As the reality of a cost of living crisis sets in, advertisers may be feeling concerned about the effectiveness of their campaigns. However, it's important to remember that people are still spending money, and advertising can still be effective in reaching consumers - but it's crucial to adjust to how people are likely to respond to advertising and how their purchasing decisions will change.
We are in favour of practical advertising so here are two easy ways to change your thinking and help your performance in times of uncertainty.
Start thinking, monitoring and acting about your products differently.
Going into a cost of living crisis, your products start to mean different things to consumers not just on price but also because their behaviour is changing.
Similar to the start of the pandemic, people are once again starting to settle in to spend more time at home, this time to get away from increasingly expensive trips out. While this trend isn't as strong as a forced lockdown, history tells us that those products that boost the at-home environment are likely to be under less price pressure than similar expendables out of the home.
This is great news if you are a brand that is fortunate enough to be in that area or span both in and out of home ranges, but for most, while interesting this isn't an action point, so here is one. Re-classify your product range into the four groups suggested by the Harvard Business Review below.
- Essentials are necessary for survival or perceived as central to well-being.
- Treats are indulgences whose immediate purchase is considered justifiable.
- Postponables are needed or desired items whose purchase can be reasonably put off.
- Expendables are perceived as unnecessary or unjustifiable.
Once you have classified your products into those groups do two things.
Over the next period, there are bound to be many predictions about the downturn in expendable products or news on the resilience of different sectors, but this will never be a universal truth. If you do this work today you can be powered by your own data and make your own decisions based on your own brand, and surely that is better than following the herd?
Depending on your budget and your brand you may respond tactically or proactively but unless you can both report and activate to changes in the response rates, you will be blind and inflexible to how consumers change their purchasing patterns. As being bling and inflexible has never been a good thing for a marketer to be we advise doing this ASAP (as the benefits will surely be much higher than getting one more creative change in).
Understand that there are two key motivators in play.
With so much news on the "cost" of a cost of living crisis, it is forgivable to think that price sensitivity is the only big pressure during this time. You would be wrong.
We are in a time of fear and anxiety across the country and across the world. An ever more inflammatory and division-heavy new cycle has left your consumers more and more on edge, and the cost of living crisis is only adding to this.
So as well as thinking about price sensitivity you also need to think about advertising to anxious consumers - well explained by Forbes below.
Anxious consumers cling to familiar, trusted brands as a safe haven. In a recession, purposeful advertising and comforting messages that reinforce an emotional connection with the brand, as well as demonstrate empathy, are vital.
This means that reminding people of the core value and strength of the brand is going to be crucial to reinforce trust.
Pragmatically though, not all consumers will respond to this in the same way, as their starting trust level in your brand differs. To respond to this, we, therefore, recommend again segmenting your audience this time not on individual products or ranges but on overall customer lifetime value. What is a better sign of trust for a brand than when a consumer keeps coming back?
Just like with products, this segmentation should be present for reporting, but just as important is your ability to activate advertising based on it.
Combined with the product range segmentation, you will be able to understand your audience from both a price sensitivity and trust standpoint and be able to act on each, leaving you ready to grow in uncertain times.
In Summary
How do you advertise in a cost of living crisis? Relate to the changing motivations of your consumer and be ready to act when they change.
Hopefully, you found this helpful! If you are looking for a partner to help with segmentation for paid media and boost your opt-in audience size by up to 90% please reach out
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