Setting the Scene: The Rise of Specialized Production Companies

If you’re looking for a location that’s a melting pot of technology, creativity, and entrepreneurship, look no further than the Golden State. California video production companies have evolved beyond Hollywood movies and are making significant inroads into advertising, especially when it comes to commercials that call the viewer to immediate action.

• Tech-Savvy: These companies are at the forefront of technological innovations, incorporating everything from 3D effects to virtual reality.
• Creative Talent: A blend of experienced directors, cinematographers, and editors ensure that each project is a masterpiece.
• Strategic Locations: Situated close to tech giants and innovation hubs, these production companies have the strategic advantage of quick adaptability and partnerships.

Why Direct Response Commercials Matter More Than Ever

While traditional advertising plays a long-term game, direct response commercials aim for immediate consumer engagement. These are not just any commercials; they are strategic masterpieces designed to evoke immediate action from viewers.

• Measurable ROI: One of the most significant benefits is the ability to track real-time performance.
• Targeted Approach: By focusing on a specific call to action, these commercials allow for a more focused advertising strategy.
• Cost-Effective: When produced correctly, the ROI can significantly outweigh the initial investment, making it a cost-effective strategy.

The Synergistic Relationship: California Video Production Company and Direct Response Ads
So what happens when the creative talents in California take on the challenge of producing direct response commercials?
• High-Quality Production: When professional production meets strategic advertising, the result is a high-quality commercial that stands out.
• Innovative Storytelling: Storyboards go beyond traditional structures to create compelling narratives that engage the viewer and encourage immediate action.
• Data-Driven Decision Making: Leveraging big data and analytics, these commercials can be continually optimized for better performance.

Case Studies: Success Stories Worth Noting
Several brands have benefited from this synergistic relationship. Here are a couple of examples:
• Healthcare Brand: A recent campaign yielded a 300% increase in call volume, thanks to a brilliantly executed commercial by a California-based video production company.

• Fitness Equipment Retailer: An engaging 30-second ad resulted in an immediate 200% boost in website traffic and a significant uptick in same-day sales.

The Road Ahead: Future Trends in Direct Response Commercials

As technology and consumer behavior continue to evolve, we can expect several new trends to dominate:
• Increased Use of AI and Machine Learning: Advanced algorithms can help optimize ad placement and timing for maximum impact.

• Personalization: Tailoring commercials to individual preferences will become more straightforward, thanks to data analytics.
• Multi-Platform Strategy: As consumers diversify their media consumption, direct response commercials will have to adapt to multiple platforms for maximized reach.

Conclusion
While the essence of advertising remains constant—to engage and persuade—the tools and methodologies continue to evolve. The joining of forces between California’s creative powerhouses and the immediacy of direct response advertising offers an enticing avenue for brands aiming to make an immediate impact. And in an age where every click, share, and call counts, this collaboration could just be the game-changer the industry needs.

The post Unlocking the Future of Impactful Advertising first appeared on TVA Media Group.

My conversation with Bob Gruters.  Bob is currently the Chief Revenue Officer at Loop Media.  Due to his experience on both the digital (Loop Media and Facebook) and linear (MTV and Univision) sides of convergent, he understands it from all angles.

In this episode, we cover: 

1) The future of TV when screens are everywhere

2) How agencies should look at evolving mediums such as digital out-of-home (DOOH)

3) Why “it’s all just TV”

2. Cutting the Cord: Pay-TV’s Subscriber Base Plummets by 1.7 Million in Q2

Seven big questions re: cord-cutting:

1) How many homes subscribe to a pay-TV bundle?

2) What share of pay-TV subscriptions is streaming?

3) What does a streaming pay-TV subscriber look like?

4) Are streaming pay-TV services replacing all the subscribers leaving traditional pay-TV?

5) What share of households subscribes to a traditional and streaming pay-TV service?

6) Why would someone subscribe to both?

7) Is time spent with cable declining at the same rate as subscribers?

Big question #1: How many homes subscribe to a pay-TV bundle?

Quick answer: 73M

YoY change in pay-TV subscribers:

1) Traditional pay-TV – ↓ 6.5M

2) Streaming pay-TV – ↑ 1.1M

3) Total pay-TV – ↓ 5.4M

Total pay-TV subscriptions (YoY growth):
1) 2019-Q2 – 91.0M

2) 2020-Q2 – 85.9M (↓ 6%)

3) 2021-Q2 – 82.5M (↓ 5%)

4) 2022-Q2 – 78.1M (↓ 5%)

5) 2023-Q2 – 72.7M (↓ 7%)

Big question #2: What share of pay-TV subscriptions is streaming?

Quick answer: 19%

Streaming pay-TV subscriptions (YoY growth):
1) 2019-Q2 – 8.2M
2) 2020-Q2 – 9.9M (↑ 20%)
3) 2021-Q2 – 11.7M (↑ 18%)

4) 2022-Q2 – 13.0M (↑ 17%)

5) 2023-Q2 – 14.2M (↑ 9%)

Big question #3: What does a streaming pay-TV subscriber look like?

Quick answer: Streaming pay-TV subscribers look the same as traditional pay-TV subscribers, except they are slightly younger.

Big question #4: Are streaming pay-TV services replacing all the subscribers leaving traditional pay-TV?

Quick answer: No.  Since 2019, streaming pay-TV has only gained 24% of the subscriptions lost by traditional pay-TV.

Big question #5: What share of households subscribes to a traditional and streaming pay-TV service?

