As a consulting firm based outside of D.C., we are acutely attuned to politics, even though we don’t do any political or governmental work. Big political and governmental moves ripple across the economy to impact businesses across sectors. I haven’t seen much advice or discussion of what advertisers should consider given the declining consumer financial outlook and the potentially rising consumer activism, so I put together this post to distill my thoughts on how advertisers should prepare.
Declining Consumer Financial Outlook
For the first time in nearly two years, U.S. consumer spending in January fell. That doesn’t yet fully account for the agency staff cuts in February, or the forewarned mass layoffs coming in March. However, those changes and upcoming tariffs likely contributed to the drop in consumer confidence seen in February. As I write this, Target and Best Buy are warning that prices will increase soon.
Advertiser Considerations
- Stay the course with brand investment. Long-term brand building still pays off if we enter a recession. Defending and even increasing Share of Voice, especially as competitors pull back, pays dividends. Businesses that achieved over 8% Excess Share of Voice (ESOV) saw annualized market share growth of 4.5% during a recession.
- Consider cuts in lower funnel if demand is soft or non-existent. As consumer confidence wanes, fewer consumers will be shopping. For demand-based channels (such as search and affiliate) advertisers should closely watch efficiency and set gates for when to reduce budget because of lower results.
- Don’t throw out your marketing playbook or completely reinvent your mix. Work with marketing analytics and agencies to size the impact and reforecast what marketing can achieve. Develop tests and performance gates to re-evaluate metrics and KPIs.
- Focus on impression and ad view quality. Rather than quantity of impressions, advertisers should prioritize quality ad views for prioritized segments. This may mean significantly limiting where your ads are placed and rigorous testing and analysis to ensure you prioritize high customer lifetime value audiences; however, learnings will continue to pay dividends long past the recession.
Rising Consumer Activism?
The “economic blackout” on Friday, February 28, received a lot of news coverage, though the results were mixed for retailers. On social media, more targeted retail boycotts are being shared. Other consumers are re-evaluating their shopping habits based on companies rolling back DEI initiatives.
Advertiser Considerations
- Consumers may shop earlier to avoid boycotts. The retail shopping calendar may be out the window if consumer boycotts gain additional traction. Products sold through big box stores and Amazon in particular should evaluate how to drive conversions in the absence of historical sales holiday periods.
- Consumers may want to shop directly. If you’re already set up to sell directly to consumers, ensure that experience is optimized. Plan and prepare to pivot budget and efforts between sell-through and sell-to channels.
- Monitor competition on boycott and blackout dates. Competition for consumers who are shopping will heat up. Expect cost pers to increase and advertisers should look at whether these consumers are incremental and high value.
Preventing reactionary decisions to stay ahead
Though the governmental upheaval is unprecedented, seasoned advertisers have weathered low consumer confidence and poor financial outlooks before. To prevent reactionary decision making, advertisers should prepare and set expectations in advance, and develop stage gates or guardrails around performance. Monitoring competitor activity and continuing to test and learn what is working also is essential.
If you’re unsure how to get started, get in touch! Simply fill out the form (put “develop performance stage gates” in the anything else we should know box) or send me an email: srenner@marketbridge.com.
Download our resource, “Accelerating growth through test-and-learn marketing culture”
For an in-depth look at full-funnel marketing strategy, marketing imperatives, and key testing levers, download our 20-page paper.
