The most-talked-about economic downturn of all time may be upon us -- or not, depending on the day. Consumers keep spending despite high inflation, and the labor market is strong despite high-profile layoffs. As investors flock towards bonds and other markers of certainty, marketers should do the opposite and embrace the unproven.
Consumers are not behaving the way economic models say they should. They didn’t spend to expectation in December, but opened up their wallets more than usual in January. Core personal consumption inflation paced hot in January, but consumer sentiment was up in February, with Michigan’s Consumer Sentiment hitting a 13-month high. When consumers are acting weird, marketers need to open their minds to new markets.
Are you missing new segments because they don’t look like your core customer?
Like media consumption, and everything that requires choice, buying stuff is becoming increasingly individualistic. Marketers that have spent lots of time focusing on the perfect consumer profile should constantly check on who their customer is this month. Middle-class consumers, still with some healthy pandemic savings, are splurging on certain luxuries like travel. The Wall Street Journal is calling our current state a “Richsession” as assets drop and consumers who make more than $100K trade Whole Foods for Walmart groceries.
While machine learning has plenty of biases, PowerPoints of well-defined personas are not one of them. Machine learning and AI help us find lookalikes we might not consider. Testing new target demography like income can yield surprisingly positive results.
Are you looking at outsized opportunity in certain geos?
If pandemic marketing taught us anything, it’s that “national” marketing will have different responses based on local externalities. Sales ebb and flow came in regional waves. However, sales are a lagging indicator of marketing, and getting ahead of a local opportunity can require a crystal ball.
But sometimes the fish we are catching is more of a reflection of the pond we’re in than the product fit. Are there any places that have been less likely to hear about you because of your efforts or media mix? If so, there’s no better time to try a new geo or channel.
When economic activity is pretty unpredictable, personas can mislead us. “Frugal Fran” may have just dropped $5,000 on a luxury vacation and “Mover & Shaker Michelle” is buying private-label groceries. Let’s test as many new opportunities as we can.
Your two points are well-made. Too often advertisers succumb to selection bias in both their audience composition targeting and their audience location targeting. The sample bias of a non-random selection of an observed population is what look-alike targeting ultimately is, using data related only to existing customers. Decisions based only on data gathered from purchasers means the data is based solely on the act of buying. This is akin to putting ads for Roundtable Pizza outside Roundtable Pizza parlors and then concluding that the ads led to pizza purchases. Reach planning looks risky but holds the promise of growing share that the advertiser wouldn't have access to relying only on look-alikes alone. The trick is creating syncronous reach across asyncronous audiences. Your example of the traditionally upscale segment shopping at Walmart is a good example. There are liberals who like guns; there are conservatives who are vegetarians. There are GenXers who own their homes and are grandparents for the first time, AND there are GenXers who still rent and never had kids. Our categorizations help simplify thinking and make organizing easy, but we don't have to rlimit ourselves just to reduce risk when scale is the reward.