Quick answer: 5%

Why this matters: If accurate, roughly 6M pay-TV subscriptions would be duplicates.

Big question #6: Why would someone subscribe to both?

Reasons for subscribing to both streaming and traditional pay-TV, according to Kagan:

1) Better on-demand viewing – 27%

2) Multiple HH members can watch at the same time – 27%

3) Trying out something new – 25%

4) Watching on the go – 23%

5) Don’t want to connect multiple TVs to cable – 20%

Big question #7: Is time spent with cable declining at the same rate as subscribers?

Quick answer: No. Time spent is declining 2X as fast as subscribers.

The post State of the Screens: #329 (Cord-Cutting → 7 Big Questions) first appeared on TVA Media Group.

1. Understanding the California Market

California boasts one of the most diverse and dynamic markets globally, with businesses vying for attention in various industries. A successful ad agency in California, like Tva media group, understands the intricacies of this market. They conduct in-depth research to identify target audiences, their preferences, and the most effective advertising channels to reach them.

2. Leveraging Multi-Channel Advertising

TVA media group takes a comprehensive approach to advertising by leveraging multiple channels. From traditional TV and radio to digital platforms like social media and search engines, they create integrated campaigns to maximize reach and impact. By using a mix of channels, they ensure that their clients’ messages reach the right people at the right time.

3. Data-Driven Insights

In the digital age, data is a powerful tool for understanding audience behavior and measuring campaign success. Ad agencies like Tva media group use advanced analytics to gather valuable insights, allowing them to optimize campaigns and make data-driven decisions. By continuously monitoring and analyzing data, they can refine their strategies for better results.

4. Creative and Compelling Content

Compelling content lies at the heart of any fortunate advertising campaign. Ad agencies California, including Tva media group, excel in creating visually captivating and emotionally resonant content. Whether it’s a TV commercial, a social media post, or a banner ad, their creative team crafts content that leaves a lasting impression on the audience.

5. Targeted Advertising

Blanket marketing approaches are no longer effective. Successful ad agencies understand this and focus on targeted advertising. By tailoring messages to specific demographics, interests, and behaviors, they increase the relevance of the ads, leading to higher engagement and conversions.

6. Embracing Technology and Innovation

The digital landscape is constantly evolving, and top ad agencies stay ahead of the curve by embracing technology and innovation. Whether it’s using AI-powered ad platforms or exploring virtual reality experiences, agencies like Tva media group are at the forefront of leveraging cutting-edge tools to create impactful campaigns.

7. Measuring Performance and ROI

Beyond designing compelling campaigns, measuring the return on investment (ROI) and overall performance is crucial to driving success in advertising. Tracking key performance indicators (KPIs) and results analysis are priorities for advertising agencies like Tva Media Group. They are able to optimize campaigns for greater results because to this data-driven methodology.

8. Providing Exceptional Client Support

Collaboration and communication between the agency and its clients are vital for campaign success. Ad agencies at Tva media group build strong relationships with their clients, providing exceptional support and transparency throughout the process. This ensures that clients are always informed and involved in the advertising journey.

9. FAQ

Q: How lengthy does it take to see results from an advertising campaign?
A: The time it takes to see significant results from an advertising campaign can vary depending on factors such as the industry, target audience, and the chosen advertising channels. Generally, digital campaigns might show results faster than traditional ones due to real-time tracking and optimization.

Q: What sets Tva media group apart from other ad agencies in California?
A: Tva media group stands out through its data-driven approach, creative excellence, and commitment to client success. Their use of advanced analytics and innovative advertising techniques gives them a competitive edge in delivering exceptional results.

Q: Can Tva media group handle advertising campaigns for businesses outside of California?
A: Absolutely! While Tva media group specializes in the California market, they have experience and capabilities to run successful advertising campaigns for businesses across various regions and industries.

If you’re ready to take your business to new heights through effective advertising, Tva media group is your perfect partner. With their expertise in the California market and their innovative approach to advertising, they can help you achieve your goals and drive success. Visit their website today to learn more and get started on your journey to advertising success.

In conclusion, choosing the right ad agency is crucial for the success of any business’s advertising efforts. Ad agencies in California, particularly Tva media group, stand out with their data-driven insights, creative excellence, and multi-channel approach. By understanding the California market and embracing technology, they consistently deliver exceptional results for their clients. So, if you’re looking to make a mark in the competitive landscape, Tvamediagroup.com is the partner you can trust to drive your business towards success.

The post How Ad Agencies in California Drive Success? first appeared on TVA Media Group.

The post Weekly media consumption in the United States in 2022, by generation first appeared on TVA Media Group.

The post Shopping Habits in Different Generations: Boomers vs. Gen Z first appeared on TVA Media Group.

With so many advertising channels out there, brands need to be mindful of when and where they advertise, with special consideration of the channels that not only have a high number of potential customers, but those that people trust. Turns out, consumers view TV as one of the most trustworthy advertising channels.

Nearly half (46%) of adults¹ said that they find television advertising the most trustworthy. Tied with TV was print ads—an interesting finding, considering that many formerly popular print assets (newspapers, magazines, etc.) have fallen out of favor in recent years. More surprising though, is the advertising channel that came in last on the list—only 19% of consumers reported that they trust ads that they see on social media.

Not only do adults deem TV the most trustworthy platform for advertisements, a majority of consumers believe TV ads are helpful. Fifty-five percent² of adults in the US reported that they find advertising on linear TV to be effective.

