We all know that some ads are designed…if not quite to deceive, then to be disingenuous.

How do you spot them? – and as a marketer, how do you avoid creating them?

We take a look at how behavioural science can help us to identify when we’re being manipulated or downright lied to. And how to ensure your ads make the grade on clarity and honesty.

Misleading ads – why they matter

Aside from the ethical reasons for not producing misleading financial promotions, there are strong regulatory drivers too.

If you are regulated by the Financial Conduct Authority (FCA), you need to ensure your ads meet their fair, clear and not misleading requirements and deliver their required consumer outcomes.

Even if your firm isn’t regulated by the FCA or other industry regulator, UK advertisers all need to comply with the Committee of Advertising Practice (CAP) requirements, which are enforced by the Advertising Standards Authority (ASA).

You can read more about the ASA and CAP in this blog on How to comply with the CAP code.

Every year the ASA/CAP receive thousands of consumer complaints about adverts, offline and online. Find out more about the nature of these complaints, and how to avoid them, in How to produce complaint-free ads – lessons from the ASA.

Learnings from behavioural science can help

Our brains respond in interesting ways to adverts. A paper published by the FCA earlier this year looked at the science of financial advertising. It focuses on how consumers see, interpret and act on the information they include.

It found that:

  1. Framing is important

How you ‘frame’ a message – whether you present it in a certain way, encouraging a certain interpretation – plays a big part in the way it is received.

The paper discusses the fact that most of us tend to be loss averse; we fear losses more than we want equivalent gains. Adverts that focus on the potential loss of something – whether the prospect of missing out on a good deal, or the money you could lose by not taking out an insurance policy – may work better than those that focus on the potential benefits.

For financial products in particular, framing is especially pertinent. Do not overstate the benefits of a product, or the risks of not buying it.

Financial promotions talk about performance and potential gains. It’s important to make sure that any reference to investments has clear risk warnings and disclaimers and that these meet FCA rules on prominence.

  1. Beware of encouraging inference

‘Pragmatic implications’ is a term you may not be familiar with. But the concept is easy to grasp. It looks at not what is said, but what the listener ‘hears’ based on the rules of usual conversation.

For example, an ad may say – to use the example in the paper – ‘You only want the best. Buy our brand’. This implies that the advertised brand is the best, but doesn’t actually say as much.

You want to get your wording past your Compliance team as easily and quickly as possible. So you need to make sure that you avoid potential grey areas. Inferences can fall into this category.

Say what you mean, and mean what you say.

  1. Use numbers sparingly

This might be a big ask for financial promotions, where performance statistics, AuM and other necessary information is – of course – in number form.

But the paper is clear that people find it difficult to interpret numbers – percentages in particular. While you may not intentionally mislead, any advert that includes a lot of statistics is naturally going to be harder for people to get their heads around.

Again, keep in mind the FCA’s rules on promotions being fair, clear and not misleading.

Source: Perivan Technology

Lessons from behavioural science can help to inform your advertising, ensuring that your financial promotions meet FCA rules as well as the ASA and CAP requirements. We offer a complete solution with a range of self-service, cost effective, compliance and marketing products and services that are uniquely suited to supporting firms.

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