Posts tagged ‘credit crunch’
understanding value
Like many other Planners I suspect, I’ve been pulling together a lot of insight pieces for work recently looking at the effect of the downturn economy on buying behaviour.
Since it’s proper paid-for-by-my-employer stuff drawing on all the groups and depths the research team have been doing with mums recently, I can’t really share it in full here, but one of the most interesting things that came out is about the broadening definition of what ‘value’ means for UK shoppers – and it’s NOT just about cheaper prices:
- for many hardcore premium supermarket shoppers, it’s still about the store delivering value via a less stressful shopping experience (no screaming kids or muzak)
- value is getting tied into brands providing a rationale for purchase, ‘ammunition’ to justify spending money on non-essentials while other people are skint
- value can also mean a reassurance of quality (which is where big brands still have a role to play), or can be about delivering quantity (a dozen Value loo rolls) or even minimal packaging – mums seem to have finally woken up to the fact that they have been paying over the odds for overpackaged goods
- value can even be delivered via advice, in terms of how to use up leftovers or quick and healthy meal ideas
- when it comes down to it, value is now all about delivering an acceptable compromise to conflicted mums struggling with tight budgets
we’re all doomed…right?
So, the economy is in free fall and we’re all doomed. Right?
The quallies at work have been doing a lot of focus groups with Credit Crunched Mums recently. Apparently yes, Mums are being careful and trying to be more frugal – but a lot of them are doing so not because they are very worried about their finances right now, but because they think things are going to get worse before they get better.
I think we might be talking ourselves into making the economic situation worse. The media isn’t exactly helping, a quick dig round nexis revealed dozens of recent case study stories about families who were cutting back and lots of first-person pieces by jounros describing how they were economising madly, but nothing suggesting that just maybe, a few people were actually carrying on pretty much as normal.
It’s admirable if someone decides to live more frugally now in order to try and safeguard their immediate future. But with every scare-monger story the media puts out, perhaps it has got to a point where people are taking more severe steps then they really need to, in turn bringing about the next step of the downturn they were trying to protect themselves against in the first place…
So to fire us all up, here’s the rather brilliant (if a little USA-centric) 40 inspirational speeches in 2 minutes from overthinkingit via ThoughtSpurs:
Economic Indicators
Sorry to keep banging on about this (now apparently official) recession. But a few things cropped up over the weekend that I thought were worth sharing.
On the downside, over the last couple of days I’ve had reports of a restaurant where the takings are down 20% year on year, the hairdresser whose customers have added an extra week between haircuts and the beautician where you can now get a much coveted after-work appointment on two days notice.
On a more positive note, both freelance and agency mates are reporting unexpected work landing in their laps – from out-of-the-blue new clients to projects that had previously been written off as in Development Hell suddenly springing to life. I can only hypothesise that clients are so scared of having their marketing budgets slashed that they’re spending it while they’ve still got it?
When the going gets tough, its time to buy lipstick
I’m sure you’ve all read the ‘upsurge in sales for shoe repairers’ stories in the news suggesting that some sectors of the economy actually benefit from a downturn, in this case as people get their shoes repaired rather than splashing out on a new pair.
There was also an interesting piece in the New York Times as long ago as May of this year hypothesising that lipstick sales are a way to gauge the state of the economy, with the chairman of Estee Lauder commenting ‘When it’s shaky, sales increase as women boost their mood with inexpensive lipstick purchases instead of $500 slingbacks’.
I think you could add rising sales of other consumer goods as economic indicators too. Like ties – men might not be able to afford a new suit, but can still stretch to a new tie. Or an rise in cushion and throw sales set against falling sofa purchases.
So I suppose you’d better tell your New Business team to go after cosmetics, soft furnishings and erm, tie brands then.
Big Thinking, Big Price Tag
I got an email today reminding me about the forthcoming APG Battle of Big Thinking. It boasts an amazing line up of speakers and everyone I know who has been to a Big Thinking event before has raved about it.
There’s just one problem – the cost. Its not a good time to be asking your boss to sign off a purchase order for £689 for a one day conference. Even the early bird rate of £559 for APG members looks steep in the current climate – especially when you cost in peak time return train tickets for us Outside London.
Don’t get me wrong, my agency is doing OK at the moment, we’re just being sensible about splashing money about. If we’re going to be ruthlessly practical, what is of greater value to the agency – one day of Big Thinking for me or 125 sets of layout pads and marker pens?
Worried? You should be.
Worried about the economy or think its all a lot of hot air? A couple of months ago I would have said that we were in danger of talking ourselves into a recession, now I think its clear that we are in for one whether we like it or not:
- Manufacturing output fell for the sixth successive month in August, shrinking by 0.4 per cent, marking the longest run of falling UK manufacturing output since 1980. (source: The Times)
- UK advertising spend on traditional media will slump 5.8% this year, a major slide from the previous 2.4% drop predicted in June, ZenithOptimedia said today (source: Media Guardian)
- On the upside, if you work in Digital, Internet advertising expenditure grew 21% year on year in the first half of 2008 to £1.7bn as the total ad market fell by 0.7%, according to the Internet Advertising Bureau (source: BrandRepublic)
Basically what I’m saying is batten down the hatches, its here.
We are going to have to make client’s smaller budgets work a lot harder and unless we get our acts together in terms of evaluation, we will see clients shifting their budgets into digital – the only media outside DM that can actually demonstrate ROI. My agency mates across the country in online media tell me they’ve got more work than they know what to do with.
The real issue is simple – consumers and businesses are going to have less money to spend. So our clients will be willing to spend less in wooing them. To top it all, at the most basic level if the government is getting less taxes from business and individuals, it has less for the DoH, DCMS, MoD, UKTI and the like to spend with us.
Since the average agency bod is my experience lives financially pretty much month to month (as an industry we’re not exactly famous for our love of cautious saving and living within our means), some people are going to get hit very hard very quickly if they get made redundant.
What can you do? I’ve not got all the answers but I suppose for starters you could develop a sudden interest in your agency’s steady-away B2B client that has weathered every financial storm since 1897. Or you could decide that online media planning is what you really always wanted to do.
But more realistically its going to be about advising clients on the best way to spend what budget they have – and making sure they spend it with you.
I think Planners are going to have to start demonstrating their own effectiveness outside of the IPA paper as well. I’ve always said that without Planners effective ads would still get made, its just that they would be less insightful and therefore effective – but they’d still work. Indeed many agencies manage perfectly well without Planners at all. So maybe we need to start calculating the value of the articles we write, the conferences we speak at, the away-days we attend and so on. After all (to steal from the seemingly recession proof Tesco), every little helps.
