3 Ways Consumer Confidence in the Economy May Influence Your Ad Spend
As of July, America’s Consumer Confidence Index hit a 17-month high, illustrating the continued rise in optimism that U.S. consumers have about their personal finances and the overall economy. Rising consumer confidence is great news for businesses across all industries, since high confidence tends to be accompanied by increased consumer spending on everything from clothing to new appliances to family vacations.
We’ve spotted similar consumer trends in our surveys of both consumers and advertising professionals. We’re also well aware that, as the economy returns to normal and even shows signs of prosperity, local businesses are wondering how they should be advertising to capitalize on this economic opportunity.
As consumers declare themselves more and more eager to spend rather than save, local businesses should be developing their own plans to draw some of this purchase activity to their business. Regardless of whether your advertising strategy held strong during the pandemic or was placed on ice while you weathered the economic storm, increased spending on targeted ad campaigns could be the jump-start your business needs to convert high consumer confidence into a rush of revenue for your business.
Here’s a quick look at three ways consumer behavior may influence your advertising best practices.
1. Consumer Confidence is Driving to Increased Spending
Jobs are increasing. Unemployment is down. And, as businesses are opening back up and industry-specific restrictions are loosening, consumers have increased opportunity to enjoy the forms of spending they were denied throughout much of the pandemic.
The upswing in consumer spending is being driven largely by increased confidence in the economy, but other factors are helping fuel that surge and give local businesses a much-needed injection of revenue. In some cases, consumers are simply looking to make up for lost time by booking vacations, enjoying meals out, or splurging on purchases and other forms of spending they weren’t able to fully enjoy during the pandemic.
Call it “revenge spending” or the “YOLO economy” fad. But regardless of the moniker given to this spending trend, it’s clear that some consumer spending is being driven simply by enthusiasm over the ability to spend.
While that might be particularly beneficial to businesses in the restaurant, tourism, and related industries, overall economic confidence has given consumers faith that they don’t have to hoard their savings in anticipation of impending economic fallout. About 64 percent of consumers are optimistic about the direction on the country over the next 12 months. This long-term confidence is playing a huge role in driving today’s spending decisions.
2. As Spending Increases, Businesses See An Opportunity to Acquire New Customers
In the fact of this consumer free-for-all, businesses are aware of the opportunity ahead of them. To capitalize on new revenue opportunities, many businesses—including your competitors—are investing in advertising to claim new market share and customers. This strategy offers short- and long-term financial benefits, providing an economic stimulus in the present while potentially increasing your customer base for years to come.
Given the influx of new spending—which comes after a period of suppressed inactivity—brand loyalties figure to be less influential on purchasing decisions than they might have been in the past. Between business closures, changes in operating procedures, and inconsistent or absent brand engagement, customers may be recalibrating their loyalties and looking for new businesses to patronize.
As a result, businesses are shifting more resources toward customer acquisition, rather than customer retention. While retention strategies remain an important part of any advertising strategy, more than 28% of the businesses we surveyed are focused primarily on customer acquisition, while only three percent are focused exclusively on customer retention.
Since the start of the pandemic, 78 percent of consumers have changed either the brands they shop or the way they do their shopping. Consumers that may have ignored your business in the past may now be looking for exactly the kind of experience you offer. Advertising is your best tool to build brand awareness, engage those consumers, and convert them into paying customers.
3. Brands’ Top Pain Points Include Ad Inventory and Performance Measurement
As consumer spending patterns have turned favorably for small businesses, some of the biggest pain points faced by these brands are coming from the advertising side of the equation. Fourteen percent of respondents to our survey cited product inventory and supply limitations as the biggest pain point they currently face in their advertising.
Meanwhile, 41 percent of respondents said they were eager to get more help with campaign performance metrics and analytics. Analytics and campaign optimization are likely to grow in importance for businesses of any size as competition for ad inventories grows over time. To build successful ad strategies that maximize ROI, businesses will need the right tools and partners to discover valuable inventories and optimize performance to grow their revenue potential.
With consumer spending and small business advertising both heating up at the same time, the pressure is on small businesses to build and manage ad strategies that control ad costs while optimizing results. A digital ad partner like Cox Media can help with all phases of ad strategy development and execution, connecting your business to high-value inventories while keeping your ad strategy focused on meeting business goals and delivering ROI.
Invest in a partnership that will separate your business from the rest of the pack. Contact us today to get started.
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