The New Equation: Bad Economy; Good Marketing
Economic growth has come to a halt; incomes are flat, the GDP has stalled, and corporate earnings are expected to remain stagnant through the end of the year. The affluent consumer market, however, continues to grow, and affluent marketing is increasing in its effectiveness. In order to capitalize on this apparent cross-current of economic conditions and marketing success, digital marketing and audience targeting become more influential than ever before.
Let’s explore some data to back up our thesis. According to The New York Times, Wall Street analysts expect earnings for the typical company in the S.& P. 500 to decline 2.2% in the third quarter from the same period a year ago. According to Thomson Reuters, this is the first such drop since the third quarter of 2009, and earnings are expected to slide 3% from the second quarter of 2012. Despite these declining numbers, the affluent end of the consumer scale is optimistic. Palm Beach County, Florida, reported this week that affluent customers are “flocking to its resorts,” and Costco is reporting new growth among its $250k+ sector. Lastly, Phoenix Financial conducted a survey of its wealthiest customers, and results displayed increased optimism about the future state of the economy.
Although the success of affluent marketing can’t be exclusively credited to digital marketing strategies, there is definitive anecdotal evidence proving it has been a major factor, especially in the travel business. Diversity Affluence, for example, has released a new research report indicating travel among prosperous African Americans has increased by 30% in the past three years. The study also shows approximately 60% of the target group takes at least five overnight business trips, and two-thirds of those traveling spend a minimum of $2,000. The findings come at a time when the overall travel and tourism industry is experiencing downturns due to the current state of the economy. Growth will materialize if companies continue to rely on data represented by this sector, says the company. The growth of data spun off by digital marketing campaigns and social media exchanges have reached a level where these kinds of micro-customer segments can be identified and addressed. That 30% growth represents a new division of customers who can be reached through customized messaging.
Loyalty marketing programs have also focused on affluent segment spending. An academic research paper from University of East London professor Osman Khan has received attention recently because it uses high-end travel brands to show a new level of detail for loyalty program attraction. Customer behavior, says Khan, is measured through purchases, repeat buying, satisfaction, and length of time spent with a firm. All of which are effectively measured through consistent audience targeting. He went further to identify the factors behind “attitudinal loyalty,” including intent to repurchase, positive word-of-mouth, and commitment. Yet again, digital marketing is key to this kind of customer loyalty. Companies that are finding success in measuring and growing loyalty include Thomson Europe and Emirates Air.
Finally, affluent marketing converts customers. Travel-specific research has not been produced recently, but the dominance of affluent e-commerce preferences were proven by iProspect’s survey, and presented at Shop.org. Across a variety of categories, the survey showed that all but 2% of the affluent males surveyed purchase products online. An overwhelming 70% prefer to explore and buy online, versus researching online and purchasing in store. The recommendation is that brand marketers use a mix of research-driven and direct response messaging, combined with appropriate goals and measurement criteria to see the best results. More importantly, a majority of affluent males are willing to engage with banner ads that are simple and to the point. He also has a preference for video and interactive ads, both of which are a great fit for highly visual luxury brands.
Digital marketing is on point with affluent customers, producing results above and beyond the more general economic malaise. While it would be a stretch to give all the credit to the ability to identify, target and measure this segment, the tools for further growth are available for any and all future segments.