Understanding Marketing Signaling

So, what does evolutionary biology have to do with marketing? Turns out, quite a bit.

What is marketing signaling?

In its simplest form, marketing signaling is any communication that provides information beyond the mere form of a message. Think about the lasting impression you get from a hand-written thank you note versus the same message in a text. What is the difference? The hand-written note signals a much greater investment from the sender. They took the time, care and added attention to intentionally elevate the experience. The signal this sends is that they really are grateful, and you can believe it.

As digital provided a lower cost alternative to other forms of marketing, what got lost by many in the translation is how consumers perceive marketing. The effort by many companies to make their marketing as inexpensive as possible signals to buyers that the product is no more special than other products marketed similarly.

One of the best examples of this in our current digitally centric marketing era is the fading popularity of more expensive traditional advertising. But one of the key reasons advertising works is because it is expensive. While this may sound counterintuitive, it is one of the most scientifically backed ideas in all of advertising. It’s a concept called “costly signaling” and is well-studied because it is a core component of evolutionary biology. Altering the perceptions of others is difficult, and thus doing it in ways that are very difficult to fake is far more persuasive.

John Kay, an economist at Oxford University explains the role of signaling in advertising this way:

"The advertiser has either persuaded lots of people to buy his product already, a good sign, or has persuaded someone to lend him lots of money to finance the campaign."

How can brands capitalize on signaling research?

Many of the things we want to know when we are buying a product or service, especially for the first time, are not directly perceivable. Customers often have far less knowledge of the true value of a product than the company they are buying it from. This can create a gap between reality and perception. Signaling expertise and customer centricity can be a bridge to close that gap.

What is your web presence signaling?

One of the most common signal failures we see is with companies that have innovative, quality products, but dated websites. It sends a clear signal to the market that they are nowhere near the cutting edge. This begins to trickle down with less effective site performance, which affects Google rankings, which begins to send a signal that they are not a leader.

Almost every element of marketing sends a signal. If you regularly post well-produced, useful content, it signals you have a commitment to sharing knowledge and are likely a thought leader. In addition, B2B buyers have come to expect it, so this signals you are in touch with their expectations. Their engagement with articles and case studies during the purchase process is about 70%. If you aren’t creating informative content, it signals to them you aren’t committed to them.

There is a concept of information asymmetry that is almost always at work in the buyer-seller relationship. The web has provided a much better opportunity for the buyer to close the gap between what they know and what the seller knows. Search, online reviews, and related information-sharing have leveled the playing field.

Companies that are committed to transparency and honestly communicating with their customers on a regular basis tend to view marketing as an investment rather than an expense and rarely fail to understand the importance of the market signals they send.

How signaling helped our client raise millions

In our work with the University of Minnesota College of Education and Human Development (CEHD), we recognized that they were perceived to be a good land grant University college. The reality was they had the number-one ranked child development institute in the country and were pioneers and thought-leaders in educational psychology, special education, and issues around the achievement gap, and had an impressive portfolio of groundbreaking research that could benefit people all over the world.

To send a signal that this college was a global leader, we began a resource platform called “Improving Lives” that provided insights from their research faculty written in an accessible way. For example, a parent with an autistic child or a struggling reader could immediately use the information. These articles were read in over one hundred languages in almost every country every week for 8 years. It was a clear signal that the University of Minnesota College of Education and Human Development was a world-class thought-leader – and its fundraising campaign has reflected that, raising over $100 million. The resource platform was a costly signal that they were dedicated to their mission of education.

Ready to look closer?

If your brand is a market leader or category disruptor, make sure your marketing signals it or they might not believe it.