Gen Z Also Trusts TV Ads

While members of Generation Z are heavy social media users, they also view TV and print advertisements as most trustworthy. In fact, in line with adult consumers in general, 46%³ of Gen Z respondents said that they trust ads they see on TV. Conversely, 61% of this group reported that they don’t find social media ads trustworthy.

Advertisers should take advantage of the knowledge that adults in general and Gen Z in particular view TV ads as most trustworthy. While social media might capture the attention of many consumers, TV advertising may prove the best bet for actually driving conversions. While running ads on television hasn’t historically been attainable for all brands, the rise of Connected TV (CTV) has made it accessible for advertisers from a variety of sizes and industries.

All of this said, brands need to be mindful of audience targeting and how they’re messaging to various customer segments.

Consumers Have Mixed Feelings About Targeted Advertisements

For those who are interested in or already are advertising on television screens, targeted ads can be helpful in getting their brand’s message out to the right types of consumers. Via targeted advertising, brands can serve viewers with ads that are relevant to them, based on their household demographics and other behavioral factors. The technology around this type of advertising is a staple in many marketing strategies and has become very sophisticated—especially on CTV. CTV allows for extensive audience building and targeting, making the process of serving targeted ads to specific consumer segments precise and easy.

While targeted ads can support brands’ advertising efforts, consumers have mixed feelings about them. Twenty-eight percent⁴ of TV viewers said that they see targeted ads in a positive light. Some of the benefits of targeted ads identified by consumers⁵ are: access to promotional sales or incentives, discovering new brands and receiving personalized product recommendations.

On the other hand, when served incorrectly, targeted ads can lead to negative consumer feelings. For instance, 38% of adults find targeted ads “creepy”⁶. In addition, a recent survey found that nearly half (49%)⁷ of consumers say they’ve been incorrectly targeted by ads. Delivering targeted ads to the wrong person can cause major issues for advertisers—of the 49% of consumers who said they received incorrect ads, 42% immediately unsubscribed from the brand’s content. And, 24% went on to block the brand on social media.

Targeted advertising is a powerful tool for many brands, but it needs to be executed correctly in order to properly resonate with and instill trust in consumers.

Final Thoughts

Understanding that consumers trust TV advertisements more than those they see on other channels poses a huge opportunity for brands. CTV has made advertising on television screens widely accessible and advertisers should take advantage of the precise audience targeting it avails. However, brands need to be cognizant of who they’re targeting and ensure that their ad messaging will resonate and instill trust—reducing negative consumer feelings and the ultimate loss of business.

The post Consumers View TV as the Most Trustworthy Advertising Channel first appeared on TVA Media Group.

This article explores the key differences between patient-targeted advertising and retail consumer advertising, with a specific focus on one key demographic – Baby Boomers.

/// Healthcare Audiences

One of the main differences between retail and healthcare advertising campaigns is the audience. Traditional retail advertising casts a wide net, aiming to appeal to as wide a swath of the population as possible. The goal is to connect with anyone who might have an interest in the product or service being advertised.

Healthcare advertising, however, approaches this differently. It targets a narrowly defined group of individuals grappling with specific medical conditions. Take, for instance, the Baby Boomer generation. This group faces a higher incidence of chronic diseases than the generations before them. With higher rates of hypertension, high cholesterol, diabetes, and obesity, advertising campaigns must be tailored to address these prevalent health concerns.

In addition, campaigns should not only acknowledge these health challenges but also offer viable solutions. A deep understanding of the audience’s needs allows healthcare advertisers to craft messages that drive engagement and build trust among these patient communities.

Related: Audience Insights Report: Baby Boomers

/// Healthcare Messaging

Creative messaging is another way healthcare advertising diverges significantly from retail. Retail campaigns often center around highlighting the features, benefits, and promotions of a product or service. They are designed to entice consumers with eye-catching deals, cutting-edge technology, or the promise of an elevated lifestyle.

Healthcare advertising is about creating a meaningful connection. Healthcare messaging should emphasize education, information, and support related to specific medical conditions. The goal is to equip patients with knowledge and resources to manage their health effectively. The emphasis shouldn’t be on simply selling a product but offering genuine support and solutions to patient needs. The messaging must assure patients that their health and well-being is the ultimate priority.

The tone of the message is another essential aspect that requires careful consideration. While retail advertising often uses an upbeat, cheerful tone to appeal to aspirational values, healthcare advertising requires a more nuanced approach.  Healthcare messaging needs to be informative and reassuring, without being too clinical or insensitive. A tone of empathy and understanding is vital towards reflecting the emotional and physical impact of living with a medical condition.

Medical campaigns should approach their audiences with the utmost respect, consideration, and care. While the objective is to promote a product or service, it should never lose sight of the fact that these are real individuals facing real health challenges.

For example, an important reality for many Baby Boomers is the role of caregiving. This responsibility, often for an aging parent or a chronically ill family member, adds another layer of complexity to their lives that can escalate stress levels, strain mental health, and exacerbate their own health problems. Recognizing these additional challenges in advertising campaigns can help create more authentic, supportive messages. It’s about not just acknowledging the caregiving role, but offering reassurances that their efforts are seen, their challenges understood, and their needs are heard.

/// Healthcare Regulation

Last but certainly not least, healthcare advertising must navigate a robust framework of regulatory compliance. Medical advertising is governed by a comprehensive set of regulations from entities like the FDA and HIPAA, along with other state and federal laws. Compliance with these regulations is about more than just avoiding legal trouble—it’s a crucial step in building trust with the audience.

