Lets face it, the last few years have been an absolute whirlwind for everybody across the UK and the world. We’ve battled our way through a horrendous pandemic, watched as our Government divided, the world came together to discuss climate change and a war ensued overseas.
The cost of living crisis is now the latest in a series of unfortunate, life-altering events we’ve faced in recent years.
And did I mention all the Google algorithm updates???
From a digital eCommerce perspective, marketers have had to ride the waves and be as reactive and flexible as possible, responding to the shifting behaviours and doing all we can to help the brands we support survive.
In the first ever webinar hosted by Boom Online Marketing and The Digital Maze, we discuss the current cost of living crisis and how it affects marketing, exploring whether now is the right time to shut down organic or paid advertising online. We also talk about how digital strategies can pivot in response to the cost of living crisis.
If you couldn’t make it to the webinar or want to refer back to something we discussed, here’s a summary…
2022 Spending: A Survey
Back in April, KPMG surveyed 3,000 consumers about their planned spending habits in 2022. The findings give a rough idea of where digital marketing may stand for the remainder of the year.
It paints a clear picture that consumers are worried about the impact the cost of living crisis is likely to have on how they spend their money. Many of the cutbacks planned include what some would describe as luxuries, with:
- 67% planning to cut back on buying clothing
- 51% planning to cut out takeaways
- 47% planning to go to the cinema and pay for other experiences less
- 34% investing in fewer beauty products or services
- 26% cancelling subscriptions like streaming services and gift boxes
- 39% not booking holidays, searching for lower prices or delaying their trips
There are also areas being cut back on that we would consider essential, with:
- 51% cutting back on food and drink shopping
- 31% spending less on transport
- 18% spending less on fitness
When survey respondents were asked if they were planning on buying less in general, one third agreed that they are. The majority of people who answered this way also stated that they were spending less because of the rising costs. Ultimately, they have less money to spare.
The survey also found that respondents who have some sort of a financial security blanket (savings) to fall back on, are still planning to make some big budget investments with:
- 38% using their savings to book a holiday
- 32% planning to invest in home improvements
- 22% putting some of their savings towards buying a car
- 21% will buy home appliances and electronics
- 19% plan to use their savings to buy a home,
- 1% stated ‘other’ when asked how they would be spending their savings
It’s worth noting that we haven’t seen the true impact of the cost of living crisis, but if these statistics are anything to go by, it paints a somewhat bleak picture and brands are definitely going to be feeling the pinch too.
With so much turbulence, should brands ‘turn off’ their marketing?
While we know it’s not as ‘simple’ as flipping a switch to turn your marketing on or off, we also know from the pandemic that during times of uncertainty, marketing budgets are usually the first thing to go.
But what we also saw during the pandemic was many brands scaling their organic marketing as more people were spending time (and shopping) online. Here are some other learnings you may want to consider if you’re thinking about pulling back on your marketing spend:
Businesses that continued to engage with loyal and potential customers throughout the pandemic saw a swifter recovery than those that didn’t – i.e the brands that ‘turned off’ their marketing.
If your business has an online presence as well as a brick and mortar store, your online visibility is vital when consumers aren’t spending money to ‘go out’ shopping.
Again, we saw this during the pandemic (although lockdowns kept even more people indoors) and are likely going to see it throughout the duration of the cost of living crisis as people try to spend less.
While it may be necessary to pull back on budgets while your business handles the current situation, it’s highly recommended that you maintain your online presence and stay connected with your customers.
How the Cost of Living Crisis Could Impact Your Marketing
As we’ve stated previously, no one can know without a doubt how things are going to go, or how it will truly affect consumers, but here are some educated assumptions:
- You might see less foot traffic into brick and mortar shops – As more people are spending time at home and online in a bid to save.
- You might see an increase in traffic to your website but no one is buying – This could be qualified traffic, but they aren’t in a position to invest just yet.
- You may see a sudden uptick in previously less popular items being sold on your site – These will likely be consumers moving towards investing in ‘need to haves’ rather than ‘nice to haves’.
So, how should brands respond to the cost of living crisis?
