Opinion
Why do some innovative ideas never see the light of day? Status quo bias.
Summary
- Many of us hold onto outdated and ineffective ideas because of this behavioural trait. The human brain does not like to change. But innovation can be nurtured only by being open to ideas.
Imagine you discovered an idea that could dramatically solve one of the most significant problems of an industry. What will you do with that idea? Would you shout about it from your rooftop or will you keep quiet about it? Here is the story of how an idea that could change the fortunes of the digital-advertising industry was treated. This story is a telling example of how most of us treat paradigm-shifting ideas.
Digital advertising is today a $600 billion industry. In 1994, when digital advertisers started using banner advertising, the click-through rates (CTRs) were about 40%. But in 2022, CTRs stood at a mere 0.35%, a drop of more than 100 times from the 1996 level. One could try to cover up this humongous drop in CTRs by blaming an exponential increase in digital stimuli and the ever-shortening attention spans of digital consumers. But the fact remains that this drastic drop in CTRs has happened in spite of new strategies like sophisticated data-mining techniques, deep personalization based on data from sophisticated online cookie trackers and the use of search-engine optimization.
Tim Hwang, a former global policy lead on artificial intelligence at Google and author of the book Subprime Attention Crisis: Advertising and the Time Bomb at the Heart of the Internet, has warned of consequences for the global economy from the declining effectiveness of digital advertising. Once the actual inefficacy of digital advertising is more widely known, the value of online advertising will probably drop drastically. In this view, much like the subprime-loan crisis of the US mortgage industry pulled the plug on the world economy during the West’s Great Recession about a decade-and-a-half ago, an implosion in what digital advertisements are seen by the market to be worth could hit the value of several technology majors that depend on digital advertising money for their revenues.
Given this precarious situation of the digital advertising world, a new idea put forward by Amazon is hugely relevant. As a leading player in the digital marketing world, trust Amazon to know a lot more than others about what works and what does not work in the digital world. Amazon claims to have found a way to improve CTRs. The Amazon Ads website says: “An advertiser may have stand-alone images of their product against a white background, like a coffee mug. When that same coffee mug is placed in a lifestyle context—on a kitchen counter, next to a croissant—in a sponsored brands mobile ad, we have seen that click-through rates are more than 40% higher compared to ads with standard product images."
Wow! Given the precipitous fall of CTRs over the years, an idea that promises 40% improvement should be big news, even headline-worthy. But that was not what happened. Even on the Amazon Ads website, this new idea was not even a subhead. It was tucked away in a Q&A section one had to chance upon. Why was this idea underplayed and treated so badly?
First of all, to all those who have worked in the traditional advertising world, that idea is not new. In the traditional ad industry, art directors and photographers have long been aware of how an attractive product shot for a point-of-sale poster can impact business. They would often spend days, if not weeks, thinking through a particular product shot and its background, along with special props and models if required. But the enormous time taken to photograph a product in an appropriate context was probably not the reason that Amazon played down its idea. Today, Generative AI, backed with creative prompting strategies, can churn out good-quality images in a very short time. Everyone knows that. So why was an idea promising a more effective digital connect, one that could potentially alter the design of product tiles and product display pages across e-commerce sites, not given due importance?
Many of us hold onto outdated and ineffective ideas because of an inherent behavioural trait called the status quo bias. The human brain does not like to change. It likes to continue doing what it has been doing all along.
Ever since e-commerce began, it has been a sort of dictum that a product tile or display page should only feature a stand-alone product shot against a white background. It soon became the norm of all e-commerce websites. Based on work that my team had done, this column was one of the few to question that status quo (bit.ly/49ZcYVP). But otherwise, it was business as usual in the e-commerce business; even Amazon’s website had only drab product shots against the usual white background.
The idea that Amazon Ads has recently proposed to make product displays more appealing questions the status quo of the e-commerce business. Will e-commerce players break free of their bias? It seems unlikely. As the philosopher of science Thomas Kuhn once said, faced with a paradigm-shifting idea, the more intelligent a person is, the more intelligent the reasons this person will come up with for why the status quo is better.
What is the best bet for an innovative idea of yours to overcome the status quo bias that seems to prevail all around? Go to a family-run concern with your idea. From my experience, the heads of family-run businesses are far more open to accepting innovative ideas than professional managers in multinational companies. It takes a very different mindset to nurture innovative ideas that challenge the status quo.