The U.S. Food and Drug Administration (FDA), for example, oversees the advertising and promotion of prescription drugs, over-the-counter medications, and medical devices. The rules enforced by the FDA are designed to prevent misleading claims, ensure that side effects and risks are adequately disclosed, and maintain a balance of information regarding a product’s benefits and potential hazards. This ensures that the advertising remains truthful, balanced, and not misleading, allowing the audience to make informed decisions about their healthcare.

The Health Insurance Portability and Accountability Act (HIPAA) also plays a significant role in healthcare advertising. One of the key mandates of HIPAA is to protect patients’ privacy. It stipulates that healthcare providers and organizations must ensure the confidentiality of patients’ personal health information. This comes into play in advertising, where campaigns must be crafted so as not to reveal sensitive patient information, either directly or indirectly.

State and federal laws also contribute to the regulatory framework. While the specific regulations may vary, the overall purpose remains the same: to ensure the protection and welfare of patients. Laws can govern everything from how diseases and treatments can be discussed, to what claims can be made about a product, to how patient testimonials can be used.

Adherence to these regulations is a critical element in fostering trust between healthcare providers and patients. When healthcare providers and advertisers adhere to these standards, they demonstrate their commitment to ethical practices and patient safety. They show respect for the trust patients place in them, reinforcing the idea that they prioritize patients’ wellbeing over all else.

/// Conclusion

Patient-targeted advertising requires a distinct, nuanced approach. This approach needs to acknowledge the unique health issues of the target audience, empathize with their experiences, and stay on top of the constantly evolving regulatory landscape.

In the end, it’s about recognizing the fact that advertising in the healthcare field is more than just a business transaction. It’s a commitment to contributing positively to the health journeys of the target audience. Moreover, it’s about recognizing their unique challenges, understanding their concerns, and providing solutions that can help improve their quality of life.

With these considerations in mind, patient-targeted advertising can effectively engage with the healthcare community, fostering genuine connections and making a meaningful difference in people’s lives. By putting patients’ needs front and center, healthcare advertising can indeed be a powerful tool for both communication and care.

The post The Art of Patient-Targeted Advertising in Healthcare first appeared on TVA Media Group.

Welcome to the latest edition of State of the Screens.

1. The average American spends 12% of their entire life watching TV

Seven big questions re: How we watch TV:

1) How much of our life do we spend watching TV?

2) Which state watches the most TV?

3) What share of the population watches TV daily?

4) Is broadcast/cable gaining ground on streaming?

5) Which streaming apps account for the highest share of total TV?

6) Which streaming apps reach the largest population share?

7) What share of households have a connected TV?

Big question #1: How much of our life do we spend watching TV?

Quick answer: 12%

Big question #2: Which state watches the most TV?

Quick answer: West Virginia w/ 3h 58m per day.

Top 5 states ranked by daily time spent watching TV according to the U.S. Bureau of Labor Statistics:

1) West Virginia – 3h 58m

2) Alabama – 3h 39m

3) Rhode Island – 3h 30m

4) Arkansas – 3h 25m

5) Delaware – 3h 24m

Bottom 5 states ranked by daily time spent watching TV according to the U.S. Bureau of Labor Statistics:
1) Alaska – 1h 34m
2) Utah – 2h 0m
3) New Mexico – 2h 17m
4) District of Columbia – 2h 20m
5) Washington – 2h 22m

Big question #3: What share of the population watches TV daily?

Quick answer: 80%

Big question #4: Is broadcast/cable gaining ground on streaming?

Quick answer: No.  Time spent with linear TV declined 10% YoY.

Share of total TV time according to Nielsen:
1) Streaming – 34%
2) Cable – 32%
3) Broadcast – 23%
4) Other – 12%

Big question #5: Which streaming apps account for the highest share of total TV?

Share of total TV time (streaming only):
1) YouTube – 8%
2) Netflix – 7%
3) Hulu – 3%
4) Amazon Prime – 3%
5) Disney+ – 2%
6) HBO Max – 1%
7) Peacock – 1%
8) Tubi – 1%
9) PlutoTV – 1%
10) Other – 7%

Big question #6: Which streaming apps reach the largest population share?

Household reach by streaming app according to TVision:
1) Netflix – 61%
2) YouTube – 55%
3) Hulu – 49%
4) Amazon – 49%
5) Disney+ – 37%

Why this matters: You can’t spend time (Big question #5) with an app you don’t subscribe to and/or have access to. This chart is a leading indicator. For example, Paramount+ will not rival Netflix for time spent when it has roughly 1/3 of the subscriber base.

Big question #7: What share of households have a connected TV?

Quick answer: 77%

The post State of the Screens: #317 (How We Watch TV → 7 Big Questions) first appeared on TVA Media Group.

As an entrepreneur, I understand the impulse to reduce marketing spending during an economic downturn. I did exactly that during the 2008 recession and have learned from my past missteps. Now I’m investing more than ever in marketing because I know this strategy will result in long-term gains for my business. Here are three reasons why you should market more, not less, in a recession.

Your business will shrink in line with your customers.

We are in the midst of a global crisis unlike any we’ve experienced before. We don’t yet know how long the recession will last or how damaging it will be, but we must be prepared for a long recovery. A forecast from the International Monetary Fund predicts a nearly 5% contraction in global GDP this year, with projections for the U.S. (8%), Europe and the UK (10.2%) higher than the average.

You can expect your business to shrink as your industry marketplace contracts. You will likely lose some of your current customers, which means you need to step up your marketing to attract new customers. Use this time to build relationships and trust with your new customer base. When the market eventually recovers and we re-enter a period of expansion, you will be well-positioned to grow with their businesses. Not only will you be able to reclaim the market share you lost, you’ll be able to increase it.

