I'm trying to come up with a convincing argument for why we might eventually be able to claim that economic recovery was marketing-led. I'm promoting that very idea at the Debating Group's MCCA sponsored event at the House of Commons next Monday. There's plenty to fuel such an argument. Any other organs that one might argue are capable of, or even responsible for, pumping life back into our financial system are currently failing.
Consumer spending and personal incomes were flat in June, according to government statistics released on Tuesday, the latest indication that the economy would continue to struggle in the second half of the year. The Commerce Department figures, which were seasonally adjusted, showed that personal income was steady in June, compared with a slight 0.3 percent rise in May. It was the lowest level this year and the first time in nearly a year that personal incomes have not risen compared with previous months.
Can a warm and fuzzy, people-focused advertising campaign help restore the reputation of the bruised financial unit of General Electric? G.E. will start to find that out as it rolls out ads for its GE Capital unit, which was battered by the financial crisis because of its exposure in areas like commercial real estate and consumer credit card debt.
As Mr. St. Angelo and several other longtime American executives tell it, a new era has arrived at Toyota. Its face is Mr. Toyoda, who this month reaches his first year as president, and by these accounts, has come to appreciate how closely Toyota flirted with disaster in the United States — and is prepared to shake things up because of it.
Despite all kinds of mixed economic tea leaves, a new study of consumer perception from Deloitte indicates that most Americans do believe financial recovery has arrived, and that view is especially strong among affluents. "Consumer confidence is really strengthening," Scott Erickson, a partner in the firm's retail practice, tells Marketing Daily. "And people with higher incomes are more likely to believe we are in recovery."
The age of austerity is over, as the well-heeled splash out on Porsches and Dom Pérignon champagne, according to retailers of luxury goods. The wealthy are more prepared to open their wallets than at any time in the past two years, suggesting they have put the financial crisis behind them. But they are still looking for value for money and craftsmanship, says a study published today. Flashy labels and glitz have yet to make a comeback.
ZenithOptimedia has upgraded its global ad-spending forecast again, now predicting 2.2% growth in 2010, up from the 0.9% increase it had projected four months ago, which was itself a slightly more optimistic projection than the 0.5% gain anticipated before that. "Confidence in the global economic recovery, while tentative, continues to grow, and this improvement has been apparent in ad markets across the world," ZenithOptimedia said in a report Wednesday morning. "Ad expenditure is accelerating in bullish developing markets, while in the developing world the downturn is coming to an end more quickly than expected."
Last year, Palm had the hottest handset not named iPhone. The Pre was the company's long-awaited Hail Mary -- or at least its best shot to revive the once-storied brand and reclaim a bit of the hand-held market Palm created. Today, the Pre is not selling and nor is its cheaper, lower-end model, the Pixi. The company's stock plunged 30% on a fateful day last month as two analysts cut their price targets to zero and Morgan Joseph & Co. analyst Ilya Grozovsky called Palm "essentially in an accelerating death spiral."
As US equity markets recover and consumers regain a bit of their swagger, shoppers are abandoning Wal-Mart's US stores in droves. The discount giant, which posted healthy US same-store sales gains in four of the first six quarters of the Great Recession as millions of cash-strapped shoppers traded down from department stores and other higher-priced chains, was considered to be among the biggest beneficiaries of the economic slowdown. Now shoppers are dropping Wal-Mart like a bad habit. In fact, the Bentonville, Ark.-based chain is likely to post, for the first time in its history, four straight quarters of same-store sales drops. Coincidentally, the S&P 500 Index is up in each of those quarters. It's an odd relationship America has had recently with the low-price titan.
Increasingly turbulent labor negotiations are threatening to knock U.S. airlines off their recovery course just as the battered industry starts to emerge from a deep recession. Airlines slashed pay and benefits over the past decade, often during stays in bankruptcy court. Now, their restive workers are pressing for wage increases, in some cases by double-digit percentages.
Toyota is employing a marketing campaign to mitigate the horrific damage it has sustained over the past several weeks – including an estimated 18,000 “lost” sales in February, billions of dollars in repair costs, and an untold deterioration of its once-sterling reputation. Even as Toyota executives testified on Capitol Hill this week, the brand was unveiling a whole new approach in its TV advertising and launching the company’s most ambitious incentive program ever. “We’re back in the sales business,” Bob Carter, general manager of the Toyota division of Toyota Motor Sales USA, declared to reporters on a conference call yesterday.
U.S. consumers didn't let snow or frigid temperatures stop them from shopping in January. And if they couldn't get to the malls, there was always the Internet. Retail sales increased a larger-than-expected 0.5% last month, more than recovering a 0.1% loss of December. Sales might have increased even more if not for the lack of inventory. The latest retail data suggest real gross domestic product is on a solid track, even though February's storms cut into business activity. The January shopping gain was broad-based, with sellers of sporting goods, books and music, general merchandise stores and Internet retailers posting increases in excess of 1%. Internet sales have soared 12.4% over the past year.
In Davos, signs of recovery for the economy — but it's not the same old world.
