The double-whammy of irrational consumers on top of a waning recession poses a new challenge for marketers as we enter the 2010 budget planning process. Indeed, among companies we polled earlier this summer, marketers are split on how their budgets will change next year. But regardless of whether you plan to ramp up or throttle back your marketing budgets, we are all faced with the same edict: cost-effectively matching post-recession marketing to consumers' new attitudes and purchase behaviors.
With 2010 viewed as the year that we will emerge from the recession, this is a conundrum that marketers need to solve quickly -- if only because our strategies and budgets will be defined over the next several weeks. While many marketers hope to increase spending next year, the data indicate that consumers are divided on whether they will follow suit. Just last week the Federal Reserve reported that consumers have spent the past six months paying down their credit balances. Who really knows what level of demand for cars and computers will be next year?
According to our own consumer survey which we conducted in August, the results are truly mixed:
· 42% of consumers feel the economy will improve in 2010, whereas 34% think it will be worse;
· 38% of consumers expect to decrease their spending next year, while 14% plan to spend more;
· 41% of consumers reported switching to cheaper brands to save money on household purchases, and 32% reported to switching stores altogether;
· Among consumers who reported switching, two-thirds said they would consider switching back to their old brands, and 82% said they expect return to prior stores.
If the consumers we surveyed are telling the truth (I think they are, Dr. Gell-Mann may not), then the big question for marketers heading into planning and budgeting is, "What do I need to do to flip loyal customers and the 'on-the-fencers' to buy from me instead of my rivals?"
The good news is that modern marketing is built upon making calculated investments supported by the best data available. And to that end, the data indicate that there are three new strategies that all marketers will need to factor into next year's marketing plans. Interestingly, each of these originated during the recession, each has affected consumer behavior irreversibly, and each needs to be part of our post-recession marketing strategy.
1. Facebook. Simply put, every marketer needs a plan for Facebook. Not because it's just another big social media site, but because it has the potential to be one of the largest closed-loop marketing platforms on the planet. While the site grew from 10 million unique visitors to more than 120 million in the US over the past three years, this doesn't tell the whole story; based on total time spent on the site (a metric that we call Attention), Facebook is the dominant site on the web, commanding twice as much Attention as Google. This scale makes Facebook a top three source of online traffic to sites like Target.com, BankofAmerica.com, Apple.com and Southwest.com. Yet none of these three brands have engaged fans within the Facebook platform as effectively as Coke, Starbucks or Skittles, all with more than 3 million fans each. Advertisers need to get beyond social media experimentation and embrace the latent demand that Facebook users represent.
2. Nouveau coupon and deal sites: Compete's consumer survey mentioned above confirmed that consumers changed brands and/or stores to preserve cash during the recession. This has given rise to an interesting new breed of "value sites" that are more durable than your average comparison shopping engine. Coupon sites like Retailmenot.com and Redplum.com did not exist just three years ago and now have 6.5 million and 1.3 monthly unique visitors respectively. As such, these sites are often the number one affiliate for top brands such as Victoria's Secret, Best Buy, Pizza Hut and Sears. At the same time, new private shopping sites like Ruelala.com and Gilt.com have emerged and are approaching the 1 million unique visitor threshold (larger than Oldnavy.com and Bananarepublic.com) in just their first two years since launch. And these sites have created engaged followers who visit over three times per month (more than Walmart.com or Target.com). Together these sites have redefined consumers' expectations for online shopping, providing access to high-end brands and a differentiated experience, at a lower price.
3. Smartphones: In a survey we recently fielded to more than 1,000 Smartphone users, consumers confirmed that mobile is an attractive opportunity for marketers. The most interesting results of the survey focus on consumers' opinions about advertising and mobile commerce. First, nearly one-third of consumers stated they were comfortable receiving targeted marketing offers on their mobile device; among this group, nearly half said they would be interested in mobile-based grocery coupons. Second, while consumers are using their smartphones to make purchases, the majority of these transactions are impulse purchases for content and applications; therefore marketers who offer high-ticket, high-consideration purchases are better served to engage users with location-based promotions to drive in-store visits.
Certainly there is a tremendous amount of uncertainty about when the recession will officially end, how consumers will react, and how much and where marketers should invest to achieve their respective goals. What we do know is that a lot of the behaviors that consumers developed during the recession are permanent, whether they were driven by the need to save or based on new technology. Specificity, in the form of marketing budget, in the face of this uncertainty, presents a real challenge for marketers over the next few months. As you are developing your plans, your best bet is to turn to the best data you can lay your hands on to reduce this complexity and focus your investments.