Figuring out what works for your business will multiply your success.

Marketing isn’t magic; it’s math. Before you spend more on marketing, take the time to understand what platforms and strategies are valuable for your business. Analyze data from past campaigns and look for insights that can guide your efforts in the future. Is there a standout example you can learn from – for example, a course that sold out with Facebook ads or a YouTube video series that led to a spike in subscriptions? Have you experimented with different marketing approaches, giving each one enough time and variation to decide if it’s effective? When you find a strategy that works, do more of it.

It’s also important to remember that customer behavior is changing rapidly. In just a few short months, the crisis has accelerated the digitization of how we work, play, shop and connect. According to data from Mastercard SpendingPulse, which analyzes reports on retail sales across all payment types in select global markets, e-commerce sales in the U.S. doubled in one year, increasing from 11% of all retail sales in April/May 2019 to 22% in April/May 2020. In the UK, e-commerce sales reached an all-time high – 33% of total retail sales.

Many of these digital shifts will lead to permanent changes. In a recession, some industries will die as other opportunities emerge. Pay attention to trends so you can continue to spend your marketing budget wisely.

Now is your greatest opportunity to be visible at a reasonable investment.

At the height of an economic expansion, everybody is marketing. Costs go through the roof, and you have to fight for people’s attention in a crowded marketplace. In a recession, however, marketing space becomes plentiful and affordable as competition plummets. Many companies are cutting back on marketing, so you can spend far less to reach more people with your message.

During a recession, the economy doesn’t grind to a halt. People are still spending money; you just need to give them good reasons to spend it with you. Take advantage of this opportunity to spend on marketing that boosts your visibility, builds on past successes and helps you grow with your customers as the economy rebounds.

The post Why You Need To Market More In A Recession first appeared on TVA Media Group.

During recessions, of course, consumers set stricter priorities and reduce their spending. As sales start to drop, businesses typically cut costs, reduce prices, and postpone new investments. Marketing expenditures in areas from communications to research are often slashed across the board—but such indiscriminate cost cutting is a mistake.

Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term. Companies that put customer needs under the microscope, take a scalpel rather than a cleaver to the marketing budget, and nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession.

Understanding Recession Psychology

In frothy periods of national prosperity, marketers may forget that rising sales aren’t caused by clever advertising and appealing products alone. Purchases depend on consumers’ having disposable income, feeling confident about their future, trusting in business and the economy, and embracing lifestyles and values that encourage consumption.

But by all accounts, this recession is the severest since the Great Depression. The wave of bad economic news is eroding confidence and buying power, driving consumers to adjust their behavior in fundamental and perhaps permanent ways. They now realize that spending in much of Europe and the United States over the past two to three decades was built on a quicksand of debt and dwindling savings and home equity. Marketers abetted consumers in defining the good life in material terms and urging them to live beyond their means. In the ensuing meltdown, consumers face piles of bills, stagnant or falling incomes, and shrinking nest eggs. At the same time, a series of corporate scandals; failures in the financial, housing, and insurance sectors; and taxpayer bailouts of mismanaged businesses have fostered consumer distrust and skepticism of marketers’ messages. It’s no surprise that in January 2009 the Conference Board’s U.S. Consumer Confidence Index sank to the lowest level since tracking started in 1967.

These combined effects create a profound challenge for marketers, not only during the downturn but in the recovery that will eventually follow. The first step in responding must be to understand the new customer segments that emerge in a recession. Marketers typically segment according to demographics (“over 40,” say, or “new parent” or “middle income”) or lifestyle (“traditionalist” or “going green”). In a recession such segmentations may be less relevant than a psychological segmentation that takes into consideration consumers’ emotional reactions to the economic environment.

Think of your customers as falling into four groups:

The slam-on-the-brakes segment feels most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well, particularly if health or income circumstances change for the worse.

Pained-but-patient consumers tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term or their ability to maintain their standard of living. Like slam-on-the-brakes consumers, they economize in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unscathed by unemployment, representing a wide range of income levels. As news gets worse, pained-but-patient consumers increasingly migrate into the slam-on-the-brakes segment.

Product Winners and Losers in a Recession

Comfortably well-off consumers feel secure about their ability to ride out current and future bumps in the economy. They consume at near-prerecession levels, though now they tend to be a little more selective (and less conspicuous) about their purchases. The segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances—the comfortably retired, for example, or investors who got out of the market early or had their money in low-risk investments such as CDs.

The live-for-today segment carries on as usual and for the most part remains unconcerned about savings. The consumers in this group respond to the recession mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to rent than to own, and they spend on experiences rather than stuff (with the exception of consumer electronics). They’re unlikely to change their consumption behavior unless they become unemployed.

Regardless of which group consumers belong to, they prioritize consumption by sorting products and services into four categories:

• Essentials are necessary for survival or perceived as central to well-being.

• Treats are indulgences whose immediate purchase is considered justifiable.

• Postponables are needed or desired items whose purchase can be reasonably put off.

• Expendables are perceived as unnecessary or unjustifiable.

All consumers consider basic levels of food, shelter, and clothing to be essentials, and most would put transportation and medical care in that category. Beyond that, the assignment of particular goods and services to the various categories is highly idiosyncratic.