Though there's still widespread disagreement of just when the industry will put the recession firmly behind it, one thing's clear: Whenever it happens, marketers had better be ready. Forward thinkers such as Allstate, Walmart, New Balance, Macy's, Procter & Gamble, McDonald's and Bank of America are already paving the way to recovery by spending on marketing and product innovation, cementing relationships with new consumers and rewarding loyalists who stuck by their brands during the bad times. They are also creating products and messaging that bridge from recession to recovery.
We've become a nation of early adopters -- now can the consumer electronics industry lead the U.S. recovery? That's what CE manufacturers (who happen to include a few of the world's biggest consumer marketers) hope for as they gather in Las Vegas this week for the annual Consumer Electronics Show.
Nike reported better-than-expected second-quarter earnings Thursday as cost-cutting and a steadier order book helped offset weak sales in mature markets, and its shares rose more than 3 percent. Nike has countered declines in consumer spending mainly by cutting costs, streamlining operations and reducing marketing. It has slashed 5 percent of its global workforce, or some 1,750 jobs. Orders for goods to be delivered from now until April fell 1 percent on a constant currency basis. That was better than some analysts had expected and an improvement from a 4 percent decline in the first quarter.
General business strategy dictates that there are two ways a business responds to a dramatic downturn in consumer spending. They cut costs and/or discount heavily to drive traffic and lure beaten consumers out of their malaise. Both approaches are easy levers to pull because they have a salient short-term impact. The rub lies in not knowing what the long-term impact of these short-term decisions will be. While the long-term implications of cost-cutting is an article in itself, today many retailers find that their most immediate issue is working their way back out of discount-driven brand-price erosion.
The recession may be over but companies that cater to consumers believe people are digging in for a long, frugal winter. That's why Clorox Co. is keeping the price steady on a new improved trash bag that grips the top of the garbage can. Clorox says it wants to highlight the bags' "greater value." Similarly, Campbell Soup Co. recently reduced the promoted price of its V8 beverages in some markets to 2 for $5 from 2 for $6. Burger King Holdings Inc. is selling double cheeseburgers for just a dollar. Glimmers of recovery in housing starts, manufacturing and auto sales have yet to reassure many consumers who are spooked by 10.2% unemployment, determined to save more and skeptical of sunny forecasts. The Conference Board recently said its consumer confidence index fell almost six points in October from September.
Leading retailers say October turned out to be unexpectedly solid, with consumers spending more freely than expected. The International Council of Shopping Centers, which tracks leading chains around the U.S., says its index gained 2.1% for the month, the strongest gain in 15 months. And Retail Forward, a consulting company that tracks a slightly different group of stores, says its index saw a pop of 2.3% compared with a 0.9% gain last month and the 3.8% decline in October of 2008.
The important question during a downturn is not whether or not the economy will recover -- it will; it always does. What's important to ask is whether your company will be in position to surge as the economy begins to grow. To a large degree, the level of your success will depend on your marketing efforts and capabilities -- what you have done during the downturn and what you put in place now to win business during the recovery. You will need to make strategic decisions about choosing new media, entering new markets, and positioning products.
Signs of an improving economy might be in your kitchen or bathroom cupboards. Consumers are showing a willingness to pay a little more to get Colgate toothpaste, Kellogg's Frosted Flakes and Gillette Fusion shavers. That's good news for the economy and the multibillion-dollar companies that make those products and have been battling to keep shoppers from trading down to store brands to save money. Procter & Gamble Co., Colgate-Palmolive Co. and Kellogg Co. all gave upbeat earnings reports and even stronger outlooks for next year on Thursday, a day that also saw the announcement that U.S. gross domestic product rose for the first time in a year.
For some time, the advertising industry seemed ready to write off the fourth quarter, convinced that marketers could not wait to close the books on an annus horribilis. Now, there appears to be hope that things have stopped getting worse — but are they starting to get better? “Client sentiment has stabilized, but remains cautious,” Michael I. Roth, chairman and chief executive at the Interpublic Group of Companies, the giant agency holding company, said on Wednesday. Among the signs of improvement, or at least a bottoming out, are reports in trade publications like Advertising Age that demand for commercial time on television networks is increasing, even if slightly.
Global consumer confidence is rebounding, and in the United States has risen for the first time since 2007, amid signs the world economy is picking up although spending is still restrained, a survey showed on Wednesday. Confidence was highest in India, followed by Indonesia and Norway, and was weakest in Japan, Latvia, Portugal and South Korea, although in Korea it had improved markedly, according to a quarterly survey by The Nielsen Company, conducted between September 28 and October 16.
Tuesday at the Web 2.0 Summit in San Francisco, Morgan Stanley Managing Director, Mary Meeker, gave her usual quick presentation with a ton of information. Rather than trying to squeeze it all in (which not even she can in her 15 minute presentation), I will embed the slides below when they are up and hit on her major points. Meeker thinks we’re in a new computing cycle with the mobile web.
The world’s largest media markets will return to growth in 2011, according to the latest advertising spending forecast, but with only a “meagre” recovery as emerging markets take a greater share of global ad budgets.
