Why Neuromarketing Will Go From Strength to ... - The Brain Sell

The Brain Sell Interviews ‘Why Neuromarketing Will Go From Strength to Strength’ Ron Wright, CEO of Sands Research Inc

‘Why Neuromarketing Will Go From Strength to Strength.’ The Brain Sell interviews Ron Wright, CEO of Sands Research Inc The Brain Sell interviewed Ron Wright, the cigar smoking CEO of Sands Research Inc, in the top US neuromarketing company’s HQ, located in the foothills of the North Franklin mountains on the outskirts of El Paso in Texas. Since it was in a basement at the University of Texas’ Health Science Centre that Ron first met up with his soon to be business partner Dr Steve Sands, it seemed appropriate to start with that life changing encounter. Ron Wright (RW): The Sands Research story really starts with Steve and I back in the late 1980s when he was on sabbatical from the University of Texas, El Paso. He was taking a year out to conduct research in Houston and I was working for an MRI company sponsoring the study. We met up in your typical, dingy, university cellar-‐basement lab. He turns his computer monitor towards me, and this is of course a PC in the late 80s was running on probably a 286 or a 386 Intel processor, and he shows me this software program that he had built called Scan. Steve, who is innovative and a unique combination of a neuro-‐scientist and programmer, had converted the old pen and paper EEG recorder into a digital PC-‐based EEG and Evoked Potential research software package. The Brain Sell (TBS): That was neat… RW: Yes. I said to him, we could create this into a viable product. So we went to the company I was working for and they were willing to finance the initial capital to start up Neuroscan. We went to the first Trade Show, which was the American Academy of Neurology in Chicago, living pretty cheap and that was the birth of Neuroscan. A year later the company I was working for realised this was not an area they wanted to be in. So we bought them out. The groundwork Steve and I initiated in the first year really kicked off in 1990 as budgets and grants were approved. The software was extremely profitable and by the time we sold the company, around ten years later, about 3,000 research labs around the world were using Scan. Mindlab Ltd Sussex Innovation Centre Science Park Square Brighton BN1 9SB. UK

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During the 1990s, which the U.S. National Institute of Health designated as the “Decade of the Brain”, we pushed the envelope further by building the first 128 channel amplifier system, advanced the use of EEG source reconstruction software, recorded EEG in an MRI and all kinds of new areas of brain research. At one conference, I believe it was Cognitive Neuroscience Society, we counted about 85% of the academic papers and posters being presented were based on using Scan or our SynAmp amplifiers or some of our products in some way, shape or form. So, to get to Sands Research, we sold Neuroscan. Steve went off to Stanford Research Institute up in California and I became an Angel investor in a software company and other companies. A couple of years later Steve was approached to do some testing on a few television commercials and he was fascinated by the brain response to this stimulus. He reached out to me about the results, this was late 2007 and we set up Sands Research in early 2008. From that point forward Sands Research was incorporated and began the process. Now we were not the first in the field of neuromarketing but our experience with Neuroscan and the academic research world has seen many applications for marketers. Neuroscan customers would ask us: ‘ Okay we want to test the brain response of Tibetan monks on top of a mountain, how do we do it?’ so now we design studies to test market research questions about a consumer’s neuro-‐response when on theme park rides or using a new product or responding to new store environments. Any real challenges for recording brain response, we love to tackle. Our TV commercial studies have become actually pretty routine and we have built up a large normative database but then we started doing all kinds of interesting and unique applications. How do you record eye tracking and EEG simultaneously while the shoppers freely walking inside a store? How do you record while someone’s tasting and experiencing a new flavour? We’ve completed a substantial amount of work in the health and beauty category when participants are using cosmetics or testing new fragrances. Things like that. And we benefitted because of all of Steve’s substantial research in artefact correction and ocular correction to improve EEG recordings. Mindlab Ltd Sussex Innovation Centre Science Park Square Brighton BN1 9SB. UK


