How to apply loss aversion in Google Ads
Feb 6, 2025
Discover how loss aversion theory drives consumer behavior and learn to apply this powerful psychological principle in your Google Ads copy. Includes proven examples and strategies to increase conversions by framing offers around avoiding loss rather than gaining benefits.
An unusual disease has broken out. You are in charge of picking a program that combats this disease. It’s expected that 600 people will die because of this disease if nothing is to be done about it (this is sounding like a 2002 chain email, but bear with me).
Program A: 200 people will be saved.
Program B: 1/3 probability 600 people will be saved, 2/3 probability no one will be saved.
Which one do you pick?
In Tversky and Kahneman’s experiment, most of the people selected Program A. Better to be sure to save 200 people, right?
Now think about this one.
Program C: 400 people will die.
Program D: 1/3 probability no one will die, 2/3 probability 600 people will die.
In the same experiment, most people opted for Program D. Effectively, the options are exactly the same; it's just framed as a loss versus a gain. Yet most people reversed their decision and suddenly took more risk to save everyone in program D rather than to be certain to save 200 people in program C. The researcher’s conclusion was: if people are confronted/framed with loss, they will do anything to avoid it – even if it means taking more risk.
While this experiment is an extreme example, it led to a series of experiments that came to the conclusion that people are more afraid to lose something than they are happy to gain something, even if the probability and the magnitude of that loss or gain is of the exact same size. This is what’s called loss aversion theory. Our human brains rather avert certain loss over anything else and we change our behaviour because of that.
There are tons of business examples out there of how loss aversion theory is applied, but I think Asana does it really well. They give you access to their full product for 30 days by default, and after that it’s downgraded to Asana Personal. Notice how it’s not upgrading (gaining) it’s downgrading (losing). Beauty brands are talking about preventing wrinkly skin (averting loss).
How to apply loss aversion in Google Ads
So, how do we apply this to paid search? We frame our ad copy in a way that it emphasises avoiding loss. A couple of examples.
Topic | Example ad | Description |
Stressing potential future loss | Save $200 before prices go up | Don't overpay! | This ad frames the offer as a way to avoid losing money in the future, stressing that prices will go up and thus the consumer averts loss by buying today. |
Risk of missing out on benefits | Get our membership today | Don't miss out on exclusive benefits | Highlighting the exclusive benefits that might be lost if the user doesn't take immediate action encourages them to sign up. This puts emphasis on missing out or in other words averting loss. |
Stressing potential future loss without discount | Protect your home now | avoid costly repairs later! | By framing the message around the potential future losses of not taking action now, the ad leverages loss aversion of future costs. This can be applied to many different product categories if you think about the disadvantage of not taking action today. |
Combine social proof with fear of missing out | Join 1 million users | Don't get left behind! | By showing how many people have already taken advantage of the offer, this ad implies that not joining means missing out on something valuable that many others have already benefited from (avoiding loss) |