The Unwavering Growth of the Experience Economy
Today it’s no coincidence that the brands with the greatest cultural relevance and the highest social value are those with experiences at the heart: from Amazon to Apple, Facebook to Fitbit, Uber and Airbnb – these are the brands people talk about and depend upon.
Having worked on, researched and evaluated experiences for many years, we have coined a phrase to explain the value of experiences to brands. We call it The Exponential Experience Returns (TEER) Theory and this is why it works…
The Law of Diminishing Returns is a classic economic theory and one we can all relate to.
The 1st sip of beer always tastes better than the 2nd, 3rd or 4th and so on.
This law also applies to objects and products. For example, the smartphone or the new car is far more exciting and valued when it’s new, because, as humans, we habitualise towards objects in our environment relatively quickly. Our love and excitement of even the highest value items wanes as time goes on.
Not so with experiences.
In fact, with experiences, THE OPPOSITE happens.
The value we get from experiences in life actually grows over time, even when we have nothing physical to show for it. Rather than forget a good life experience, people enhance their memories by talking about what they have done, revisiting photos and embellishing their stories.
This is because we are defined by what we do far more that what we own… experiences feed our identity and deliver social value, so we keep remembering, reliving and retelling the memories.
Our love of experiences is also tied to our human tendency for “Euphoric Recall”.
A phrase coined in the 1980s by scientists studying addiction, Euphoric Recall describes the way in which people remember past experiences in a positive light, whilst overlooking the negative aspects. Euphoric recall is the reason people don’t reflect on the long queues they stood in at a football match, or the bad weather at a gig. Euphoric recall is the reason anyone has more than one child in life.
The way in which brand experiences are designed, shared and celebrated is critical though.
Although the experience itself must deliver, the shared aspect of any event deserves equal attention.
At PrettyGreen we follow the 1-9-90 model. That is to say that, in any experience, only 1% of the total target audience should be the attendees (experiencing it first hand), 9% of the will be hearing about it directly from the 1% (through word of mouth or online social platforms) and a huge 90% of the total target audience will be hearing about the event via the carefully planning amplification of the experience (the PR).
It is essential to consider this dynamic when deciding where to focus time and budget. The experience must be strong, as it drives everything, but it only exists to serve the wider audience. If an event is incredible first hand, but the reporting of it is mediocre it will never deliver ROI.
As an industry we need to think about experiences in more totality: from event to amplification to evaluation. We need to move beyond talking about immediate measures (like attendees, view, likes or even OTS) and find reliable ways to measure the longer term impacts. As an agency we are at the forefront of this change, with our managing director Jess, championing the Institute of Promotional Marketing’s Experiential Council industry-standard ROI model to more accurately reflect the long-term value that experiences offer.
Good brand experiences can be the comms gift that keeps on giving. The best examples have the power to stretch beyond their brief, becoming the best content ideas, virals, PR campaigns – the brand stories that get retold over and over both by consumers and brand teams, creating life-defining moments for all involved.