Steve’s algorithms, research and scientific publications are used widely in the area of cognitive neuroscience. This knowledge benefitted Neuroscan and now we’re carrying it over into Sands Research. TBS: I’ve seen a lot of your work with the automotive industry, and of course you’re doing all this work with POPAI in the States. You seem to have a very broad range of clients, everything from cosmetics to automotive to retail. RW: Right. It divides into two different types of clients in various industries. We’re dealing with the product R&D people for product testing, packaging, in store. And then we’re dealing also with the marketing people for TV and radio ads, print ads, in store display material and things along that line. So it’s really two different groups that work together and it’s interesting, in some cases the marketing people drive the R&D and sometimes the R&D people are driving the marketing people. So we get some unique requests and we’re the custom shop, we’re the ones if it’s really an interesting and difficult task that they want to get a customer’s response from, they’ll come to us. TBS: What proportion of your work would you say is laboratory based and what is ambulatory, because I always think ambulatory is a lot more problematic than when you can control more of the environment. RW: It is. The percentage lab versus mobile, I would say is probably about 60% lab to 40% mobile at this point. When I say lab – I refer to a non-‐ambulatory study. If somebody says we want to record in the Kansas City market or we want to record in Chicago, we move our equipment and establish a data-‐recording lab in a focus group facility, a client’s location or even a hotel conference room for testing. While of course in an ambulatory study we are in the environment where the client wants to test, i.e. restaurant, hotel or retail store. TBS: Is your background in neuroscience? RW: No, my background has mostly been sales and that experience includes politics but after twenty plus years hanging around neuro-‐scientists I have picked up some knowledge in the field. My family was very active in the political arena, still remain active, and it was a natural for me to get into sales. Mindlab Ltd Sussex Innovation Centre Science Park Square Brighton BN1 9SB. UK


So that’s what I was doing with the MRI company when I met Steve. Steve was a scientist and programmer and I was a sales and management type, so we both complimented each other. Basically I think that’s how successful entrepreneurial… TBS: …businesses run, totally. I think it’s important to have strengths in both these areas. Some companies, naming no names, are clearly run by marketers who have very little understanding of science. RW: It’s true. TBS: The Advertising Research Foundation’s first study of neuromarketing, in 2011, did not produce results that were especially encouraging for the industry. Basically every company that tested the commercials they supplied came up with a different answer. RW: I think their expectations were that each one of the methodologies used would come up with the same answer. And we all know that that’s not the case. You use different testing methods to give you another piece of information to add to the overall diagnosis. And in this case they said here’s all these different methodologies we’ll give the same material to each one of them and they should all come up with the same answer. Well they didn’t happen and that was difficult for the marketing research people to accept. TBS: Like assembling any type of intelligence, you need to gather from a number of sources. RW: Of course. And in the beginning that was part of the problem also. And I’ve seen this in so many different new products or new technologies that come in the field. At one conference someone from a neuromarketing company stood up and said, this is going to replace all existing market research methodologies. That’s the same thing that the MRI guys said when MRI came into medicine. The early MRI providers stood up and said ‘forget PET, forget CT scanners, forget EEG, it’s all going away, it will only be MRI!’ Reality is, that is not the case. This is the same thing with neuromarketing that certain methodologies will give you certain insights and the more you pay the better the insight plus some methodologies are best for different situations. You can use eye-‐tracking alone but all you receive is where the participant focused not emotional response or an understanding of why they focused on that certain hot spot. Mindlab Ltd Sussex Innovation Centre Science Park Square Brighton BN1 9SB. UK


