Chapter 2 Impactful knowledge creation
Neuromarketing: Inside the mind of consumers
Reading time: 8 minutes
by RSM Case Development Centre
The human brain is the most complex entity in the known universe. Scientists have made important advances in understanding its mysteries and applying their understanding to help people make better decisions.
Neuromarketing aims to understand the neurobiological mechanisms underlying customer responses to marketing and to better predict customer behaviour by monitoring brain activity. The marketing department at RSM has been a frontrunner in neuromarketing research ever since Professor Ale Smidts coined the term in 2002. RSM’s neuromarketing research is not only published in top neuroscience and marketing journals, but has also attracted the attention of marketing professionals and the public.
Research
Headed by Smidts, the Erasmus Centre for Neuroeconomics has one of the largest neuromarketing research teams in business schools worldwide. The team tries to answer questions about how consumers make decisions, what our brains perceive as valuable, how our brains processes persuasive messages, and how brain imaging can be used to predict purchasing decisions.
Given that consumers are not always able or willing to state their true preferences, neuromarketing not only asks them what they think but also measures how their brains respond to marketing messages. Two modern brain imaging techniques, electroencephalography (EEG) and functional magnetic resonance imaging (fMRI) are commonly applied in neuromarketing research. With recent advances in machine learning and data analytics, EEG and fMRI data can be used to indicate how consumers experience marketing appeals, and how this information can be used to understand and predict consumer behaviour. The Centre currently has two main lines of research.
The first is assessing the quality of dynamic marketing stimuli. For example, in a recent project, PhD candidate Esther Eijlers, Dr Maarten Boksem and Prof. Ale Smidts used EEG to track emotions in the brain in real time. They collected EEG data from 40 students who were watching short videos; each video was designed to trigger a specific emotion: happiness, sadness, fear, or disgust. With machine learning techniques the researchers then classified the emotional content of these video clips by the frequency and topography of the EEG signals from the brains of their volunteer viewers. For the first time, researchers could see, moment by moment, which emotions people experience when they watch something. This is ground-breaking because before now, researchers using fMRI could only see how these processes are represented in the brain but were unable to trace short-lived emotional experiences as they evolve over time.
The second line of research is neuroforecasting – the use of brain data to forecast market-level outcomes. A project by Dr Maarten Boksem and Prof. Ale Smidts provided the first evidence that brain data improves predictions of consumer choices as compared to conventional methods. Using EEG, the team recorded the brain activity of 32 volunteer participants when watching 18 movie trailers. Then they compared the participants’ brain activity with what the participants said their preferences were, and later compared this data with data from US box office sales. Although EEG measurements and the participants’ own preferences indeed predicted individual choices, only the EEG readings showed a strong correlation with a movie’s commercial success. The researchers identified this from correlations with the participant’s gamma oscillations which indicate cognitive phenomena such as working memory, attention, and perceptual grouping. This finding significantly enhanced the accuracy of neural prediction models, opening up a whole new area for research and application.
Neuroforecasting techniques can also be applied to predict social and emotional influences on consumer decision-making and behaviour. Using fMRI, Dr Alexander Genevsky accurately predicted the success of microlending and crowdfunding requests on the internet. In one experiment he and his team asked subjects to make decisions about real crowdfunding projects while their brains were scanned. The findings suggest that neural activity data from a small laboratory sample can forecast aggregate choice better than traditional behavioural measures. In another experiment, in collaboration with Kiva Microfunds, an international NGO, 28 participants were shown photographs of borrowers from actual Kiva loan pages along with the texts of loan requests. The neuroimaging results showed that brain activity in a specific region associated with positive feelings and reward (the nucleus accumbens) can predict the participants’ decisions whether or not to lend money, but more importantly, can forecast the real-world outcomes of the loans.
The Centre’s research enjoys considerable academic attention and recognition: articles based on it appear in top journals such as the Journal of Marketing Research, International Journal of Research in Marketing, Psychological Science, the Journal of Neuroscience, and Neuron. The paper Neural Profiling of Brands: Mapping Brand Image in Consumers’ Brains with Visual Templates (Chan, Boksem and Smidts, 2018), in which a novel method was developed to measure brand image with fMRI, won the prestigious ERIM Top Article Award in 2019 – selected by a jury comprising members from three Dutch partner schools in economics and business.
