Global spending on DOOH (Digital Out-of-Home) advertising is expected to reach $18.64 billion this year, with forecasts predicting it will grow to be $24 billion over the next five years, highlighting its increasing role in the advertising industry. To fully capitalize on this trend, it’s essential to understand how cognitive biases like the Anchoring Effect and Halo Effect shape consumer behavior. Anchoring occurs when the first piece of information a consumer encounters heavily influences their decision-making, while the Halo Effect causes positive impressions of one product to enhance perceptions of a brand as a whole. Compared to traditional advertising, DOOH stands out by offering dynamic content, interactive features, targeted ads, and emotionally engaging experiences, all of which strengthen the impact of these psychological principles.
Global ad spending in the DOOH market is projected to reach $18.64 billion this year, with forecasts predicting growth to $24 billion within the next five years (Slayton, 2024). This surge in investment underscores how rapidly DOOH advertising is becoming a critical driver of business success. But to fully capitalize on this momentum, understanding the psychological factors that shape consumer behavior is key. By applying principles of psychology, we can gain deeper insights into how consumers make decisions and respond to advertising. So, how can psychology boost the impact of DOOH advertising? Today, we’ll explore two powerful cognitive biases—Anchoring and the Halo Effect—and examine how they influence not only how consumers perceive individual products, but also how they form lasting impressions of entire brands. We’ll also look at how these principles align with the unique strengths of DOOH as a dynamic advertising platform.
The Anchoring Effect is a cognitive bias in which people place a lot of importance on the first piece of information they encounter when they are making decisions (Tversky & Kahneman, 1974). In simpler terms, our first impressions tend to shape our perception and biases about a given topic. On the other hand, the Halo Effect is a bias where we extend our perception of one positive trait to unrelated aspects (Nisbett & Wilson, 1977). In advertising, if consumers associate positive feelings with one product from a brand based on an ad they’ve seen, they’re more likely to transfer those positive feelings to other products from the same brand. One example to understand both of these effects is the creation of the Apple iPhone in 2007 (Apple Press Release, 2007). The price of the base model was higher than that of other existing phone models at the time ($499). As future iPhones were created and set at lower prices, these prices looked like great deals as they were lower than the first price that had been initially anchored with the first model, which demonstrates the Anchoring Effect (Chen, 2007). In regards to the Halo Effect, the popularity of the iPhone led to high sales of other Apple products such as MacBooks, iPads, and more. The positive perception of the iPhone led to positive perceptions of future Apple products.
How can both of these principles be applied to DOOH advertising? Traditional advertising is less interactive, more static, has less visibility, contains less personalization, and results in weaker emotional responses in comparison to DOOH advertising. Let’s explore five key factors where DOOH outshines traditional advertising: dynamic real-time content, increased reach and visibility, interactivity and engagement, targeting capabilities, and emotional and immersive experiences.
In summary, DOOH advertising provides a unique advantage in leveraging the Anchoring and Halo Effects. Its dynamic, interactive, and highly visible nature ensures that ads are not only seen but remembered and acted upon. By tapping into psychological principles, brands can maximize the effectiveness of their DOOH campaigns and create a lasting positive impression that boosts consumer engagement and brand loyalty. At Dolphin Digital, we specialize in programmatic DOOH advertising and are at the forefront of this innovative approach, helping businesses effectively harness the power of digital out-of-home media. For more insights and information, please visit our website.
Apple Press Release (2007). Apple reinvents the phone with iPhone. Apple Newsroom. https://www.apple.com/newsroom/2007/01/09Apple-Reinvents-the-Phone-with-iPhone/
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Nisbett, R. E., & Wilson, T. D. (1977). The halo effect: Evidence for unconscious alteration of judgments. Journal of Personality and Social Psychology, 35(4), 250-256. https://doi.org/10.1037/0022-3514.35.4.250
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Slayton, C. (2024, May 10). The Power of DOOH and CTV, and How They Can Boost Your Brand’s Advertising Strategy. framen.com. https://www.framen.com/blog/the-power-of-dooh-and-ctv-and-how-they-can-boost-your-brands-advertising-strategy
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131. https://doi.org/10.1126/science.185.4157.1124
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