• by Liz Tascio , January 2, 2009

Why the drop in spending shouldn't scare you

In a way, the green movement should have been a red flag.

People suddenly did not want to buy multiple disposable items; they wanted fewer, more durable items that could be purchased once and reused, kept handy on a kitchen shelf along with a good clean conscience. They wanted more efficient laundry detergent, hybrid cars that used less gas, fewer pesticides in their food, and less packaging in general.

They were willing to pay for the changes, so spending didn't really slow, it just shifted. But the green movement nurtured the idea of less consumption, and now the global credit crisis is forcing people to cut their spending. Retail sales dropped another 1.8 percent in November, according to the U.S. Commerce Department, marking a record fifth month in a row Americans cut their spending, whether because they want less, or need less, or because they can't afford not to spend less.

In response, both the message and the media are changing, aligning with the live-more-spend-less mentality prompted by the green movement and made even more appealing by a tighter economy.

Success now depends on whether a brand can convey not just social responsibility but overall responsibility and value; whether it can take the new media tools that were developed in a time of prosperity and apply them even more effectively now, in an era best described as post-consumption.

"People are looking for responsibility," says RPA's David Berne, senior vice president, director of strategic planning. "They've seen businesses and companies that have just let them down. And I think as consumers, anyone who is seen as being responsible is appreciated."

One of the simplest measures of responsibility is that a company continues to employ people and make money, Berne says. The banks that failed this year were probably very involved in social causes, he points out, but they weren't applying responsible long-term thinking to their business practices.

The next canary in this particular coal mine: the auto industry. Auto sales in the United States fell nearly 37 percent in November, The New York Times reported. Not even foreign automakers, like Honda, one of RPA's clients, escaped the drop.

Honda and RPA are taking this slump as an opportunity not to push car sales, but to remind people that Honda is a company with long-term vision and the maker of a product that holds its value. This year's "Happy Honda Days" campaign was built on that core message, and its online marketing was aligned with charitable giving. This, Berne says, is a far more sustainable message than just cutting prices or offering dramatic deals.

"Companies that are clear about what they're doing, why they're doing it, how they're operating their business, all those things, are being seen as good companies, responsible companies," he says. "We have a value proposition, and we're not necessarily going to just lowball everyone because times are tough. We're a good value in terms of how you think of your purchases overall."

Dentyne's "Face Time" campaign, from McCann Erickson, associates the brand with the real-life benefits - organic benefits, you could say - of unplugging. The ads, which appear in print in the subways and online show people hugging, kissing and smiling at each other, with taglines like "The original instant message" and "Friend request accepted." While the campaign was in development before the economic crisis, it now feels like a response to too much consumption and too much business, neither of which feel very satisfying at the moment.

It also essentially relaunched the brand with a much warmer message. "For years, Dentyne has focused on the functional aspect of the product," says Jeff Geisler, senior vice president, general manager, TAG ideation, McCann. "I think the campaign does remind people to pick up our heads from our computers and BlackBerrys and go see our friends and family. We're getting fantastic feedback and it's been unprompted. There have been a lot of bloggers picking up the campaign, and we didn't do any seeding for that at all."

The microsite includes a prominent three-minute timer; when it hits zero, the site suggests you get off the computer - even though that means you stop racking up time spent with the brand. It would have been counterintuitive a few months ago maybe, but today, the brand and the user each receive something of value that goes beyond minutes and entertainment. The user feels like this brand gets where she's coming from, and the brand builds a stronger relationship with the user.

Tylenol's "Feel Better" campaign, by Deutsch, which launched last summer, was also in development long before everyone started banging their heads over terms like credit default swap, but it fits into today's marketplace as if it were designed for it.

The print portion of the campaign gives advice on how to keep from getting aches and pains in the first place - by eating breakfast, for example, and getting a good night's sleep. The underlying message: We want to show you how to take such good care of yourself that you won't even need Tylenol, but it's always available for you, just in case. It's a responsible, value-added, on-your-side type of campaign. At a time when consumers' skepticism of corporations is at a dizzying high, this campaign delivers a relationship-grounding message.

"I think companies are using this period to build their brands," says Berne. "They know that they still have to drive business. If you're going to just discount, you may erode the long-term value of your brand."
A well-reasoned discount, however - not one that plays to recession-special drama - strengthens both the value of the brand and the customer's bond to it.

"Imagine if your cable company said, 'Pick one month this year, the most difficult month to make a bill, and cut it in half.' And you had that option in your hip pocket and you thought about it the entire year," says Rob Wunder, a serial entrepreneur and the cofounder of organic candymaker Yummy Earth. As a brand, "you get to differentiate yourself in an extraordinary way."

