From Advert to Action: Behavioural Insights into the Advertising of Financial Products

47 Pages Posted: 25 Apr 2017

See all articles by Paul Adams

Paul Adams

Financial Conduct Authority

Laura Smart

Financial Conduct Authority

Date Written: April 25, 2017

Abstract

How are we affected by financial advertising? What do we pay attention to and when might we be misled? We explore the science of advertising to answer these questions. Building on earlier FCA work into behavioural biases, we summarise a large body of academic literature to explore the mechanisms behind consumer attention, understanding, and behaviour. We build this into a framework for understanding how consumers process information in the form of advertisements, divided into three stages: See, Interpret and Act. We then apply our findings in a novel setting: explaining what the science says about when an advert may be unclear, unfair or misleading.

In See, we find that attention may be predicted by the relative salience of information and is also affected by consumers’ motivation and intentions; for example, those searching for a house are more likely to notice mortgage deals. In Interpret, we find that certain ways of presenting information, particularly those which make use of behavioural biases or which involve percentages may impede understanding and have the potential to mislead consumers in certain circumstances. In Act, we see that consumers may be influenced into action through techniques which encourage reliance on heuristics or emotion, rather than reason, and that this may cause problems.

Throughout, we offer fictitious examples of adverts to illustrate the behavioural points we observe and we suggest further areas for research which can guide our actions.

Suggested Citation

Adams, Paul and Smart, Laura, From Advert to Action: Behavioural Insights into the Advertising of Financial Products (April 25, 2017). FCA Occasional Paper No. 26. Available at SSRN: https://ssrn.com/abstract=2958139

Paul Adams (Contact Author)

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

Laura Smart

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

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