Tuesday, September 18, 2007

Fraudsters and testimonial ads


In a previous post, we reported evidence that advertising informs, but doesn't persuade. However, some advertising does persuade, and the most persuasive ads often include testimonials.

The Federal Trade Commission prosecutes fraudsters who use credit-repair, work-at-home, and diet and exercise scams to bilk consumers out of millions of dollars.

A common characteristic of these scams is a testimonial advertisement that features a number, like the one pictured here, "I lost 74 pounds wearing slimming insoles." These advertisements are persuasive because:
1. some consumers don't realize that the number is drawn from the upper tail of a statistical distribution [they may not even know what a distribution is]; and

2. some consumers think they can do better than whoever is giving the testimonial [does everyong think they are above average?].
To combat these biases, the FTC requires a disclaimer, e.g., "results not typical."

However, testimonials that mention a number are used for legitimate products as well. For example, the Jenny Craig weight loss plan, which has data to support its effectiveness, has a website that allows users to search for testimonial advertisements by weight, and by pounds lost, so that readers can more closely identify with the stories.

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