The life sciences industry [herein includes pharmaceutical, biotechnology, diagnostic and medical device companies] plays a critical role in the U.S. economy. Innovative new medicines developed by life sciences companies provide better patient outcomes, improved quality of care, increased life expectancy, and lead to economic gains. Currently, the strengths [e.g. innovation, quality of care] and weaknesses [e.g. gaps in healthcare coverage, high costs and inefficiencies] of the U.S. healthcare system are the subject of great debate. During this period, it is essential for all parties involved to place the importance of medical and scientific innovation at the forefront of the conversation. New medicines should be viewed as investments in the future, not only in patient health – but also in economic recovery and growth.
The American economy is back — or so some of the country’s biggest advertisers are saying in new campaigns. It may be a sign that the recession is ending, or it may be a sign that consumers are sick of hearing about it. While economists and investors study housing starts and gross domestic product predictions to measure economic vibrancy, General Electric, Bank of America and other companies are using commercials to proclaim that America’s future is bright. And that may be something of a self-fulfilling prophecy.
As the economy shows signs of a recovery, marketers are wondering if consumers will revert to pre-recessionary behavior. Consumers are trying to figure that out too. Many people are reevaluating their spending because they never again want to feel as vulnerable as they have over the past 12 months. But our society is contending with another significant change. For many people, the new determining factor for success is no longer pure profitability, but responsibility. That shift in perspective takes the form of a simple question: Am I doing the right thing--for my family, our nation, the planet?
A year after the U.S. economy was brought to its knees by the bursting of the housing bubble, credit for consumers is still being aggressively ratcheted back. Total consumer credit outstanding, which includes everything from credit-card debt to loans for recreational vehicles, fell $12 billion in August, or at a 5.8% seasonally adjusted annual rate, the Federal Reserve reported Wednesday. It was the seventh straight month of declines, the longest stretch since 1991. The drop is a stark demonstration of how banks and other lenders are scaling back, owing to their own exposure to the struggling real-estate market. But it also reflects a reluctance by Americans to hold big loads of debt at a time when the job market remains in bad shape and the value of their homes has fallen.
CBS is close to selling out approximately 80% of its ad inventory for Super Bowl XLIV, according to a person familiar with the situation, a sign that the sports-advertising marketplace may be recovering more quickly than other TV venues. CBS is still hesitant to force a price point into its discussions but has sought between $2.5 million and $3 million for a 30-second spot in the game, according to this person. As usual, the price hinges on the position of the ad within the telecast as well as whether advertisers want to get more involved with the event by buying up pre-game time or other CBS sports inventory. CBS is expected to broadcast the game from Miami on Feb. 7, 2010.
If you have recently searched for "Kenya safari," "gold jewelery," or "insurance price comparison" lately, you are responsible. Responsible, that is, for an article published last week in the Financial Times that claims how these search terms and others like them "suggest that consumer confidence is perking up." According to the FT, search query patterns suggest that "consumer sentiment in the UK is up 6 per cent since the beginning of the year." These figures are based on data from Google's Barometer, which tracks a basket of 50 positive keywords and 50 negative keywords to gauge the health of the overall economy. Created in response to the recession, this type of trend spotting within Google search data is part of a wider effort at Google to demonstrate how patterns in search queries can not only alert marketers to emerging trends but also accurately model real-world phenomena.
In this new era of frugality, well-to-do shoppers have gone into hiding and stowed away their splashy logos. But they may hold the key to a consumer recovery. Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. The top 20 percent of the nation's households -- with income of at least $150,000 -- account for 40 percent of all spending, according to government data. That makes them a crucial spoke to any turnaround.
The economic crisis appears to be abating as indicators suggest the worst may be past. Yet with each new release of data, the market is subject to impacts which produce varying opinion of the health of the global economy. It is widely agreed that the recovery will be long and trying. In the fall of 2008 when the severity of the downturn was being realized, DDB published a paper called, Capturing Opportunities in Challenging Times. The response was overwhelming with the paper downloaded over 50,000 times and referenced in numerous articles online and offline.
With all the news coverage today on financial mismanagement, I can tell you from first-hand experience about a company that continues to prosper amid all the chaos. And I think it is worth trying to understand why.
There is a lot of talk about "green shoots" lately. Is prosperity just around the corner, or is the worst still ahead? For marketers, uncertainty about what's next for the economy poses a conundrum: how to plan for the future when the only thing forecasters can agree on is that the future is murky?
I can remember three major downturns during my career. Each hit most agencies like one of those thunderstorms where everyone makes a mad dash for shelter. Agencies ultimately adapt and develop new business models and positions, but not before embracing more cautious versions of themselves rarely seen in good times. Pretty soon that caution becomes a reality that everybody accepts. What we forget is that there's a flip side to a bad economy. This may be counterintuitive, but just as you must retool your business during a recession, you need to plan for an economic recovery. I think it's time to start planning.
The green movement may be at risk of slowing down, especially within the business community. Many business people hold on to an outdated view of green: the misconception that environmental practices always cost a lot of money. So logically, in this economy they're asking, "Is this really the time for green? Can we really afford it now?"