By: Jim Poh, SVP, Media and Communications Director
Media planning and buying involve psychology in a wide variety of ways, from understanding the motivation of consumers to better target their interests, to influencing co-workers and clients. Perhaps the most important part of media, negotiating the best deals, is fraught with psychological underpinnings. There is a vast body of work exploring the psychological side of negotiating, and much of it is relevant to the types of bargaining we do on behalf of our clients.
One principle that is often cited in treatises on the psychology of negotiation is the “anchoring” effect. Anchoring is simply the cognitive bias for humans to put too much stock in an initial piece of information offered in making a decision. Most argue that this principle favors making the first offer in a negotiation as ensuing rounds will tend to gravitate towards that anchor. However, in media buying, there are factors in play that can offset the anchoring effect. One of the most important is experience. Research has shown that people who are well armed with information relevant to the negotiation are less likely to be lured into overpaying based on anchoring. That’s why in media buying it’s typically preferable to have the sellers make the first offer because you’re usually talking to a number of them and you can use their proposals to get a gauge of where the market is relative to your experience and expectations. Their submissions will invariably attempt to anchor you to a higher price point, but you’ll know better if you have the experience and information to keep you grounded.
Scarcity is a psychological effect that can defeat your resistance to anchoring. The scarcity principle applies to the human cognitive bias that makes us place a higher value on an object that is scarce and a lower value on one that is available in abundance. So while we might be able to reach 50MM people in the digital video for substantially less money, we are willing to pay huge premiums to reach those people in the Super Bowl because there are only so many spots to buy. The sellers will often exacerbate the scarcity effect by warning us that time is running out or that there are only a few opportunities left, and we become glad to pay whatever the asking price is. Having “must buys” on our media plans makes us particularly susceptible to the scarcity effect, so we try to avoid them whenever possible.
At the end of the day, the 2 cold realities of negotiating media buys are that we have a set budget that we cannot exceed and the seller has a minimum price that they will not go below. Our objective is to make those positions meet, using any combination of psychological principle.