A March, 2010 online survey from The Nielsen Company of more than 27,000 consumers in 55 markets from Asia Pacific, Europe, Latin America, North America and the Middle East/Africa (consisting of countries from Saudi Arabia, Pakistan, United Arab Emirates, Egypt and South Africa) reveals that spending habits have definitely changed and mat reflect a new ongoing frugality. Of course, given the recession this is hardly earth-shattering but what this study uniquely shows is that these changes are now universally underway. Every country and consumer has been impacted and that has us all using a number of tactics for making our money work harder.

Nielsen makes a bold stand stating, "Regardless, one thing remains clear: habits picked up during the recession are likely to survive even after economic recovery is in full-swing." This means marketers must ensure that their offer, pricing, messaging, guarantees, and other value associations meet the new reality. The study shows that there has been a shift towards private label products along with these other tactics for saving money:

• Buying items on sale (a 57% global average)
• Using coupons (40%)
• Shopping at value retailers (37%), such as supercenters and dollar stores
• Purchasing value packs (35%)
• Shopping close to home/work (25%)
• Stocking up (22%)
• Switching to cheaper health and beauty products (18%)
• Purchasing smaller packs with a lower unit price (17%)

Interestingly, one in ten of respondents reported no change in their spending habits which may aid luxury brands. It will be very interesting to see if luxury returns to a more elitist segment. In the past twenty years we have seen a democratization of luxury which, in essence, is ironic so that designer items, spa treatments, high-end vehicles, exotic vacations, and the like were more readily available to the masses. This is one of the harshest realities for many consumers - not all can afford to do or own everything and this is as much a cultural shift as it is an economic.

It reminds me of a CNN report at the height of the crisis on a couple from Seattle whose income was collectively below US$100,000 but owned/mortgaged a US$800,000 home and stated other significant (unrealistic) economic expectations for how they would live. It seems astonishing now but the crisis we are still grappling with stems from that historic conflict of wants versus needs. Consumers are in a new economic reality and marketers must continue to adjust to it. However, as DDB featured in its two Yellow Papers on the impact of the recession, every economy brings opportunity but that can only be achieved with a deep connection and understanding of the consumer.

Read the full Nielsen article here, http://blog.nielsen.com/nielsenwire/consumer/global-consumer-strategies-for-saving-money/.

Jeff Swystun
Chief Communications Officer
DDB Worldwide

Posted on September 14, 2010 3:33 PM | Permalink | Comments (4)

I was listening to a recent HBR IdeaCast titled, Strange-But-True Insights that was an amazing collection of groundbreaking research across industries and situations. One piece of research by Leif D. Nelson, a Hass School of Business professor at Berkeley, was particularly fascinating as it challenged a commonly held assumption in human behavior. Professor Nelson has spent the past few years looking into “consumer adaptation” which deals with how we react to certain stimuli including marketing messaging. One of his earlier works was titled, Interrupted Consumption: Adaptation and the Disruption of the Hedonic Experience. Not surprisingly in this study, he and fellow researchers, found that people tend to choose breaks in negative experiences and avoid breaks in positive ones.
 
Basically, we humans naturally attempt to intensify our positive experiences and mitigate the negative – really no big surprise. However, Nelson and colleagues argue that “consumers should insert breaks into positive experiences, but not in negative ones”. They explain this counterintuitive rationale with the following, “we argue that consumers will often fail to anticipate adaptation and the intensifying effect of breaks. We propose that consumers instead assume that breaks actually weaken the intensity of the experience. In other words, we argue that consumer’s preferences for breaking up experiences are often in direct opposition to the strategies that would maximize their enjoyment or minimize their suffering.”
 
In simple terms, they are saying – insert breaks into positive experiences because each ‘start-up’ of that experience actually mirrors and intensifies the original emotions and impact. These are positive adaptations. Further, we should as people and consumers not insert breaks in negative experiences as it just causes us to relive it over and over rather that dealing with it directly and in total.

Where Nelson and his colleagues work really engages is in a piece published in the Journal of Consumer Research in January, 2009 (Download). The essay is titled, Enhancing the Television-Viewing Experience Through Commercial Interruptions. Here is a verbatim summary whose insights are very counterintuitive:
 
“Consumers prefer to watch television programs without commercials. Yet, in spite of most consumers’ extensive experience with watching television, we propose that commercial interruptions can actually improve the television-viewing experience. Although consumers do not foresee it, their enjoyment diminishes over time. Commercial interruptions can disrupt this adaptation process and restore the intensity of consumers’ enjoyment. Six studies demonstrate that, although people prefer to avoid commercial interruptions, these interruptions actually made the programs more enjoyable (study 1), regardless of the quality of the commercial (study 2), even when controlling for the mere presence of the ads (study 3), and regardless of the nature of the interruption (study 4). However, this effect was eliminated for people who are less likely to adapt (study 5), and for programs that do not lead to adaptation (study 6), confirming the disruption of adaptation account and identifying crucial boundaries for the effect.”
 
Lots of academic language, I know. But in short, the authors are saying that consumers actually benefit by changes that challenge our adaptation processes so we are more stimulated. In effect, commercials break a pattern that contributes to overall pleasure and value of television-viewing. While I contend that consumers would prefer to watch an informative, entertaining and quality advertisement over one that does not deliver the same value, I cannot dispute Nelson and colleagues’ primary finding regarding the benefits of interruption. Very cool stuff and worthy of further research.

Jeff Swystun
Chief Communications Officer
DDB Worldwide

Posted on August 18, 2010 10:10 PM | Permalink | Comments (4)

It is an understatement to say that the advertising and communications industry has experienced a great deal of change in the last five years. Economic conditions, consumer engagement, social media, digital technologies, tangible metrics and much more, are changing how we do business. Clearly the industry needs to be fluid and adaptive while leaders within the industry need to be bold, take a stand, and lead the change. The Cannes Lions International Advertising Festival has not been immune to these forces and is doing its best to be increasing relevant within these new dynamics.

This year entries are up 7% and attendance has risen 35% which is comparable to pre-recession levels. This indicates a general restoration in faith in the economy but more importantly it signals a need to invest in the future and celebrate the strategic and creative accomplishments of the industry. Since arriving in Cannes, I have noted a refreshing seriousness amongst those in attendance. People are here to learn and to challenge themselves. I have never seen such active note-taking at the sessions and more earnest, intense discussions at the breaks.

If you check out the homepage of the Festival, you will see a section, “Creative Advertising = Business Success.” This section features a report that purports to prove that creative advertising equates to business success. This is incredibly relevant to clients who, by the way, are back in force this year representing approximately ten percent of attendees. This is a good thing. Client participation can only result in more relevant and rewarding work from their agencies.

Another growing segment of attendees are what can be called "tech companies." Over the last few years, Microsoft, Google and Yahoo have become a staple and a force (this year Yahoo scored a minor coup by sponsoring the infamous Gutter Bar). Now these companies are joined by Adobe, Nokia, and HP. Global consulting firms are relatively new entrants with ones such as PwC joining session discussions on the changed marketing landscape. Hollywood too is increasing its presence supporting the theory that communications and entertainment are a natural combination.

The Festival will always be a great time, a great place to network, and a time to celebrate great work. Increasingly, it needs to be synonymous with effectiveness and results. By what I have observed, this transformation is underway.


Chuck Brymer
President & CEO DDB Worldwide

Posted on June 25, 2010 3:06 PM | Permalink | Comments (1)