Looking back now! Consumer behavior is as volatile as ever in the aftermath of Covid-19. While Marketers can’t predict the future, you can set yourself up for success by getting closer to your customer. And still provide value to your community whilst being profitable.
All Marketing Managers will need to pay attention to these emerging trends in consumer behaviour and advertising.
Post isolation, the habits we’ve formed for two plus years have remained. Raise your hand if you are still shopping online, cooking, watching smart TV, and researching at home more than you did before. Both consumers and brands feel the need to adapt, due to“Skyrocketing inflation, supply chain issues and the lingering pandemic, the business world is in flux.” (GFK and Campaign Brief). With changing consumer habits, brands need to adapt to these adjusted needs. “62 per cent of consumers say they only buy products and services that appeal to their beliefs, values or ideals.” (GFK and Campaign Brief).
So what are most of those common needs?
- Lingering mental health and anxiety issues (feeling isolated and unsure about community)
- Adjusted perspectives of what makes us feel good (spa day at home instead)
- Where we spend most of our time (working from home and entertaining from home)
- How we get creative (now it’s in the kitchen and online)
- How we like to go out and socialise (“let’s have brunch”)
Don’t get it wrong, not everyone is like this, but based on the research, the majority of us resonate with these themes to some degree or another.
In Australia we love our freedoms, our little luxuries and we are explorers at heart. So it’s no wonder that when isolated we craved that dopamine hit of online shopping to give us something to look forward to. “Consumers started using online shopping as a coping mechanism to fight ever-growing quarantine fatigue” ( Brandwatch). Or getting creative in the kitchen and buying appliances, like the airfryer boom (you know what I’m talking about). “Nielsen’s recent study revealed that many consumers who learned how to cook during the pandemic would continue with this habit” (Brandwatch).
For a few years we have longed to get out and drink with friends. Now, some people tend to overindulge to make up for lost time, case in point those drinking beyond their limit in bars. We’ve adapted to our craving for our luxuries and are still maintaining some of them. But also making the most of some new adjustments like going out for Brunch a lot more, instead of going out for dinners and clubbing. (see Brandwatch graph below)
On top of that, we are starting to feel a lot less financially stable now that Government stimulus has died down alongside Reserve Bank interest rates climbing. We are seeing inflation drive the cost of living up. With energy and fuel supply issues, there are a number of factors at play which help us all feel this way “Russian invasion of Ukraine in Feb 2022, global energy and food prices also rose sharply. Inflation has since spread to other sectors, particularly in countries where demand is strong enough for businesses to pass on higher costs.” (from Kantar 2023 forecast).
This means a reallocation of discretionary spending, and can be viewed as an opportunity, if brands can position themselves in the right way.
(From GFK and Campaign Brief Khatri Says) “In this new world, consumer behaviours are different. Find opportunity in understanding and using values as foundations for your brand strategy”.)
The Media Kaleidoscope
There are more ways than ever to get consumer attention. But the multitude of media channels and ways to engage, entertain and connect is becoming more fractured. Due to privacy needs, the media ecosystems are less likely to cross correlate the same person across each channel to use for targeting and reporting. “With further choice, comes increased audience fragmentation across platforms and devices” (Kantar).
The pandemic has spurred a digital content consumption boom, and that seems to be part of the ‘New Normal’ moving forward. “17.4 Million Australian Adults (18+) stream video online spending on average 50 hours in a month” (IAB Australia & Neilson Digital)
Smart phones give us a convenient option, but for entertainment and experiential purposes we prefer the ‘Big Home Screen’ for all our video and audio streaming services. “Mobile is a dominant medium across many activities, but when it comes to viewing, it’s all about the best available screen. Household-viewing, BVOD (Broadcast Video On Demand) and SVOD (Subscription Video On Demand) viewing is on the main TV screen, and the Smart TV set is now the primary driver of increased usage of streaming services.” ( Kantar).
Also, looming above is the tightening consumer budget (thanks inflation!) “Subscription video-on-demand (SVOD) platforms – now seeing a slight drop in market – feels the bite of post-lockdown churn and consumer price inflation.” (Kantar). However, those who are feeling the pinch are more likely to accept ads if they still get to enjoy the service for free.
