The Encoding of Value

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Cover image for  article: The Encoding of Value

Advertising, sales, and marketing all work by increasing the value perception of a brand.

In my picture, individuals have motivations which are the things they value: Competency, Experience, Self-Knowledge and so on (a total of 15 Motivations according to RMT - Research Measurement Technologies).

Brands tend to sell themselves based on obvious product features, and the obvious benefits those features serve.

However, this overlooks the motivations the audience member is already equipped with.

The response to the ad starting from attention and continuing through the improvement of value perception will differ based on the motivations/values of the individual.

The ad will be noticed If the individual is motivated by Competency foremost and the ad is for a free online course.

The values are what direct the attention.

In this instance, the advertiser got lucky and reached a person who subconsciously was always looking to boost their own self-image of competency.

It seems apparent that the fields in which we work need to quickly get up to speed on understanding what value perception scientifically is.

Neuroscience and marketing science theory have not been coordinating very well forever. Thank God this is undergoing rapid positive change. The ARF opened the door ten years ago, but it’s taken until now for the two bodies of thought to move toward becoming fully integrated. This beginning is now happening. Lumen’s Mike Follett for example proposed a project to the ARF Cognition Council, and I strongly supported it, and this year a paper will be published by ARF that will serve as a cornerstone. This sort of thing is happening all around us.

In the business, I’m working on several neuro studies right now. Outside the business I continue to demystify mental methodologies I call “HI” for Human Intelligence, and am guided by inputs from the neuroscientists with whom I work.  

I asked Zab, as she’s called (Elizabeth Johnson, of Wharton Neuroscience) what book I should read next to get “fully caught up on what neuroscience knows about decision making”. My nonprofitThe Human Effectiveness Institute (THEI) is chartered with the focus of improving human decision making. Zab directed me to a giant “bible” Neuroeconomics Second Edition.

As I read this incredible book and get caught up on neuroscience (which is actually moving even faster than AI), I see that one of the most powerful variables being considered in this book is Value. VS are value signals which can be read by fMRI and/or other technology. Two of the 52 main brain areas (Brodmann Areas) are implicated in value encoding, the inferior frontal gyrus, and the dorsolateral prefrontal cortex (dlPFC). There are probably other parts that play a role.

Value signals are not monolithic but break down into attributes, i.e., different types of value signals. My hypothesis is that these variations of VS correspond to the RMT DriverTags. The basis for this intuition is that the DriverTags are psychological dimensions empirically measured to drive choice behavior.

It is stunning to know that we have already narrowed down the search for two of the key brain areas we must study in the advertising, marketing, and media businesses, in order to obtain more efficacy from advertising and program content in being able to provoke positive VS.

Is there still a long way to go? Yes. The experimental evidence in the study of decision-making by neuroscience thus far involves the ability to win money, snacks or trinkets by making choices. This is a small sampling of the 15 value motivations as experienced introspectively by audience members.

These human tests were based on earlier tests involving other primates, rats, et al, where these incentives worked perfectly to detect which brains areas lit up when what behavior was observed.

So, there is headroom for moving more deeply into the spectrum of human value signals, in relating neuroscience to business needs. How exciting to be at such a beginning!

Philosophically, the fact that these VS are automatic raises questions about conscious effects on top of the automatic ones. A person may be tempted by something and override it. Metacognition is being studied, as well as the effects of electrical stimulation from outside the brain, and experiments prove that negative VS signals such as fear can be reduced significantly by cognitive effort. This is the underlying neurological evidence in support of the development of ever-better mental methodologies, which psychotechnology race I joined or started with my book Mind Magic. Optimization for the mind.

I asked Zab to review what I wrote above, and she made the following comments, which I reproduce here with her permission, and I feel it adds a lot of useful color to the conversation about how advertising works, what marketers should know when devising new creative and when selecting media.


Thanks for sharing. One aspect that I think is useful to point out is that the brain areas that seem to (at least primarily) encode value, do this agnostic to the object or its worth/importance—this is interesting because it means we are constantly evaluating what is in our environment and use the same neural processes for doing so, which makes decision processes about things that we would have labeled laborious very similar to those that we think of as easy (or high stakes versus low stakes) as processed in the same way. Thus, we can compare and contrast very different things and likely do so all the time—for example, shopping for a home which might cost hundreds of thousands of dollars and deciding whether to eat an orange or a chocolate bar, both which cost many orders of magnitude less and (at least in most situations) has much lower perceived impact on our life. One could imagine the brain could do such things differently, but I think it is very interesting and critical that it doesn't.

Daniel Kahneman suggested two systems of thinking, but importantly, neuroscientists have never found a biological foundation for this—so I would argue that Kahneman's theory is more of a metaphor than anything else. What does change in those conditions seems to be what our past experience has led us to believe is optimal (our priors and our preferences), and how much additional knowledge we need or are able to collect to be more certain. In low-stakes decisions, we can sacrifice time in the decision process because it has little benefit, but in high stakes conditions we may not want to do that but can get pushed to do the case of high demand, for example with real estate (as in my last example), where trying to get more evidence may cost one the opportunity to purchase said house if others beat you to it.

This also means that advertising helps continue to nudge our expectations and our experience, even if this isn't direct—and helps explain why if we have even a slight preference for something we are being marketed, each repeated exposure helps build confidence and quicker decision making (explaining, for example, the mere exposure effect). I really do believe this is how advertising works. We all know that advertising cannot help someone like a product they strongly dislike. Nor can it shift value calculations for things that are always strongly preferred—when the brain doesn't need more time or evidence for the decision process. But most of the time, we are faced with decisions where those extremes are not so clear cut—hence advertising/marketing. Marketers are obsessed with impacts on conscious attention and memory, but indeed, attention and memory in the usual way we define these processes may in the above context not be so critical—except in the way that unconscious learning occurs (prior experiences of any kind aid our predictions about expected value and outcomes in the future)-- and this is what the brain is doing ALL the time.

All the best,
Elizabeth Johnson, PhD
Executive Director, Wharton Neuroscience Initiative


The Attribution Accelerator

The recent Attribution Accelerator showed that progress in measuring brand advertising and marketing short and long-term returns is indeed accelerating, in no small part due to the efforts of Sequent and ARF.

The inclusion of long-term effects this year was a very promising arrival. One speaker was able to point out that too much emphasis on short-term sales reduced his long-term effects in one case by 80%. Another speaker found that 70% of ad budget on short-term sales performance and 30% on brand love (seeds for future customer acquisitions) optimized both short-term and long-term profit. Of course, this will be different across verticals, etc.

The systems being shown in action have grown up quite a bit in a very short time. Their emphasis has shifted to measuring the full funnel and integrating the data between dollars and stated responses. At a deeper level, that is integrating behavior and consciousness.

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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