|Based on 507 Americans interviewed on Oct. 1-2.|
An internet poll of 507 consumers by WPP Group-owned Lightspeed Research for Advertising Age found that nearly 80% of respondents have changed their buying behavior in the past few weeks, hitting product categories at all price points. Some 70% of respondents said they're curtailing overall spending, which is sure to lead to bad news as the holidays approach. The survey also found no relief for the auto industry: Only one-tenth of respondents have purchased a car in the past three months or plan to purchase one in the next three.
The Lightspeed survey, which has a margin of error of 4.4%, found that changes in consumption were consistent across age groups and income levels. Only 45% of those surveyed expressed confidence about an economic rebound; those who earn less than $20,000 were more optimistic than those at higher income levels.
In a separate study, Omnicom Group-owned media agency OMD took a detailed look at how and where spending patterns would be altered. More than half -- 60% -- of respondents said they're more likely to take lunch to the office, and a whopping 80% are postponing vacations. Unsurprisingly, big-ticket items such as appliances, jewelry and cars will be less popular, but there is good news for purveyors of less-expensive luxuries or "feel-good products" such as beauty products and even snacks.
Back to basics
Even if the recession is characterized by more TV watching, there may be less use of certain popular forms of communications. Consumers who participated in the OMD study reported they're likely to send fewer text messages and use their phones to surf the internet less, because those services often have costs attached above and beyond a basic plan.
Together the studies offer a snapshot of an American consumer who's reacted sharply to a few weeks of economic doom and gloom in a way that will impact a vast swath of product categories. Whether or not the $700 billion taxpayer-funded Wall Street rescue package passed Friday by the House of Representatives will offer any solace remains to be seen. After all, Friday also brought grim employment data, with U.S. payrolls dropping nearly 160,000 workers -- the largest dip in five years.
There was something of a silver lining for marketers trying to figure out how to proceed during a time sure to be marked by a focus on savings. The OMD study tested consumer feelings about advertising and found that 81% said advertisers need to continue to communicate about their products during a recession, adding that they'll be more receptive to cost-savings messages and products that are positioned as investments.
The OMD study said marketing communications for low-involvement products, where there likely will be much brand switching, should focus on brand benefits. For pricier, higher-involvement products, marketers will have to show why consumers need the product, emphasizing technological improvements that make it a must-have.
Communications agencies keeping busy during crisisBanks aren't the only thing getting run on lately. The economic crisis has caused a near run on financial-communications agencies by companies looking for help in managing mergers or allaying customer fears.
According to Mergermarket, major financial-communications players have had a hand in every significant merger in the past two weeks including Bank of America and Merrill Lynch (Brunswick Group), JPMorgan Chase and Washington Mutual (Abernathy MacGregor Group and Sard Verbinnen & Co.) and the recent Wells Fargo and Wachovia deal (Abernathy again).
"We're on track to have a record year," said Jim MacGregor, vice chairman of Abernathy MacGregor. Of course, Mr. MacGregor doesn't attribute his company's success solely to the recent crisis; it also aided Yahoo in its talks with Microsoft. "All of these tend to become big-ticket items over time," he said.
The goal for Mr. MacGregor is to turn the "significant level of episodic new business" the crisis has generated into long-term clients. "Stuff like this has happened before," he said. "But what's rare is to have so much intensity in one sector in one really short period of time."
Jeffrey Taufield, senior partner at Kekst, said many of the company's business practices, including mergers and acquisitions, crisis communications, bankruptcy, financial disclosure, litigation support and investor relations, are very active right now. The firm was acquired by the Publicis Groupe back in July.
"Despite these unprecedented economic times, deals are getting done, and we are involved in many of the largest ones," he said. "We're working on a lot of transactions, and business is good." He would not confirm what deals the company has worked on, but an industry executive said Kekst has been working with AIG, Freddie Mac, Sallie Mae and Corsair.
Even so, the economic climate does present challenges, especially when you're working with a company going belly up. It was reported by the New York Post late last week that Kekst was owed $400,000 by the now-defunct Lehman Brothers, though Mr. Taufield declined to comment. "We do not comment on current or former client matters," he said.
As for Mr. MacGregor, he's certainly not complaining about all the new business. "It helps if you don't need 10 hours of sleep every night -- or eight," he said.
Newspapers see rise in ads from financial companiesCould the financial meltdown actually be good news for the newspaper industry?
Of course the near-daily collapse and sale of banks has made for hot copy in business papers such as The Wall Street Journal. But it also appears to have given them a bit of an ad boost as financial-services marketers snap up pages to assure consumers that despite recent events, they are still in business. In fact, a comparison of the Sept. 8 issue of the Journal -- before the papers were inundated with news about Freddie Mac, Fannie Mae, Lehman or AIG -- with the Oct. 2 issue showed a more than doubling of ads placed by financial-services companies, with 10 running in the former and 22 in the latter.
Michael Rooney, chief revenue officer for the Dow Jones consumer-media group, said the past few weeks have clearly been unpleasant for some of the paper's advertisers, but there are several who feel it's necessary to show themselves. "We have had some who have moved business and schedules back and postponed, while at the same we have managed to pick up business from other companies who have had an immediate story to tell," he said. "I'd prefer we weren't going through this [economic crisis] but it's the good with the bad."
Mr. Rooney would not disclose which companies have pulled or added ads. But the Oct. 2 issue of the Journal included ads from companies including T. Rowe Price, Fidelity (two ads), New York Life and Charles Schwab (a two-page spread).
Mr. Rooney said companies are not banging down the door to run ads but said he has seen an "uptick" in business and has heard similar stories from industry peers. He said he could not disclose any figures regarding an increase in ad revenue.
"We don't see a long-term trend in this, but in the last week we have seen an uptick in financial advertisers wanting to get their message out to readers ... reminding them that they can offer a sense of stability," said Brett Wilson, senior VP-advertising at USA Today. "Over the past five days, we have had six or seven pages of increase on top of regular advertising due to an increase in the amount of ads tailored ... towards the financial instability."
The New York Times and Financial Times were unable to respond by press time.
But Mr. Rooney, for one, anticipates a lot of activity this week as well, now that Congress has passed the bail-out bill. "I don't know how long it's going to last," he said. "But clearly it won't last forever."