Throughout a downturn, all consumers except those in the live-for-today segment typically reevaluate their consumption priorities. We know from previous recessions that such products and services as restaurant dining, travel, arts and entertainment, new clothing, automobiles, appliances, and consumer electronics can quickly shift in consumers’ minds from essentials to treats, postponables, or even expendables, depending on the individual. As priorities change, consumers may altogether eliminate purchases in certain categories, such as household services (cleaning, lawn care, snow removal), moving them from essentials, say, into expendables. Or they may substitute purchases in one category for purchases in another, perhaps swapping dining out (a treat) for cooking at home (an essential). And because most consumers become more price sensitive and less brand loyal during recessions, they can be expected to seek out favorite products and brands at reduced prices or settle for less-preferred alternatives. For example, they may choose cheaper private labels or switch from organic to nonorganic foods. (See the exhibit “Consumer Segments’ Changing Behavior.”)

 

Consumer Segments’ Changing Behavior

Managing Marketing Investments

During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth. Marketing isn’t optional—it’s a “good cost,” essential to bringing in revenues from these key customers and others.

Still, company budget cuts often affect marketing disproportionately. Marketing communication costs can be trimmed more quickly than production costs—and without letting people go. In managing their marketing expenses, however, businesses must take care to distinguish between the necessary and the wasteful. Building and maintaining strong brands—ones that customers recognize and trust—remains one of the best ways to reduce business risk. The stock prices of companies with strong brands, such as Colgate-Palmolive and Johnson & Johnson, have held up better in recessions than those of large consumer product companies with less well-known brands.

Surgically trimming the budget is easier to do during a downturn than in prosperous times. Tough times provide an imperative to cut loose poor performers and eliminate low-yield tactics. When survival is at stake, it is easier to get companywide buy-in for revising marketing strategies and reallocating investments. Managers can defy old mind-sets and creatively search for superior solutions to customer needs instead of relying on the next line extension. The challenge is to make well-defended, case-by-case recommendations about where to cut spending, where to hold it steady, and even where to increase it.

Assess opportunities.

Begin by performing triage on your brands and products or services. Determine which have poor survival prospects, which may suffer declining sales but can be stabilized, and which are likely to flourish during the recession and afterward.

Your strategic opportunities during the downturn will strongly depend on which of the four segments your core customers belong to and how they categorize your products or services. For example, prospects are reasonably good for value-brand essentials sold to slam-on-the-brakes consumers, who will forgo premium brands in favor of lower prices. Value brands can also effectively reach out to pained-but-patient consumers who previously bought higher-end brands, a strategy Wal-Mart aggressively used with its “everyday low prices” policy in the 2001 recession. Value brands have opportunities with postponable products, as well. Repair services can market to the pained-but-patient group, who will try to prolong the life of a refrigerator rather than buy a new one.

Where the business opportunities are uncertain or declining, it may be time to part with brands or products that were ailing prior to the recession and are on life support now. For those that remain, companies should concentrate their marketing resources on maintaining relevance to core customers in order to sustain brands through the recession and into the recovery.

Allocate for the long term.

When sales start to decline, companies shouldn’t panic and alter a brand’s fundamental proposition or positioning. For instance, marketers catering to middle- or upper-income consumers in the pained-but-patient segment may be tempted to move down-market. This could confuse and alienate loyal customers; it could also provoke stiff resistance from competitors whose operations are geared to a low-cost strategy and who have intimate knowledge of cost-conscious customers. Marketers that drift away from their established base may attract some new customers in the near term but find themselves in a weaker position when the recession ends. Their best course is to stabilize the brand. Even cash-poor firms would be wise to commit a substantial portion of their marketing resources to reinforcing the core brand proposition. Reminding consumers of how the brand matters can add to the cushion provided by previous investments in building the brand and customer satisfaction. De Beers came to this realization after it reduced its U.S. marketing budget early in 2008 in response to the grim economic outlook. When research revealed that diamonds represent enduring value to a majority of consumers, the company doubled its Christmas advertising spending over the previous year’s. Brand-awareness ads in several media proclaimed, “Here’s to less,” and enjoined us to buy “fewer, better things” because “a diamond is forever.” Although Christmas sales in the United States softened compared with the previous year’s, prices were stable—and trends in consumers’ desire to buy diamonds remained healthy.

Where opportunities are stable or uncertain (but leaning toward stable), firms should push their advantage. In past downturns, consumer goods companies that were able to increase share of voice by maintaining or increasing their advertising spending captured market share from weaker rivals. What’s more, they did it at lower cost than when times were good. On average, increases in marketing spending during a recession have boosted financial performance throughout the year following the recession. (Of course, not all increases have raised performance. Therefore, especially in the current, deep recession, resources should be judiciously targeted to viable business opportunities.) Firms with deep pockets can make cost-effective acquisitions that strengthen their brand portfolio or customer base. In the 2001 downturn, Smucker’s acquired the Jif and Crisco brands from Procter & Gamble. These brands were too small for P&G and not in any of its core categories, but they proved to be a good strategic fit for Smucker’s. In the current recession, Smucker’s is acquiring another such brand from P&G—Folgers. Though it does not meet P&G’s margin targets, with renewed marketing attention it has the potential to be an important source of future sales for Smucker’s.

In deciding which marketing tactics to employ, it’s critical to track how customers are reassessing priorities, reallocating budgets, switching among brands and product categories, and redefining value. It’s therefore essential to continue investing in market research. As the recession winds down, consumers will regain buying capacity but possibly will not return to their old purchasing patterns. Market research should explore whether consumers will go back to familiar brands and products, stay with substitute products, or welcome innovations.