If digital marketers are good at anything, it’s pivoting strategies in response to data.
Here are some different ways you and your marketing team could go as you continue to monitor the impact the increased cost of living is having on consumers and your website:
Treat the Cost of Living Crisis as a Google Algorithm Update
Consider approaching the situation as you would an algorithm update. Rather than panic and make changes to strategy or budget straight away, gather information over a period of time and make decisions based on fact. This is something your marketing team should be a dab hand at!
Research Your Customers Again to See How You Can Help Them
Even if you’ve done tons of research on what makes your audience tick over the years, things will most definitely be shifting.
Now is a good time to research and reevaluate what is on your target audience’s mind, and how your product can help them or add additional value to their lives.
Pivot Your Targeting to Loyal Customers
With digital marketing, there’s always a balance to be struck between targeting new customers and maintaining loyalty and reinvestment from previous customers. With that said, it’s notoriously more difficult and expensive to find new shoppers and help them navigate the sales funnel to purchase from you.
While there is so much uncertainty, it may be worth focusing your attention on re-investors and loyal customers in the short term, until we know a little more about the full impact of the cost of living crisis.
Consider Cost-saving Strategies
While this isn’t necessarily the advice we would normally give, it’s better as a short-term solution than switching your online marketing off entirely for the duration of the crisis. Stretch your assets so they work harder for you.
Carry Out Competitor Research
How are your direct competitors responding to the increased cost of living? Are they taking the same approach that you were contemplating? You can compare your findings to what you know about your target audience.
For example, your competitors may be offering a 10% discount on all of their products, but if you know your audience are more interested in ordering in bulk as a way of saving, then you’ll be starting off on a stronger footing straight away.
Refresh Your Search Term Research
This is something your marketing team should be doing regularly anyway, as the way people search online is always shifting.
Your PPC team will likely be able to help here, as they will have reams of data showing precisely what people are typing into search engines. Google Search Console could also be an incredibly valuable (and free) tool.
Shift Your Focus
If you can categorise your products into what potential or loyal customers would see as ‘want to haves’ and ‘need to haves’, now might be the best time to put your marketing budget and efforts into optimising the ‘need to haves’.
Recentre Your Communications
It may be unavoidable that you need to increase the prices of your products. After all, businesses are navigating the rising costs, too. If this is the case, be open and honest with your shoppers, and ensure that you’re adding value to what you’re offering wherever you can.
Think About The Long Term
I recently wrote a piece that was published on Moz about purpose-driven marketing, and I’ll also be speaking at Drink Digital and Brighton SEO about putting together a corporate social responsibility strategy.
With more consumers looking for brands that hold the same values and principles as them, now is the time to consider incorporating these into your digital marketing strategies.
Consider Additional Ways You Can Help
Are there other short-term solutions you can offer to help consumers financially? Do you have any or all of these options on your website:
- Deals or a discount when products are purchased in bulk?
- A buy now, pay later scheme?
- A loyalty programme where customers are rewarded for shopping with you?
- The option for shoppers to pay using PayPal Credit or Monzo Flex, for example?
And if not, are any of these a feasible option?
The aim here is to understand how you can support consumers during this uncertain time.
Consumers remember brands that genuinely care about them.
While we may not yet know how the cost of living crisis is going to affect shoppers, sales and your brand to its full extent, it stands to reason that consumers will be spending more time at home and surfing the web.
Financial experts are expecting the situation to get worse before things get better. If we look at how consumers behaved during the pandemic, businesses need to continue communicating with their customers and help them navigate these uncertain times.
While you may need to be smarter with your digital marketing strategies, now is not the time to pull the plug entirely.
When it comes to reshaping plans and shifting approaches in response to situations out of our control, you won’t find better people for the job (in my opinion) than digital marketers. We’re here to help!
Apologies for such a bleak subject matter, but we hope you picked up some actionable takeaways and enjoyed the pictures of TDM pets that we added to hopefully soften the blow! If you’d like any additional advice on how to approach your digital marketing strategy during the cost of living crisis, our team is always on hand to help, just get in touch.