How advertisement framing increased loan demand by 25%
Abstract
The advertising market is far reaching and ever growing, with American firms spending almost $300 billion on advertising just last year.1 This intervention examines how behavioral science can be used to design effective advertising content.2 Specifically, the experimenters conducted a field experiment in conjunction with a consumer lender, mailing a randomized combination of creatively designed letters and a range of loan prices. The study found that framing content to promote affective decision making can be an effective advertising strategy. Adding a picture of a female on the letter increased demand by the same magnitude as decreasing interest rates by 25%. Moreover, extending the deadline to apply for the loan increased the take-up rate by 3% and was as effective at increasing demand as decreasing interest rates by almost 10%.
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Sources
- Adgate, B. (2021, December 8). Agencies Agree; 2021 Was A Record Year For Ad Spending, With More Growth Expected In 2022. Forbes. https://www.forbes.com/sites/bradadgate/2021/12/08/agencies-agree-2021-was-a-record-year-for-ad-spending-with-more-growth-expected-in-2022/?sh=2f5d9637bc69
- Bertrand, M., Karlan, D., Mullainathan, S., Shafir, E., Zinman, J. (2009). What’s Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment. Yale University Economic Growth Center Discussion Paper No. 968, Yale Economics Department Working Paper No. 58. https://ssrn.com/abstract=1332007