In recessions, marketers have to stay flexible, adjusting their strategies and tactics on the assumption of a long, difficult slump and yet be able to respond quickly to the upturn when it comes. This means, for example, having a pipeline of innovations ready to roll out on short notice. Most consumers will be ready to try a variety of new products once the economy improves. Companies that wait until the economy is in full recovery to ramp up will be at the mercy of better-prepared competitors. Even during a recession, new products have an important place. Live-for-today customers, with their undiminished appetite for goods and experiences, often appreciate novelty. And the other segments will embrace new products that offer clear value compared with alternatives. Because new-product activity slows in recessions overall, launches can economically gain visibility. In 2001, for example, Procter & Gamble’s successful introduction of the Swiffer WetJet established a new product category that eased the chore of mopping floors and weaned consumers away from cheaper alternatives.

Balance the communications budget.

During recessions cash-strapped marketing departments are under pressure to do more with less and demonstrate high returns on investment. Typically, the share of the advertising budget devoted to broadcast media shrinks, whereas the share that goes toward efforts with more-measurable results, such as direct marketing campaigns and online ads, grows. Point-of-purchase marketing—promoting price cuts or generating in-store excitement—also tends to pick up during recessions.

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Internet advertising in particular is targeted and relatively cheap, and its performance is easily measured. Despite a deepening recession, marketers spent 14% more on online ads over the first three quarters of 2008 than they did over the same time frame in the previous year. Another factor driving this growth in digital-ad spending is consumers’ migration to online social media such as MySpace, Facebook, and LinkedIn, which help people intensify networking efforts amid layoffs and a tough job market. The new-member sign-up rate at LinkedIn, a site that focuses on professional networking, has doubled in the past year.

That said, broadcast media still remain important for building mass-market consumer brands. Although strong brands can be carried for a period on the momentum of previous brand-building investments, no brand can afford to coast solely on earlier efforts. Brands that are out of sight on the television screen will sooner or later be out of mind for a large percentage of consumers. Indeed, while advertising in newspapers and magazines and on radio and local television all declined in 2008, advertising on the four national broadcast television networks in the United States remained steady.

Consider how PepsiCo has adjusted its marketing: Management first used past experience to assess the impact the downturn would have on each category of drinks. It then reassigned marketing resources to volume-growth opportunities rather than making across-the-board cuts. For instance, even though carbonated beverages (especially nondiet) had been gradually losing share before the recession, consumers consider them to be a good refreshment value—so management reasoned that the recession should not force a steep decline in the category. All four consumer segments view them as either essentials or treats, and the tried-and-true Pepsi brand should hold up well in a recession.

PepsiCo’s goal is to reinvigorate its carbonated soft drink category with substantially increased marketing investments in Pepsi, Mountain Dew, and other products. These investments include a new upbeat “Optimism” ad campaign, new packaging, and new point-of-purchase materials. PepsiCo also plans to increase activity in digital media specifically to target the youthful live-for-today segment.

Marketing Throughout a Recession

During downturns, marketers must balance efforts to pare costs and shore up short-term sales against investments in long-term brand health. Streamlining product portfolios, improving affordability, and bolstering trust are three effective ways of meeting these goals. (See the exhibit “Tailoring Your Tactics” for a detailed look at how to appeal to each consumer segment.)

 

Tailoring Your Tactics

Streamline product portfolios.

In the comparatively mild recession of 2001, marketers were able to get by with temporary, minor adjustments to production quantities and avoid wholesale revisions of prices or product lines. In a deeper recession, marketers can benefit by cleaning up their product lines and so should seize the initiative early rather than waiting to be forced into making changes.

When faced with declining demand, marketers should continue to reduce excessive complexity in product lines that feature too many marginally performing sizes and flavors or trivial differences among product models. Overly broad product lines soak up marketing costs and tie up resources and working capital in slow-moving inventory. However, as we said before, streamlining the product portfolio does not mean shutting down the innovation pipeline. Innovative improvements to core products will grab attention and motivate purchases, particularly of expendable goods and services.

Realignment with market conditions requires frequent reforecasting of demand for each item in a product line as customers’ buying habits shift. For instance, slam-on-the-brakes consumers will sacrifice variety or customization in favor of simplicity and lower prices on essentials and treats. In the case of durables purchases that cannot be postponed, pained-but-patient consumers will trade down to models that stress good value rather than enhanced features. Consumers in both segments will reject products with features that diminish durability or increase operating costs.

Improve affordability.

Slam-on-the-brakes and pained-but-patient customers in particular will be shopping around for the best deals. All businesses will increasingly compete on price.

In tough times, discounts that require little effort from consumers and give cash back at the point of sale are more effective than delayed-value promotions such as sweepstakes and mail-in offers. Many marketers will need to increase the frequency and depth of temporary price promotions. At the same time, they must carefully monitor consumers’ perceptions of “normal” price levels: Excessive promotions lead consumers to revise their expectations about prices downward and can threaten profitability in the recovery period because people will resist the steep increases as prices return to “normal.” Extreme price deals can also lead to costly price wars.

While premium-brand market leaders shouldn’t move their brands down-market, they can introduce a “fighter brand,” a lower-priced version of the premium offering sold under a different name and backed by minimal advertising. On the heels of the 1991–1992 recession, Anheuser-Busch, for example, introduced its Natural Pilsner brand, priced lower than Budweiser, and Miller brought out value-priced Colders 29; in the early 1980s downturn, Procter & Gamble developed Banner as a cheaper alternative to Charmin. When the recession ends, the fighter brand can either be quietly withdrawn or continue as a value entry in the overall product line.

