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Health Warnings Can Boost Sales: Regulators Beware - Ideas for Leaders
Idea #253

Health Warnings Can Boost Sales: Regulators Beware

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KEY CONCEPT

Warnings of the health risks and possible side-effects of products are commonly considered an important part of consumer protection and responsible marketing. But they can be counter-productive. Recent research suggests they not only fade over time but also lead to perverse increases in consumer confidence and product sales.


IDEA SUMMARY

Marketing messages promising powerful benefits such as enhanced social status in return for smoking a particular brand of cigarettes or sexual potency after taking a ‘cure’ for erectile dysfunction are often accompanied by grave warnings of possible side effects, including increased risks of stroke, heart disease and cancer. Such warnings buffer companies from liability — but do they persuade consumers to make safer choices?

New research by The Faculty of Management at Tel Aviv University, INSEAD Singapore and the Leonard N. Stern School of Business in New York provides compelling evidence that embedding warnings of undesirable effects in advertisements can backfire over time.

It finds that health warnings only reduce the appeal of products in the short-term — and that from a ‘distal time perspective’ they can actually increase consumption of riskier products.

The research consisted of four separate experiments, investigating the effects of warnings that cigarettes can cause cancer and other serious diseases, artificial sweeteners damage the immune system, erectile dysfunction medication increase the risks of heart disease and stroke, and hair loss ‘cures’ cause weight gain. In each one, participants were divided into four groups. Some saw ads that included warnings; some didn’t. Some were asked to respond in the immediate to short-term; some after a gap of several days or weeks.

The results are disturbing.

In one experiment involving cigarettes, two of the four groups (all smokers) saw an ad for a new brand, which included a warning of the risk of lung cancer, heart disease and emphysema, while the other two groups saw the same ad minus the warning. All four were then given an opportunity to buy the product. Half (one group that had seen the warnings and one group that hadn’t) were told they would receive any orders within 24 hours, and half were told that they would receive the packs three months later. Participants in the near-future condition who had seen warnings of the risks ordered 75 per cent fewer packs of cigarettes, on average, than those who hadn’t. In the distant-future condition, however, those who had seen the warnings ordered 493 per cent more.

In a second study, involving ads for an artificial sweetener, the backfiring effect was again extreme. Two groups saw an ad for a product that included a warning of hair loss, headaches and damage to the immune system; two groups saw the same ad without the warning. Two groups were asked to place an order for the product immediately after seeing the ads; two groups were contacted two weeks later. Those in the near-future condition who had seen the ad and the warning purchased 94 per cent fewer packs; the equivalent group who made a delayed choice ordered 265 per cent more.

A similar picture emerged in similar tests for ads for erectile dysfunction and hair loss medications.

The studies confirmed the researchers’ central prediction: there’s an ‘ironic effect’ to health warnings. What explains the results? The researchers applied construal-level theory (CLT), which holds that the more distant we are in time from something the more we focus on high-level abstract and general information rather than on concrete and secondary details. In the experiments, in other words, delay, or the prospect of delay, emphasised the positive connotations of product warnings — trustworthiness, communication about both pros and cons — and, perversely, led to increased consumer confidence in the manufacturer and increased sales.


BUSINESS APPLICATION

The ‘ironic effect’ often flies under the radar of regulators, who tend to test warnings in ads in the immediate- and short-term. (People are shown the ads and asked for their response ‘there and then’.)

Since the delay in making a purchasing decision can be significant, the effects of ‘temporal distance’ need to be incorporated into public-sector research. This may make trials more cumbersome (and more costly in the short term), but it is likely to produce more accurate results and save money in the long term.

There are implications, too, for businesses.Manufacturers that genuinely want to inform people of the dangers of their products might need to find ways to repeat the warnings at point of sale (perhaps in co-operation with retailers).

Meanwhile, the practice of allowing firms to advertise products that pose significant risks as long as they spell out the dangers might need to be reviewed. The delayed effects of warnings are not consistent with ethical marketing and corporate social responsibility.

More broadly, the research suggests the timing of warnings unrelated to health risks — for example, financial risks associated with certain investment products — might also need to be more carefully considered. 


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Idea conceived

January 1, 2013

Idea posted

Nov 2013
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