Dan Ariely’s book Predictably Irrational is a fascinating look at why human beings systematically behave in an irrational fashion. Ariely is a behavioural economist – he goes a long way to exploding the traditional rational expectation theory of economics. The subject titles of the chapters in the book immediately give you a flavour of the non-intuitive findings of his research. For example:
The Cost of Zero Cost – why we often pay too much when we pay nothing
In one experiment, a group of people were offered the choice of receiving a $10 Amazon voucher for free – or paying $7 for a $20 voucher. Under rational expectation theory, everyone should choose the $20 option. Because the overall gain is $13 versus $10. However, in the test, virtually everyone in the group picked the free $10 option. The power of free is very powerful (but says Ariely, irrational).
However, one particular chapter struck me as having major implications for social media – namely, The Cost of Social Norms. According to Ariely, we live simultaneously in two different worlds – one where social norms prevail, and the other where market norms make the rules. Social norms are usually warm and fuzzy. Market norms are very different. The exchanges are sharp-edged: wages, prices, rents, interest, and costs/benefits. Says Ariely “when we keep social norms and market norms on their separate paths, life hums along pretty well. However, when social and market norms collide, trouble sets in.” Take sex as an example. A guy takes a girl out for dinner on three occasions and pays for the meal every time. On the fourth date, he casually mentions how much this romance is costing him. “Now he’s crossed the line. Violation! She calls him a beast and storms off. He should have remembered the immortal words of Woody Allen – the most expensive sex is free sex”.
Introducing market norms into social exchanges thus violates social norms and hurts relationships. Once this type of mistake has been made, recovering a social relationship is difficult.
So what does this mean for the world of social media? More specifically for those who hope to use social media for commercial benefit? If Ariely is right, then you need to understand very clearly where the boundaries lie between social and market norms. As a PR, is it possible to apply both social and market norms to your relationship with a journalist? Ultimately, you are being paid by a client to achieve a certain commercial goal ie you’d think market norms would apply every time. Yet much of the talk around social media seems to be couched in warm, fuzzy terms like conversation, dialogue and engagement. PRs are forever talking up their special “relationships” with journalists. However, in a business context, surely market norms must apply at some point.
In another of Ariely’s experiments, people didn’t mind doing certain tasks for free – because it was seen as a social norm. The minute money was involved, market norms came into play – and people’s involvement and behaviour changed. On Twitter, can you switch from providing good info with no expectation of financial reward to pimping your own commercial interests?
Getting the balance right between social and market norms is thus going to be one of the trickiest challenges facing social media marketeers.
Filed under: Books, Technology PR, digital pr, online pr, tech pr , Dan Ariely
Very nice post. It’s true that there is a certain amount of financially (as yet) unmeasurable trust involved in social media. I think that’s why SM is increasingly popular in this turbulent time. Our once econmically measurable trustworthy banks have proven that numbers don’t always equal real value or real or worthwhile relationships (The Ascent of Money, By Niall Ferguson). So the social aspect of the relationship, the part the can’t be measured in money, is becoming more important. That’s where measuring or at least monitoring social media is important.
Money changes everything doesn’t it? It’s a really interesting dynamic to watch as social media communities, however you define them, integrate commercial interests. If you look at successful content properties, and communities, they all pivot on the same central point, which is focus on quality content and addressing the core interests of their audiences/members. For an example of how this focus has been lost, look at how many groups on social media sites have turned into nothing more than spam lists. Your post does a nice job of pointing out how blurry the commercial/personal relationship lines can be and what a fine edge there is to walk.
I think this is a great, thought provoking article. I agree entirely, but question whether it’s the financial element isn’t just a symptom of the trust issue rather than being purely about money?
(Expect to be challenged on this as I’m thinking it through)
If someone offers me a voucher free, there’s very little risk for me. It’s easy to trust them. If someone asks me to spend money on it, I immediately have something at risk: what if there are conditions on the voucher that mean I can’t use it? what if I hand over my bank details and they are misused.
Similarly, ‘On the fourth date, he casually mentions how much this romance is costing him’ suggests that this person hasn’t set out their stall before going out, perhaps views relationships in financial terms or has a communication problem – if you can’t afford to take a girl for dinner, don’t invite her out, suggest in advance that you go Dutch or go for a romantic walk along the riverside instead.