Impact
The Centre’s research is interesting for the business world. Neuromarketing research provides insights into implicit processes underlying consumer responses to marketing stimuli, which are difficult – if not impossible – to obtain with conventional marketing research methods. These additional insights from neuroscience can help businesses to cut marketing costs by reducing the waste of resources while increasing the effectiveness of marketing activities.
Data for emotional experiences, for example, can show marketers and advertisers whether their product design or marketing communication have the intended emotional effect. Monitoring brain activity of consumers as they watch movie trailers or videos can reveal whether the content will have commercial success. Such granular assessment of consumer experience helps to optimise marketing campaigns and, if used in pre-testing, may prevent failure before they are launched. Now that neuromarketing techniques are becoming commercially available, they are valuable tools for better advertising, more effective storytelling, and ultimately, greater customer satisfaction.
To promote business applications while making further advances in neuromarketing research, RSM partnered with marketing consultancy firm Alpha.One in December 2016. Based in Rotterdam, Alpha.One serves as an intermediary between marketers and scientists, and has clients worldwide such as Facebook. The parties agreed to design research projects jointly and apply research techniques and findings to commercial products and services. Through Alpha. One, RSM research reaches many companies and can potentially influence the industry as a whole.
Alpha.One adopted the emotion classifier from the project on tracking emotions in real time to advise its clients. It also uses the gamma metric from the movie trailer project to test and optimise advertising stimuli. The application of this knowledge is not exclusive to Alpha.One, however. Because academic articles based on both projects are publicly available and the emotion classifier code itself is provided with open access, other neuromarketing companies or businesses can adopt these metrics and methods to advise their clients. In general, these new techniques enlarge the toolbox for marketers and help them make more effective decisions.
For applications with a public purpose, a good example is Kiva Microfunds, an online lending platform connecting online lenders to entrepreneurs, which also uses the Centre’s research findings to improve how it makes requests to potential donors. This increases the number and size of donations made to people in need around the world. The Swedish Red Cross is another non-profit organisation collaborating with the Centre in research-to-design requests that can elicit more and larger donations.
By the same token, the Centre’s research can help make consumers and regulatory bodies aware of how vulnerable certain groups of people – especially children, young adults and seniors – are to persuasive appeals. Armed with this awareness, both the public and government can better guard the interest of ordinary consumers.
Academics at the Centre are as keen to apply their knowledge in the real world as they are to teach future marketers – today’s students. Few marketers now are trained in neuromarketing and have trouble evaluating its methods and results. Clients of neuromarketing companies can be impressed by colourful pictures of brain activations that may not be truly insightful or predictive.. The RSM MSc elective in Neuromarketing goes even further and gives marketing students hands-on opportunities to collect, analyse and evaluate brain data.
Neuromarketing research at RSM attracts wide public interest. When brain beats behavior: neuroforecasting crowdfunding outcomes (Genevsky, Yoon and Knutson, 2017), for example, was picked up by 10 news outlets and retweeted more than 100 times. Smidts, Boksem, and Genevsky all give regular speeches at public events such as the NMSBA Neuromarketing World Forum, the Frontiers in Marketing series at RSM, and Studium Generale lectures for the general public. They were interviewed at the Rotterdam Film Festival and on several radio and TV programmes, gave talks at university programmes for the elderly, and frequently helped high school students on their neuromarketing projects.
The mission of neuroscience to better understand consumer decision-making and behaviour is still in its infancy, and to apply neuromarketing on a large scale in the real world still has many obstacles to overcome. With more rigorous academic research and advanced data analysis, however, neuromarketing has made rapid progress in the past five years both in the laboratory and in companies. The Erasmus Centre for Neuroeconomics is a leader in the field, not only bridging research and practice, but also informing all societal stakeholders on the value as well as the risk of this new field of science.