Emotion
On Tuesday the founding partner of Duval Guillaume, mister Guillaume van der Stichelen himself, talked about his new book at the agency. Being a copywriter I'm interested anything that's printed. So every trainride between Antwerp and Brussels I took out the book to read. The book is about how you can build a brand so it's perceived as a hero. It seems that heroes have common characteristics and if brands follow them they can be admired just as much as popstars, politicians and religious leaders.
One thing in the book was particularly interesting. Guillaume explained that consumers don't make rational decisions when it comes down to buying a brand. There are always emotions involved. In my opinion, this is something that a lot of clients tend to forget. I've done an economics study myself for one year and every attempt at creative thinking is perceived as being silly. Brand managers are taught to judge advertising on a rational level, while brands are actually chosen on an emotional level.
I want to take this theory even to a bigger scale. Take a look at the stock market of the last few months. We tend to think that this is a market where rational decisions are playing a major part, but even with buying stocks there's emotion involved. In the recent financial crisis this has become even more clear. I've never seen such big swings from depression to blind optimism. One day investors are about to hang themselves and the other day everybody is delighted again because the government pumps money into the economy (money that doesn't even exist).
I've been in the middle of the last recession. I think that the one we're in now is going to be different. The recession from 2001 lasted for a couple of years and the economy was in a deep ditch where it slowly crawled out. Now, the recession seems to induce a chain reaction of emotions. Governments act immediately, stock markets react immediately and businesses go from one extreme to the other. I think this will be a recession of extremes. It's not only a financial rollercoaster, but also an emotional rollercoaster. As a result every time when we think the biggest financial threat is gone, another surprise lurks around the corner.
Surprises like the 50 billion (!) financial fraud of Bernie Madoff. Bankers and investors all over the world trusted their money in his investors fund. The most surprising thing is that nobody could see this coming. All the banks were amazed by the steady returns on offer: about 10% to 15 % a year. So that was based on a rational decision. Only good intuition will tell you: there's something fishy about an investment fund that's going so well. But Madoff seems to have such a good name in the financial world that even the most rational thinkers in the world blindly followed their financial leader. Their hero. It proves that we're only human. And that we can expect anything these coming years. There's a tough time coming up. But whatever happens, it will be jaw dropping and exciting as hell.
One thing in the book was particularly interesting. Guillaume explained that consumers don't make rational decisions when it comes down to buying a brand. There are always emotions involved. In my opinion, this is something that a lot of clients tend to forget. I've done an economics study myself for one year and every attempt at creative thinking is perceived as being silly. Brand managers are taught to judge advertising on a rational level, while brands are actually chosen on an emotional level.
I want to take this theory even to a bigger scale. Take a look at the stock market of the last few months. We tend to think that this is a market where rational decisions are playing a major part, but even with buying stocks there's emotion involved. In the recent financial crisis this has become even more clear. I've never seen such big swings from depression to blind optimism. One day investors are about to hang themselves and the other day everybody is delighted again because the government pumps money into the economy (money that doesn't even exist).
I've been in the middle of the last recession. I think that the one we're in now is going to be different. The recession from 2001 lasted for a couple of years and the economy was in a deep ditch where it slowly crawled out. Now, the recession seems to induce a chain reaction of emotions. Governments act immediately, stock markets react immediately and businesses go from one extreme to the other. I think this will be a recession of extremes. It's not only a financial rollercoaster, but also an emotional rollercoaster. As a result every time when we think the biggest financial threat is gone, another surprise lurks around the corner.
Surprises like the 50 billion (!) financial fraud of Bernie Madoff. Bankers and investors all over the world trusted their money in his investors fund. The most surprising thing is that nobody could see this coming. All the banks were amazed by the steady returns on offer: about 10% to 15 % a year. So that was based on a rational decision. Only good intuition will tell you: there's something fishy about an investment fund that's going so well. But Madoff seems to have such a good name in the financial world that even the most rational thinkers in the world blindly followed their financial leader. Their hero. It proves that we're only human. And that we can expect anything these coming years. There's a tough time coming up. But whatever happens, it will be jaw dropping and exciting as hell.
posted by Robin Stam at 6:11 pm
3 Comments:
The funny thing is that at the same time, the Great Depression became a kind of media hype.
It's the source of inspiration for quite much every tv commercial – as they all go about saving money in times of crisis, magazines give tips on where to shop, how to cook and where to but nice clothes in times of depression etc. They treat it as if it was some x-mas kind of holiday season.
Maybe the most hilarious effect of the hard times is the latest fashion hype in NYC, where people start dressing up like in the previous Great Depression, so it's all about 20ies hats and suspenders.
Either it is just a way to deal with the situation, or people don't realize how bad it's gonna be. Probably a bit of both.
Be happy for irrational behaviour in markets, whether they are called Delhaize or the NYSE Exchange.
It provides opportunities for those (consumers, investors, brands or brokers) who try just a little harder than the rest.
I hope you're right Camiel. In the last recession that wasn't the case. Everything was standing still, like it's frozen.
But I think there are opportunities, especially for those who deal with the problems in a creative way. And the depression fashion hype is a good example of that. There's even a temporary store in NY called 1929 and they give away free coffee and soup. Hilarious!
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