, MassachusettsTuition: $3,300 (excluding accommodations)

Program Days (for certificate credit): 2http://executive.mit.edu/openenrollment/program/communication-persuasion-in-the-digital-age/#.VV4oWkgzDIs

Grounded in extensive cognitive research on how we learn and observe, this program is designed to help execu-tives and managers become successful communicators in person and in virtual contexts—from public speeches and group discussions to video conferencing and social media.

Advancements in technology and the rapid proliferation of digital media, glob-ally dispersed teams, and new levels of collaboration require executives to lead their organizations with sophisticated communication skills, adapted for these new ways of working. To be a successful leader today, you must be able to effec-tively persuade and influence at all levels, in person and virtually, and across the globe. Communication & Persuasion in the Digital Age is designed to help execu-tives and managers become successful

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http://agelab.mit.edu/client-perceptions-financial-advisors-social-media

http://www.demontjoye.com/projects.html

http://economics.mit.edu/faculty/manea

http://www.nsf.gov/awardsearch/showAward?AWD_ID=1260744&HistoricalAwards=false

http://jjzhang.scripts.mit.edu/

http://faculty.chicagobooth.edu/workshops/marketing/pdf/pdf/Tweeting%20Increases%20Product%20Demand%202015_01_07.pdf

http://executive.mit.edu/openenrollment/program/communication-persuasion-in-the-digital-age/#.VV4oWkgzDIs

http://ilp.mit.edu

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ILP.MIT.EDUMIT TECHNOLOGY REVIEW

JULY/AUGUST 2015BUSINESS REPORT — BANKING, CURRENCY, ECONOMICS, FINANCE

communicators in person and in virtual contexts: from public speeches and group discussions to video conferencing and social media.

Edward Schiappa and JoAnne Yates draw on cutting-edge communication research, theories of persuasion, studies on parasocial interaction, and empiri-cal studies on compelling storytelling to help participants solve problems, make quality decisions, and motivate people. Session topics include speaking persua-sively, visual persuasion, communicating in globally distributed teams, adapting messages to audiences, and arguing civilly to produce good decisions.

Strategic Marketing for the Technical Executive (10/13/2015)Instructors: Duncan Simester, Catherine Tucker

Location: Cambridge, MassachusettsTuition: $3,300 (excluding accommodations)

Program Days (for certificate credit): 2 http://executive.mit.edu/openenrollment/pro-gram/strategic-marketing-for-the-technical-executive/#.VV4snEgzDIs

This program is designed to provide executives who already have deep tech-nical or functional experience with a thorough review of the key concepts in marketing and strategy. The course begins by asking: what markets should you be in? This includes what markets should you enter, and just as importantly, when you should exit. The course then turns to tactical issues, describing how to optimize product, pricing, advertising, and channel decisions. In the channel management module we describe how to work with channel partners and balance the twin demands of creating value together, while bargaining over who captures this value. The course describes the role of customer data and illustrates the most effective (and easily implemented) approaches for get-ting value from this data.

After completing the course partici-pants will have learned a common lan-

guage, which they can use to interact more effectively with the marketing and strategy professionals in their own firms.

Digital Marketing and So-cial Media Analytics (10/21/2015)Instructors: Sinan AralLocation: Cambridge, MassachusettsTuition: $3,300 (excluding accommodations)

Program Days (for certificate credit): 2 http://executive.mit.edu/openenrollment/pro-gram/digital-marketing-and-social-media-analytics/#.VZKyO0gzDIs

New digital technologies have fun-damentally reshaped marketing the-ory and practice during the last decade alone. Technology has changed the modes of communication through which firms engage with consumers. Moore’s law has made the storage and analysis of con-sumer data scalable, creating opportuni-ties for fine-grained behavioral analytics. New monitoring tools have fostered pre-cise and personalized customer relation-ship management practices. The rise of mobile phones and tablets has enabled location based messaging and reciprocal communication. The ubiquity of video content has promulgated rich, native advertising programs. The global emer-gence of social networking has enabled networked-based predictive modeling and new forms of targeting and refer-ral strategies based on the preferences of consumers’ peers. And finally, new social media have brought all of this onto the public stage, with word-of-mouth con-versations driving brand awareness and brand loyalty, and user-generated con-tent on review and ratings sites making or breaking demand for products or services.

This two-day course provides a detailed, applied perspective on the the-ory and practice of digital marketing and social media analytics in the 21st century. We will cover concepts such as the dif-ference between earned and paid media, predictive modeling for ad targeting and customer relationship management, mea-

suring and managing product virality, viral product design, native advertising, and engaging the multichannel experi-ence. Throughout the course we will spe-cifically stress the theory and practice of randomized experimentation, AB testing, and the importance of causal inference for marketing strategy.

http://executive.mit.edu/openenrollment/program/strategic-marketing-for-the-technical-executive/#.VV4snEgzDIs

http://executive.mit.edu/openenrollment/pro-gram/digital-marketing-and-social-media-analytics/#.VZKyO0gzDIs

http://executive.mit.edu/openenrollment/program/digital-marketing-and-social-media-analytics/#.VZKyO0gzDIs

http://ilp.mit.edu

TECHNOLOGYREVIEW.COMMIT TECHNOLOGY REVIEWJULY/AUGUST 2015

BUSINESS REPORT — MARKETING, INFLUENCE, PERSUASION

2015-2016

Technology and the CorporationConference Seriesilp.mit.edu/conference

ILP conferences are designed to keep companies in touch with research developments and issues affecting their industries. They provide research findings and presentations by leading experts, as well as choice opportunities to connect with MIT faculty, students, and industry executives. ILP conferences are open to the public for a fee and are free for representatives of ILP member companies.

In addition to the Technology and the Corporation Conference Series, the ILP often cosponsors events with MIT partners. Generally, admission is available to ILP participants at a discounted rate. Check our conferences website for updated schedules.

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http://ilp.mit.edu/conference

the persuasive power of fake people compulsive...

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