Interesting Times

Jon Njos, VP/Media Director

Interesting times in 2009 for everyone, certainly, but not much has been said about it from the perspective of an advertising agency. One of the realities all marketing and advertising professionals live with is marketing and advertising budgets are usually the first or second line item to be cut, next to labor costs. The immediate, knee-jerk reaction by most businesses is to cut advertising expenditures for short-term savings. Stanton & Everybody had the good fortune of not losing any clients in 2009, but did experience ad budget cuts of up to 50% or 60%. We all had to experience a new reality based on decreased consumer spending, skyrocketing unemployment rate and overall financial panic nationwide.
Even though our clients’ spending decreased, they still spent advertising dollars. But as we progressed through 2009, we at the agency witnessed interesting consumer and client behavior. The task that lay before us was weighing consumer behavior against our clients’ offerings and the expectations our clients had about response.
During this recessionary period, companies and advertisers learned quickly that added-value and discounted prices became an expectation of consumers. The restaurant and fast-food industries were the first to grasp this notion and create increased value offerings as a way to gain market share. What we were seeing as a nation was that people were still spending money, but they had become more discriminating with their money and extended the length of their purchase cycle. This put a lot of pressure on businesses and has made advertising agencies like ours take a step back and consider new measures of success beyond sales.
A study by Paco Underhill from Envirosell, and author of “Why We Buy: The Science of Shopping,” and who has been studying consumer behavior at the retail level for 20 years, says that shoppers are spending 20% more time in the aisles making purchase decisions and the number of abandoned items from their shelf of origin to the checkout stand has increased significantly because of buyer’s remorse that overcomes them in that journey. (http://www.businessweek.com/magazine/content/09_06/b4118045670299.htm)
In the first quarter of 2009, our client Barrier Motors, went dark with advertising, but experienced the highest level of web site activity ever. That increased activity, however, did not result in higher sales…..at that time. It became evident that the auto industry as a whole had to act fast, consequently in the form of 0% interest and discounted prices. Consumers weren’t going to buy right now, but still wanted to know what to expect when they were ready.
For all of our clients, we’ve been able to track any type of advertising activity with a corresponding increase in web site traffic and quality return visits. But the gestation period from fact gathering to purchase is taking longer. With the proliferation of research and especially web site analytics data, advertisers have increasingly developed a direct-response attitude, wanting immediate results. But consumers aren’t cooperating because the sense of urgency to act has decreased. With a recession also comes the existence of a buyer’s market. We saw consumers of real estate consistently decide to wait for a lower price on a house, even though the market said they were at the bottom. Consumers became empowered and fully controlled the process.
At S&E, we also witnessed advertisers starting to exhibit that same behavior when it came to their advertising plans. Opting to wait rather than commit to spending advertising dollars early because the media offerings were plentiful and much less expensive than usual. Fast-forward to June 2010 and we are now seeing a turn back to the way things used to be. National business coming into the Seattle market has exploded since April 1st, putting a big stress on media inventory, thus increased costs. As the cost of entry rises, so does the sense of urgency. We are now seeing local activity follow that of national placement.
We learned during this time that we have to adjust short-term expectations, observe the behavior of our target audiences and develop new standards of success. This has made relationships with brands even more important.