Brand matters.
You’d think everyone would understand that by now, but it’s astonishing how many people don’t. In the desperate race for attention, clicks, or short-term dollars, years or even decades of brand-building can be undone overnight. See: Bud Light, Lance Armstrong.
More often, it happens very slowly, then all at once. The media landscape is littered with victims of brand atrophy, like Newsweek or Sports Illustrated. Cadillac comes to mind too. Companies that take shortcuts for profit or survival can fall from grace without anyone noticing until it’s too late.
Economic headwinds test the mettle of brand marketers like nothing else. As consumers look for ways to trim expenses, the pressure to respond with promotions and price cuts is stifling. It’s easy if your brand is “low cost,” like Walmart. For Target, conversely, it’s a delicate balancing act. People are drawn to Tarzhay for its aspirational, anti-Walmart appeal. Chasing cost-conscious consumers too hard – while potentially beneficial for next month’s sales – could have long-term implications. It takes courage to ride economic waves through the barrel. I’d bet on Target over the long haul.
In our ongoing deep dive into the beauty industry, I happened upon this chart:
For the first time since long before the pandemic, “price” has climbed clearly above “brand” as a prime motivator for beauty product buyers. It would be natural to overreact to something like that, if you’re trying to salvage a couple points of sales growth. Just remember, brand is still at least equally important to 60+% of buyers – and they may not forgive you for going cheap.
One of the biggest challenges for those of us who swear by the importance of brand is how difficult its impact is to measure. If I spend $1 on a promotional ad driving you to a page where you purchase something, the ROI is crystal clear. If I spend that same $1 on a brand campaign, proving the empirical value – however higher it might be – is damn-near impossible. CFOs love the former, which is why they’re not marketers. Investing in brand takes faith.
All of that’s to say we’ve been working hard in recent months to better understand: 1) The impact of advertising on brand equity and 2) The impact of brand equity on company success over time. If that kind of thing interests you, we’re hosting a webinar on #1 next Thursday. Don’t miss it.
Here’s what we’re seeing:
Consumer confidence improved again in the first half of June. It’s hard to explain, given the less-than-stellar May retail sales, continued stickiness of inflation, and an unemployment rate that reached 4% for the first time in over two years. Perhaps the optimism is merely a combination of summer vibes and steadily declining gas prices. In any event, our Economic Sentiment Index remains more than a full point below the same period last year and two points down from the start of the year.
Addressing retail theft is a double-edged sword for stores. In our 3 Things to Know this week, we gauged public sentiment around various steps retailers are taking to mitigate rising levels of thievery. The concept of store employees wearing body cameras is widely supported, while others – like receipt-checking and locked cases – are seen as a big inconvenience, especially among Gen Zs. Is it enough to make them shop even more from home? We’ll see. We also looked at consumers who planned to support black-owned businesses on Juneteenth and how grocery shoppers feel about more prominent nutritional labeling on prepackaged foods.
Speaking of companies who appreciate the power of brand, Apple – arguably the best brand in the world – is nailing their AI narrative. After unveiling their Apple Intelligence suite of AI-enabled features last week, the good folks in Cupertino are seeing a big jump in consumer enthusiasm for their products. It helps that Apple users were already more predisposed to be fans of generative AI. Upwards of a third of iOS-device owners are at least somewhat likely to upgrade to the next AI-infused device. Interestingly, the features appear to be more compelling for laptop users.
Adjustable rate mortgages could start putting even more financial burden on younger households. A surge of ARMs in 2022 are beginning to roost this year for many of the 14% of Americans who carry them. If they were betting rates would improve by now, they were sorely mistaken. Over half of ARM consumers expect a rate adjustment in the next 12 months – with 36% expecting it before the end of the year. Two-thirds of those with ARMs anticipate taking corrective measures to pay their bills, from cutting household expenses, to getting a side gig, to dipping into their investment accounts. Ten percent fear they will default. Yikes.
Next week’s presidential debate should be a banger for TV ratings…just not among undecided voters. Over 4-in-10 U.S. adults are fired up to watch two old men recite talking points on CNN next Thursday. Those with economic worries are most likely to tune in. The numbers are pretty much even among Rs and Ds – the majority of whom have already made up their minds. Less than a third of undecided voters (particularly younger ones) plan to watch the debate live, while a larger share will rely on social media clips and news coverage afterward. All that means is their perspective on the debate will be shaped by the people and outlets (see: tribes) who curate their news for them. That’s the nature of politics today.
More awesomeness from the InsightStore™:
- Tightened belts are causing people to start their holiday shopping even earlier this year;
- Botox and lip fillers keep climbing in popularity;
- Here are the best ways for brands to demonstrate authenticity during Pride Month, according to LGBTQ+ consumers;
- These brands will have the highest percentage of their customers watching the Olympics.
The most popular questions this week:
How often do you typically drink coffee?
Would you support or oppose an open-phone policy in a relationship?
Mayo on hot dogs: approve or disapprove?
Answer Key: Both; Huge fan; Every single day without fail; Generally oppose – but you have to check out the results; If it has bacon on it, yes.
Hoping you’re well.
JD
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