If you use EEG and eye tracking time synced together, you receive a much better understanding of the participant’s response. And, of course, survey work is not going away either. So we basically go in with our clients and say let’s also do survey work combined with EEG and eye tracking depending on your budget. If you don’t have that kind of budget then we can do some simple biometric work. I feel marketers are learning what are the trade offs from using one methodology vs. another and in which area to apply which methodology. Seldom do we test every TV ad for a client but work with them and their creative on how to improve their output. TBS: I know you’ve had a number of huge successes which you’ve published on-‐line, perhaps the most spectacular of which, was associated with the Super Bowl commercials? RW: The American media is so focused on that event. It’s turned into a holiday for Americans, so it is also the largest watched event in America. You’ve got 100m+ viewers on the night of the game plus pre-‐ and post-‐ Super Bowl viewing can increase the total another 50m to 60m viewers looking at a client’s commercials. This creates a big event for the advertising community and that in turn creates a big competition for ad agencies and advertisers. Our annual event in judging and testing the ads and ranking those ads receives a substantial amount of media attention. Many of the ads that were in our annual top five have gone on to win Emmys, CLIOs, Cannes Lions and other advertising industry awards. TBS: You use a combination of EEG and eye tracking? RW: Most of our work is with EEG and eye tracking methodologies. Initially we only performed EEG work in the first year and then we started adding eye tracking, but now those are the main tools we’re using in our studies. These are the tools we use in each Super Bowl Study and led to one result that received tremendous media attention. We alerted Volkswagen that we have never tested an ad that was as positive or proved more emotionally engaging as their Little Darth Vadar, The Force commercial. We told them this is a tremendous ad with a storyline that works wonderfully. They weren’t even going to run it, but as a result of our findings, they ran the commercial and it just turned out to be such an amazing success for them.

Mindlab Ltd Sussex Innovation Centre Science Park Square Brighton BN1 9SB. UK


Doug Van Praet, head of the VW ad agency account at Deutsch LA credits Sands for this turn of events and that helps us as an outstanding reference to our work. TBS: Do you think that all the clients are now taking neuromarketing more seriously or are they still wary about it? Do they actually understand it? In the UK, well in Europe generally, there’s still a lot of suspicions about it. People don’t really understand it, they think it’s very expensive and they can’t really see much value to it. Market research companies say ‘We have our metrics and therefore why should we spend our money on something we don’t understand?’ RW: Well, I’m of two opinions. I think there was the typical first spike of interest. ‘Wow, this is amazing’ and all the media coverage and all the over the top marketing, led them to try it. A lot of people kicked the tyres, as they say, and did some neuromarketing studies. Some companies took it seriously and started educating themselves and are still very active. We have some very large clients that are regularly testing their commercials through neuromarketing. But you’re right, some of marketers either had a bad experience or failed to understand the limitations of a new field and said ‘this is not up to much, we’ve tried it, okay there we are’. I can give you an example. One major beverage company executive complained that the neuromarketing firm they used to test their commercials told them every one of their TV ads was a good ad. ‘They never told us we produced a bad ad’. Unfortunately that experience has made it difficult for any neuromarketing firm to re-‐engage that company’s interest in neuromarketing. You’ve also got to understand that neuroscience and neuromarketing is a concern to the existing market research players, the large billion dollar companies – Nielson and Ipso and others – because they all have sunk hundreds of millions into their established databases based on their survey work. You’re going to bring in a new technology that’s saying we can measure emotion and consumer response better and you don’t need the billions you’ve spent on building that database? I mean that’s a significant corporate asset. They’re not going to sit around and just let this field come in and take their market. So there’s definitely resistance there. Mindlab Ltd Sussex Innovation Centre Science Park Square Brighton BN1 9SB. UK


But, as I tell everyone, you’re not going to stop neuro-‐sciences being applied in advertising, market research and consumer insight. All the knowledge that has been gained for the last two decades in academic research is not going to be stopped as it is being applied in the commercial world. It’s coming and it’s not just going to stop at advertising and market research, neuroscientific knowledge will flow into all aspects of life. We’ve talked to a lot of people in product development, from brain to machine interface to applications in the court room such as final summation presentations, to sales pitches or about a dating service to measure emotional response to a potential mate – I can tell you there’s a lot of areas in which neuroscience will be applied and we are on the forefront of this field. End