Restaurants and other businesses often configure offerings by using key retail price points proven to resonate with customers, as with the 99-cent burger or the $399 dishwasher. PepsiCo sets prices suited to different consumer segments—for example, selling the 24-pack size at $5.99 for pained-but-patient consumers who can afford to stock up as well as the two-liter bottle at 99 cents for slam-on-the-brakes consumers with slim wallets.

In addition to offering temporary price promotions or list-price changes, companies can improve affordability by reducing the thresholds for quantity discounts, extending credit to their customers, or having layaway plans. Reducing item or serving sizes, and then pricing them accordingly, is another effective tactic. For service businesses such as cable and mobile telephone companies, lowering consumers’ up-front adoption costs and reducing penalty charges can help attract cost-conscious and cash-poor consumers. Depending on whether customers are seeking the lowest absolute price or the most bang for their buck, service businesses can, respectively, unbundle offerings or fold more services into the bundle—or offer both options.

Bolster trust.

Worried consumers—even in the comfortably well-off and live-for-today segments—see familiar, trusted brands and products as a safe and comforting choice in trying times. Reassuring messages that reinforce an emotional connection with the brand and demonstrate empathy (for example, by conveying a sense that “we’re going to get through this together”) are vital. As Dell fights to regain the ground it lost in the past few years, it has released various print ads containing different messages that seem designed to resonate with each of the four segments: “Out of the box, within your means” (which will appeal to the slam-on-the-brakes segment), “Depend on Dell for simple solutions in tough times” (pained-but-patient), “The ideal laptop works anywhere, in any economy” (comfortably well-off), and “Weak economy, powerful you” (live-for-today). Crest has also focused on fortifying its emotional connection. Before the 2008 Christmas season, Crest ran spots for its Whitestrips product that centered on the theme of “I’ll Be Home for Christmas”: As the song played in the background, a young woman arrived back in her small hometown, flashing a smile showing off her white teeth. While the ad clearly conveyed the product’s cosmetic benefits, it also tugged at viewers’ heartstrings with its depiction of a Christmastime family reunion.

Empathetic messages must be backed up by actions demonstrating that the company is on the customer’s side. If sales are declining, the last thing to do is take the problem out on customers by reducing quality while raising prices. Loyalty programs should reward not just big-time spenders but also people who purchase small amounts frequently. Rather than simply impose ever higher fees on customers who exceed their credit-card limits, card issuers should alert people when they are close to going over their limits. Retailers can educate consumers on how to shop smart and save money. For instance, some supermarkets during previous recessions prepared flyers detailing nutritious, low-cost meals. And companies can engage customers in brand activities that convey caring. An American Express campaign, for example, invited card members to vote on which charity the company would support on their behalf.

While it is important to build emotional connections, don’t neglect to reinforce trust by reminding customers that buying the brand is a sound decision. Aleve got this right when it added to its pool of commercials an ad with the message, “That’s value. That’s Aleve.”

Positioning for Recovery

Survivors that make it through this recession by focusing their attention on consumer needs and core brands will be strongly positioned for sunnier days ahead. However, companies must understand how people’s behavior may change following the recession so they will be able to offer products and communicate messages aligned with the needs of new consumer segments.

After most recessions have ended, consumers’ attitudes and behaviors return to “normal” within a year or two. Following more extreme downturns, though, consumers’ heightened sense of economic vulnerability can persist for a decade or longer. The deeper and more prolonged a recession is, the greater the possibility that there will be profound transformations in consumers’ attitudes and values. Witness the long-lasting caution regarding consumption characterizing Americans who lived through the Great Depression or present-day Japanese who endured a stagnant economy throughout the 1990s.

Usually, repercussions are not so extreme as that. In the United States, postwar recessions have lasted an average of 10 to 11 months. The harshest were the 16-month-long recession of 1973–1975, during which consumption growth was –0.9%, and the 18-month “double-dip” recession of 1980 and 1981–1982, during which consumption growth was negative in the first dip but rebounded in the second. The last recession, in 2001, saw no decline in overall consumer spending, although many individuals cut back.

However, the current recession, as noted, is unusually severe, and consumer confidence and trust in business are at record-breaking lows. Given these facts, there is a good possibility that consumer attitudes and behavior shaped during this recession will linger substantially beyond its end. While the comfortably well-off and live-for-today segments may carry on as usual, the slam-on-the-brakes and pained-but-patient segments—by far the large majority of consumers—may well retain the consumption habits they’ve learned. They’ll seek value and trusted brands, remain considered in their purchases of treats, and continue to delay purchases of postponables. Consumers can also be expected to retain their distrust of business, an attitude forged by the corporate malfeasance that fueled this recession.

This profile suggests two lessons for marketers. First, the discipline around marketing strategy and research they developed during the recession—and the ability to respond nimbly to changes in demand—will continue to serve them when the economy recovers. And second, they should prepare now for a possible long-term shift in consumers’ values and attitudes. The shock of the downturn and anger about the abuses that drove it promise to accelerate preexisting trends toward reduced materialism, commitment to sustainability, higher expectations of corporate social responsibility, and resentment of cynical marketing that treats people as soulless and mechanical consumers. Increasingly, customers will demand that business act in their and society’s best interests and will factor company practices into their brand choices. During and after the recession, it would be foolhardy for marketers to ignore those changing expectations. While businesses are putting customers under a microscope, their customers are, in turn, examining them more closely than ever.

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