Creating artificial scarcity works—but is it ethical?
In my line of work as a spin doctor, I sometimes create artificial scarcity to fulfil my PR objectives. And I’m not alone—many communicators and marketers do the same thing.
In this blog article, I will discuss why creating scarcity works, why we use it, and whether or not it is ethical.
Here we go:
Three Uncomfortable Anectotes
Here are three short anecdotes that I’ve been pondering lately:
I know a CEO who moved a growing company to an ample new office space. The idea was to grow into it, but efficiency quickly took a nosedive. Was it wrong to move into a spacious new office? The CEO divided the room and crammed all employees into less than half the available space. Once more, people had to get in early to get a chair and a desk. And soon after that, efficiency soared back up again.
When I run monthly editorial meetings for clients, I bring an engraved trophy to the meeting. I give it to the person whose editorial contributions brought the most value to the brand (traffic, leads, shares etc.). We typically poke fun at the whole trophy thing, but it usually doesn’t take long before even a room full of hard-to-impress engineers turn into highly engaged content creators.
I remember playing tennis with my dad as a kid. There was no booking system for the court we used to play at, so we were always hoping that it would be available. We could sometimes see a pair of players finishing up at a distance. However, as soon as the players were made aware that their court was “in demand”, they would stop packing up and keep playing for an additional 20-30 minutes. 1My dad and I called this the “tennis effect” because it occurred so often. It also taught us how to approach a tennis court without seeming as we were—quite a rare skill, I’d … Continue reading
What’s going on here?
The Principle of Scarcity
The principle of scarcity is well-defined in scientific literature. It’s the economic principle that resources are not infinite. And if something seems to be scarce, we anticipate our possible regret.
“In 2 experiments, a total of 200 female undergraduates rated the value and attractiveness of cookies that were either in abundant supply or scarce supply. […] Results indicate that (a) cookies in scarce supply were rated as more desirable than cookies in abundant supply; (b) cookies were rated as more valuable when their supply changed from abundant to scarce than when they were constantly scarce; and (c) cookies scarce because of high demand were rated higher than cookies that were scarce because of an accident.” 2Source: Worchel, S., Lee, J., & Adewole, A. (1975). Effects of supply and demand on ratings of object value. Journal of Personality and Social Psychology, 32(5), 906–914.
It’s simple: We are programmed for survival and will therefore overvalue items and services that are scarce and under-value those plentiful.
Our brain releases dopamine in response to a potential reward, which causes our behaviour to be rewarded by the prospect of a new thing. It’s FOMO (fear of missing out).
People tend to act more quickly when they believe that the thing they want is about to disappear. The fear of not having something can drive people to take action when they wouldn’t have otherwise acted.
Artificial Scarcity in PR
PR professionals often base their PR strategies on the creation of artificial scarcity. We know that the more scarce something is, the more people want it.
In a world where everything has become so readily available, it isn’t hard to understand why many PR professionals, communicators, and marketers are using artificial scarcity as a weapon in their arsenal.
We apply artificial scarcity in many ways, such as limiting quantities, expiry offers, exclusive stories, rare occurrences, etc.
I once created an invite-only waiting list for a new streaming service. Your place on the waiting list was partially determined by your number of social followers and the number of followers of the person who invited you. The scarcity of available seats sparked intense anticipation. 3Creating the waiting list was a rough learning experience. The launch exceeded all expectations; however, the streaming service didn’t. While the launch was successful, it also resulted in … Continue reading
Ethics of Artificial Scarcity
The Principle of Scarcity is an effective motivator because it appeals to people’s instinct to acquire what they perceive as limited. People have an innate desire for things or activities that are scarce.
Creating artificial scarcity can be an effective motivator if appropriately utilised. Is it ethical? I wish I could deny the inherent cynicism that seems to go hand in hand with our scarcity bias.
My approach is to use artificial scarcity sparingly.
Example: I could use a countdown timer to get more users to sign up for a specific deal. But I would only use the timer if I were confident that the deal wouldn’t remain or resurface soon after the countdown runs out.
Another way of putting it:
Creating artificial scarcity is okay. But lying never is.
|My dad and I called this the “tennis effect” because it occurred so often. It also taught us how to approach a tennis court without seeming as we were—quite a rare skill, I’d imagine.|
|Source: Worchel, S., Lee, J., & Adewole, A. (1975). Effects of supply and demand on ratings of object value. Journal of Personality and Social Psychology, 32(5), 906–914.|
|Creating the waiting list was a rough learning experience. The launch exceeded all expectations; however, the streaming service didn’t. While the launch was successful, it also resulted in having to manage lots of disappointed users.|