The Standard Media Index data earlier this week confirmed what most know. We’re in an ad recession, having just experienced the sixth consecutive month of declining ad spending in the U.S… But the question is why?
The ad industry is ripe for a shakeout. Online advertising is full of fraud, and TV ad frequency is over-saturated. As we head into January, retailers have too much inventory, and consumers continue to trade down as their savings accounts dwindle. Brands have decided that cutting ad budgets is the best way to ensure their brands stay profitable. That could be a huge mistake.
“While it’s true that consumers are trading down, they are spending more on experiences, and your brand could be part of that experience. I do not believe in” brand experiences,” but some brands have this part of the equity equation. Apple, for example, still has excellent experience from placing orders until you unpack their products. There is still something fabulous about having a Starbucks cup of coffee. Some auto dealers continue to understand the importance of the overall brand experience.” While it’s true that consumers are trading down, they are spending more on experiences. Your brand could be part of that experience. I do not believe in “brand experiences.” Still, some brands have this part of the equity equation. Apple, for example, still has excellent experience from placing orders until you unpack their products. There is still something fabulous about having a Starbucks cup of coffee, and some auto dealers continue to understand the importance of the overall brand experience.
Too many brands, however, feel they have a brand experience that will keep their customers buying their products. Maybe they should go to some stores and observe consumer behavior and the latest merchandising trends. Buyers are resetting their aisles to offer consumers more value, and suddenly end caps have become premium merchandising space.
So where does that leave ads?
Firsit’st’s essential to recognize and prepare for a recession. Consumers drive the economy, spending most of their pandemic savings while going deeper into debt. We are headed for a downturn as consumers cut back on spending, and advertising alone will not increase sales.
Second, using the same ads you used last year will not work. KIA is running ads for their SUVs whiit’st’s being reported that consumers have rated KIA dealers as the worst in the category. Brands need to work on and improve the end-to-end experience. Advertising an excellent frozen pizza out of the oven with lots of cheeisn’tn’t going to work if the product disappoints customers.
Finally, a strategy heavy on promotiocan’tn’t be sustained. Retailers are full of inventory, and the only way they can sell it down is to promote the hell out of them. Even lower prices may not convince consumers to spend as they worry about their jobs and credit card debt.
“I always ask if clients have approached their brands as a customer buying their products at retail and trying to contact customer service so they can first-hand understand what consumers are going through. The days” “of “your call is important t” us” are gone as customers s”y, I’m I’m so damn important, why am I waiting ten minutes?”.”I always ask if clients have approached their brands as a customer buying their products at retail and trying to contact customer service so they can first-hand understand what consumers are going through. The days of “your call is important to us” are gone as customers say, “if I’m so damn important, why am I waiting ten minutes?”.
The other challenge is to scrap all the meaningless data in your inbox. You must understand why current customers are buying your brand, and others are switching to alternatives. Your team should understand why your customers are sticking with your brand and others are defecting.
Steve Jobs would increase his advertising during an economic downturn, but consumers today have many more worries. Does your brand make for a good experience? That is what you need your advertising to communicate.