“Attracting budget-conscious consumers with cheaper ad-funded models is likely to rise” (Kantar) but risks creating a two-tier landscape where those who can pay to avoid advertising do so, leaving a heavily skewed audience (ie. Spotify Ads). But regardless, the streaming services will realise the value in the Audience data, there will always be a way to use data to grow the company’s value and display that to advertisers.
Inflation, Global Price Hikes
In 2023, inflation and global price hikes are presenting challenges for both consumers and marketers. As the cost of living rises, consumers are becoming increasingly cost-conscious, making it more important for businesses to market their products effectively to remain competitive.
(from GFK Consumer Life 2022)
At the same time, the rising cost of advertising is making it more difficult for businesses to reach the audience volume that they are used to. Marketers need to adjust to inflationary impacts such as “a reduction in consumer purchasing power; a rise in costs for subscription media; and increasing advertising costs in certain channels.” (Kantar Media Predictions 2023).
While cutbacks are necessary to reign in a marketing budget, direct access to the customer should never be compromised, that is the lifeblood of your business. As you will read soon, tracking and access to audience and customer data will be evermore fragmented and the more control your brand can have on that connection, the better. This is why almost every marketer recognises that direct access to customer data is critical to have a competitive advantage. So the trick here is to understand where to get the best bang for your marketing bucks. The answer is, owning your data and having it easily accessible while testing different channels in your marketing strategy.
However, the good news is that businesses that effectively demonstrate value to the right consumers and invest in their brands tend to outperform the market. The best way to understand if your brand is delivering value is by tracking KPIs within your customer data. That investment in marketing remains a powerful form of defense during times of economic crisis.” (Kantar) According to this Kantar report, the learnings from the 2008 global crisis are applicable to all categories for this year. “Strong brands retain more economic value during tough times and recover more quickly when market conditions improve.”
Thus, in 2023, it will be important for businesses to invest in their brands and marketing efforts, despite the challenges posed by inflation and global price hikes.
Data Usage And Ownership Shift
“Volatile” is definitely the word for the start of 2023. But look on the bright side, this environment is making better marketers out of us. We need to adapt and use real-time data (and econometric modelling) to make decisions that help our brands provide value for changing consumer needs.
The advertising and media landscape is changing due to the removal of cookies on web browsers and apps. Cookies have been used to track users’ online behaviour and deliver personalised ads, but privacy concerns have led to their removal. As a result, marketers and brands are searching for post-cookie solutions that will allow them to reach their target audience effectively without violating their privacy.
Consumers and regulators have growing concerns about data privacy, and companies like Apple, Google, and Meta are taking steps to address these concerns. For example, Apple has implemented its App Tracking Transparency (ATT) framework (Remember Apple’s iOS 14.5 update), which requires apps to obtain user consent before tracking their data. Google is developing a new, privacy-focused tracking solution that uses aggregated data to deliver personalized ads (which keeps getting postponed 😐). While Meta has been all about ‘play fast and break stuff’. It has been the poster child of unethical use of personal data (see the latest on TechCrunch). Officially Meta has a privacy-centric alternative to traditional web tracking (a walled garden).
There have been no clear guidelines because regulators have usually always been a step behind these tech behemoths.
Consumer attitudes towards cookies and use of personal data is mixed. For some it is a huge human rights issue. For others, they don’t mind exchanging some information about their browsing behaviour in exchange for more personalised ads or content. According to Kantar “46% of Adults claim to regularly delete cookies from their devices. But 54% don’t mind accepting cookies if they get free access or a better experience”.
The removal of cookies on browsers and apps with the increasing focus on data privacy are leading to a significant shift in the advertising and media landscape. Marketers will need to adapt to these changes and find new ways to reach their target audience effectively while also protecting their privacy.
Knowing this, how can marketers make data-led marketing decisions?
In a post-cookie world, marketers will need to adopt new strategies and technologies that prioritize privacy while still delivering relevant, personalised content. Here are some ways marketers can adjust:
- Embrace privacy-focused solutions: As mentioned, companies like Apple, Google and Meta are developing solutions to track user behaviour without violating their privacy. Marketers should familiarise themselves with these solutions and explore how they can be incorporated into their marketing strategies.
- Double down on first-party data: First-party data, such as email addresses and customer information collected through sign-ins, can provide valuable insights into customer behaviour. Marketers can use this data to make more informed decisions about their target audience and tailor their campaigns accordingly. (think, direct to the customer like emails, and account setup etc).
