The rising cost of living, ever-increasing interest rates and high inflation are continuing to crunch consumer confidence and spending. Everyone knows that. But they are also creating a golden opportunity for companies who are smart and focused enough to read the mood of consumers and get on the front foot with their marketing communications.
Sure, there are green economic shoots emerging and the Federal Budget delivered on May 9 should, in theory, stimulate some business activity and ease the financial strain for some Australians. But times are still tough. Very tough.
History and countless studies from Mark Ritson, Les Binet, Peter Field, Thomas Kamber and others show that tough economic conditions are the right time for companies to maintain – even increase – their marketing activity to convince people that their brands are essential to their lives. And, of course, if your competitors have fallen silent, it’s a great time to gain
But as well as maintaining their investment in both short-term and long-term brand marketing (you need both), companies also need to really understand the mood of consumers, what they want from brands and what marketing messages will resonate with them. In the current environment, how companies communicate with customers – both existing and new – is critically important. Fall silent or send the wrong message and you might be left behind.
What is the mood of Australians right now? The pandemic, inflation, rental crisis and a year or more of increased cost of living have left many Australians feeling uncertain, confused and a bit exhausted, resulting in a “permacrisis” state, that is, a sense of being in a constant state of crisis, characterised by never-ending issues, one after another after another after another.
Why should marketers care about permacrisis? Peopleʼs response to a crisis is to eventually adapt. As people start to stabilise, the way they change and adapt will impact what they buy and how they view brands and marketing communications.
The message here is clear: marketers need to adapt to the way their customers are acting, or risk being left behind. Creating positive messaging in positive environments will combat the sense of loss consumers are feeling; it will also build brand affinity and create permission to pay a premium for products and services.
There is no doubt that many Australians are under financial pressure. The new cost of living report from Newsamp, powered by News Corp Australia’s The Growth D_Stillery and set to be released later this month, reveals that as their buying power shrinks, people are being forced to reassess their choices and think more consciously – and more frequently – about where they spend their money. For example, the new report shows that 42% of Australians plan to change their supermarket shopping behaviours, 37% will reconsider non-essential spending, and 41% will change their dining out rituals.
But that doesn’t mean people will stop spending entirely or that they are no longer receptive to hearing from marketers. The key is to understand what they will be receptive to, and how to communicate that.
Take the financial services category. The new Personal Finance D_Stilled study from News Corp Australia’s The Growth D_Stillery shows a clear division in financial literacy, with some people leaning in and some leaning out. Let me explain.
For the first time in a generation, Australian households are dealing with a volatile and inflationary financial outlook. Regardless of income, life stage or gender, everyone is feeling the pinch. But those with a higher financial literacy are better equipped to weather the storm.
This has created a “mindset split” that cuts across generations. The people leaning out lack financial skills and may feel hopeless in the face of rising costs. Focused on managing the day to day, they are potentially digging themselves into a deeper hole.
On the other hand, the people leaning in are more active, more confident and are looking to make better decisions now for their long-term future. They have a more diverse portfolio of products, explore different options and are more capable of making their money work for them.
There is a key opportunity for brands to guide better choices in what will be a year of financial evaluation. People are re-evaluating their spending and financial products, and brands can play a key role in helping them make informed choices. But this requires more than just access to the information. It is about the right information, on the right topics, at the right time.
What we are seeing in the financial services sector is playing out, in different ways, across most product and service categories. People are re-evaluating how, when and where they spend their money. They are not blocking out marketing messages, but they are more selective than ever about what they will listen to. A lot of people are stressed. Marketing that acknowledges the stress they are going through and offers a way to ease it will resonate.
Staying active as a brand in a tough market is the key to long-term brand success. Just as important is listening to consumers, understanding their current mood – which varies from category to category – and finding the right tone, voice and content in your marketing.
Lou Barrett is Managing Director, National Sales, News Corp Australia