Social media, like any media, taps into trust – communication from people we know, like, respect etc. The good thing is that, unlike the bloke at the next desk in an office, we can ignore it or switch it off if we want!
“On Twitter, can you switch from providing good info with no expectation of financial reward to pimping your own commercial interests?” I’d say yes as long as it answers that all important question: what’s in it for me (the reader)?
The old Cadbury’s gorilla did this well- it was an overtly commercial property, but popular with social media because it delivered high quality entertainment which got people talking.
As a PR, is it possible to apply both social and market norms to your relationship with a journalist? I believe so. Journalists know PRs are being paid. The PR consultant is only as good as their last contribution, and get it wrong with social media and you’re as likely to become the story (the wrong end of a post about a [named] stupid PR person).
I think you hit the nail on the head by saying “If you look at successful content properties, and communities, they all pivot on the same central point, which is focus on quality content and addressing the core interests of their audiences/members.”
Let’s face it – if I am offered, via any media, unobtainable tickets to a concert, it’s not the asking for money itself that’s going to be an issue. It’s that old trust thing again!
@Linda @Chris @Claire
Thanks for the comments – I think this is a topic that will run and run!
I thought the book contained a lot of reference-worthy research and the chapter on The Cost Of Social Norms was good, until that is he started talking about work – an area that’s been subject to market norms since its inception, not just since the advent of digital or latterly social media.
While it’s true that many crafts people, professionals, etc, do take a pride in their work, I worried for My Ariely’s delicate soul when he said:
“I am worried that recent cuts we see in employees benefits… are likely to come at the expense of the social exchange and thus affect workers productivity… If companies want to benefit from the advantages of social norms, they need to do a better job of cultivating those norms.
As companies tilt the board, and employees slide from social norms to the realms of market norms, can we blame them for jumping ship when a better offer appears? It’s really no surprise that corporate loyalty, in terms of the loyalty of employees to their companies, has become an oxymoron.”
Hmm, so which is it: is he “worried”, or “not surprised”? Or is he using a rhetorical device to engage us in his thought process?
In The Corrosion of Character (1998) Richard Sennett explored how the insecurity of work in the latter part of this century had largely erased any remaining intrinsic attachment between employer and employee – hence everything is extrinsic now, and we have to be resilient and malleable. Status, skills-gathering and productivity now sit alongside salary, rights and benefits in the extrinsic zone.
In turn – to come back to social media – I think people know that if they fan / follow a brand, or join a brand group on Facebook (or equivalent social network), as well as being able to converse with or at least be listened to by the brand, they are also likely to receive some commercial messages, but also that they may get the occasional commercially-driven communication from friends who are using social media for both pleasure and… [shock!] work
I agree essentially that with social media it’s all about brands (and individuals) knowing about boundaries and how we negotiate these different modes – aka “the new social contract” – but I think there’s something naive or perhaps disingenuous about his thought that:
“Life with fewer market norms and more social norms would be more satisfying, creative, fulfilling and fun.”
If he’s talking about this within the context of a market economy.. well, it’s just platitudinous. As the old social contract has eroded, so have our coping mechanisms re-arranged themselves. The personalisation of work is just the employer side of the equation re-arranging itself in response (granted some corporates are a little behind the curve here – but an increasing number are not).
Apart from the faux-pas of endless – or worse still, irrelevant – pimping (which will of course still happen), people will find their own way of dealing with commercially-motivated messages from brands, contacts and friends in social media.
But I’ve gone on far too long. Maybe we should start a book club
Deirdre – many thanks – the kind of thoughtful response that makes this blogging lark worthwhile
A book club – now that’s an idea….
Well now, Andrew Smith! Long, Long time no see!
“The power of free is very powerful (but says Ariely, irrational)”.
Well sure, you can have £10 for free, or just rationally send £7000 to expedite the release of £1,000,000 in funds from the tragically and recently deceased Mr. Winston N’Boto’s bank account in Lagos.
Greetings from the Stonehaven Community Centre ca 1980!
Thanks for sharing! I just read this book for my Management class not so long ago. Great read with lots of exciting experiments.