- Leverage machine learning and artificial intelligence: AI and machine learning can help marketers process large amounts of data and make predictions about consumer behaviour. This can help make more accurate, data-led decisions about marketing campaigns.
- Collaborate with partners: Marketers can streamline and work with Agency partners like us at NLOM Agency. We partner with publishers, media companies, and data providers to access the insights you need to make data-led decisions. Collaborating with these partners can help marketers reach a wider audience and gain access to valuable data about consumer behaviour.
By adopting these strategies and utilising the latest technologies, marketers can make data-led decisions that balance the need for relevance with the need for privacy.
Technology Is Needed For The Next Level
The use of technology and artificial intelligence is becoming increasingly important for marketers who want to make data-led decisions. Here’s a look at how these tools are transforming various aspects of the marketing industry:
Smart TV use
We’ve reached a tipping point in smart TV penetration where broadcast audiences migrate towards On Demand viewing. As marketers, CTV looks very attractive with the method of delivery and growth of adoption over the past two years. Also the enticing possibility of ad-supported tiers in other SVOD services like Netflix coming to town. Yes, consumers are feeling the pinch, but households still have about 3.4 subscription services. With prices bumped up across the board the churn rate seems relatively minor overall considering how much farther the budget needs to stretch, thanks again inflation! (Australian Financial Review)
With the Audience growing in Smart TV consumption the publishers open up a decent quality inventory for marketers that are all too eager to get the attention. Some of the current options are the original broadcast publishers like Nine, Seven, Ten and SBS. All with relatively healthy ecosystems and access to sign in user-level data.
If planned intelligently marketers can leverage this sign-in data. Plus these are already cookieless environments. So it works very well with the increasing need for data privacy.
If you ask most marketers; they would say that using programmatic advertising to reach targeted audiences through their largest screen in the home is the most promising avenue.
About a quarter of Australians have a Smart speaker in their home, such as Amazon Echo or Google Home. It presents a new opportunity for advertisers to reach consumers in their homes. Benefits include targeted (programmatic) ads, hands free interaction and a unique advertising format for advertisers.
Targeted advertising is possible because The companies that deliver content to these Smart speakers are able to collect data on consumer behaviour in a privacy-safe manner. Advertisers can leverage this to deliver targeted, personalized advertisements.
For example, if a consumer regularly orders groceries through their smart speaker, an advertiser could offer them a discount on a related product or a competitor can jump in at that consideration stage.
Hands-free interaction makes lives easier, smart speakers allow consumers to interact with advertisements hands-free, making them a more convenient and accessible option for consumers who may be busy or have disabilities.
Smart speakers offer a unique advertising format that is not available through other channels, such as TV or print. Advertisers can use voice-activated advertisements to deliver engaging, interactive experiences that capture the attention of consumers. We’ve even heard of a very clever interactive wine recommendation ad for a wine retailer. “A Merlot will go nicely with your steak tomorrow night”. There are so many possibilities.
However, it is important to note that smart speaker advertising is still in its early stages and there are potential challenges, such as privacy concerns, that advertisers need to navigate. Advertisers will need to approach smart speaker advertising carefully and consider the privacy implications for consumers.
Digital Out Of Home
Outdoor billboards have a lot more capability than people give them credit for. Beyond the large-scale static print, there are more advanced options, now that travel and public interactivity are back, (don’t you miss those traffic jams) Digital Out Of Home (DOOH) is looking very promising. As every good marketer knows, context is a major factor when buying OOH Media. With digital capabilities in the mix, ‘Data and Targeting’ is the first and most important driver for buying DOOH programmatically (IAB Australia).
AI is transforming the way marketers create and distribute content. For example, AI-powered content creation tools can generate high-quality marketing materials in real-time (part of the initial draft for this article was written in ChatGPT). While AI-powered marketing automation tools can help marketers serve ads to the right people at the right time. There are some limitations, but it’s only a matter of time for the results to blow us away.
In conclusion, the use of technology and artificial intelligence is becoming increasingly important for marketers who want to make data-led decisions. By leveraging these tools, marketers can gain valuable insights into consumer behavior and deliver personalised, relevant content that drives results.
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