Wunder built up wealth quickly by pushing no-fee phone cards, but after becoming a dad four years ago, he launched a lollipop company that makes affordable candies that contain no "garbage" - a word he almost bites when he says it.

But even Wunder, who deliberately sells Yummy Earth lollipops at cost so more parents can afford them, got a complaint from a customer in upstate New York recently.

"We got a call from this woman who didn't get the flavor assortment she was hoping for in a bag of 15 lollipops that she got for $2.50 or something," Wunder said in a phone interview. "And I'm trying to be understanding and everything, and she said, 'You know, these are expensive.' And it just hit me like a ton of bricks."

He sent her a replacement bag of lollipops, and then he called up distributor United Natural Foods Inc. Together, they cut the price of a bag of 60 lollipops, the biggest bag Yummy Earth sells, to $4.99 across the country from February 2009 until the end of the year.

"I told them, 'Do you want families who are trying so hard to avoid putting garbage in their children's mouths to fall back on bad habits during a recession, or do you want them to be able to get a phenomenal deal in an unusually long sale that lasts, hopefully, the entire rest of the recession?'" Wunder said.

That's an example of using discounts and pricing to strengthen a brand - tapping into consumers' willingness to pay for what they believe is best for them and helping them continue to do so during a tough time, so you still have them as customers when things are flush again.

"The thing that I did with the bag of lollipops is the same exact thing I would have done if I were trying to make a profit on phone cards," Wunder says. "I would have reminded our customers that times are tough, and here's a special deal for you.

"Because the fact is, they're feeling unsure about themselves, the earth is moving underneath their feet, and the more that we can strengthen relationships, whether it's for profit or goodwill ... the people will remember: 'That company made it easier for me.'"

For B2B, the same holds true. Marketers are looking for agencies that can make things a bit easier for them, that can lay out a reasonable plan and explain why it will work, now and in the long term.

"What we are seeing is increased focus on ROI, a little less interest in experimenting," says Michael Maher, senior partner, director of client services, Greater Than One. Mobile marketing might not see as much investment in 2009 as it might have if the economy were better, he points out.

Search, click-to-purchase and similar tools are another story, he says; measurable digital is still strong. For example, a consumer "might download some information on a pharmaceutical product, and once they do that, they are more likely to go to the doctor and discuss a prescription, so we know those are linked."

Companies willing to experiment - and some in the industry insist that a recession is the time to invest in the most promising areas of R&D - are proceeding more slowly and reviewing the results with more care, Maher says. "What we're seeing is an increased focus with clients around 'test and learn,'" he says. "If you are going to experiment, you're going to make sure you measure how it's doing, more of a direct marketing approach: 'I'll put a few bucks into it and see how it goes.'"

Landy Ung, the CEO of 8coupons.com, thinks marketers who are willing to experiment now just might unlock mobile marketing's full potential, for all the reasons we've been hearing about for years: Even people without a personal computer likely have a cell phone, mobile messages are highly targetable, and the phones themselves go everywhere consumers go.

At 8coupons, consumers can find coupons for New York City businesses and download them to their phones. Ung says site traffic has been going up 25 percent a week. "It's actually probably the best time to be in the coupon business," Ung says. Since even those who are fairly secure in their jobs are cutting back on spending, "what we recommend our clients do is send the message, 'You can still maintain your lifestyle, buy the things that you want, eat at the places that you want, but spend less.'"

The service makes use of hyperlocal, neighborhood-specific targeting - you can have coupons sent to your phone based on your location and what you're looking for. Advertisers pay $8.88 a day to reach a target audience of young, urban, 18- to 35-year-olds who may not have a lot of money but who still want to spend something on dining out, entertainment, spas, and other services. "What (advertisers) really need right now in a tough economy is they need to see an ROI for their money. They need to bring revenue in. And that's exactly what we do," Ung says.

What was the 2000 dot-com meltdown but a precursor, a mini-backlash to reckless investment and consumer spending? What was the rise of "engagement" but the realization that the consumer is a high-value participant in an actual relationship with a brand?

Falling consumer spending is unnerving, but it's also a natural fit for the way marketing and advertising exist now. Brands know they have to bring value to every consumer interaction; to talk with consumers, not at them; to create channels of communication and a shared sense of ownership in a brand message. The green movement and the evolution of Web 2.0 prepared the media and marketing industries for a period in which consumers would drastically cut their spending and suddenly want less, not more. The relationships between consumer and brand were made deeper in the past few years. Now, marketers need to hold onto the ideals of relationship-building and engagement and long-term value, ideals that can sustain them through this era of post-consumption.