With the U.S. inflation rate at 9.1% this summer, many Americans have been left asking where they can cut costs to make their dollar work harder. 84% of Americans plan to reduce spending due to higher prices: Consumers specifically intend on cutting back on dining out, impulse purchases, driving and subscriptions.
These economic changes directly impact the advertising and media landscape—in addition to the changes in purchasing habits, current economic conditions make it harder for marketers to locate and engage with potential consumers. Further, with a potential recession on the way, marketers may begin to question how to handle their advertising budget.
While it may seem at odds, according to marketing researchers and analysts, brands should stay active (and keep spending) to maintain their competitive advantage. As Anna Bager, CEO of the Outdoor Advertising Association of America (OAAA), wrote, “Marketers cannot afford to simply cut ad spending to the bone and lean on historic direct response channels.” This is the time for media companies to be true partners to their clients and offer counsel to navigate through uncertain times.
As brands look to retool their media mix in the face of inflation, here are several powerful ways out of home can solve some of today’s challenges.
Rising gas prices
Fuel prices have altered normal buying patterns, and there are signs that people are rethinking their driving.
While driving has gotten harder, mass transit has gotten easier. Innovations and additions like bikeshares, scooters and new connections to transit systems make it easier to travel by public transit.
This also presents new opportunities for advertisers to leverage unique sponsorships. People will rely more heavily on these types of cost-effective transit options to commute to work or around cities, and brands can easily and effectively reach them throughout their journeys.
Slowdown in streaming
According to a survey conducted by Momentive, 35% of Americans have canceled a monthly streaming subscription in the past six months due to inflation, and 36% of respondents will cancel a subscription if higher prices persist. This is making it increasingly harder to reach consumers in their homes.
One of the most compelling factors of OOH is audience holds—that is, audiences that rarely (pandemics aside) fluctuate with any significance. When you marry the tightening of the wallet to the desire to get off the couch and get outside, OOH provides an engaged and steadfast audience.
In fact, the OAAA and the Harris Poll found that 43% of U.S. adult consumers notice OOH ads more now than before the pandemic. In certain groups, that number is higher, such as 59% of millennials, 62% of people in cities with populations of over 1 million and 63% of Gen Zers.
Decrease in impulse purchases
Nearly all consumers (72%) are spending less due to recent inflation, significantly cutting out “fun” or “impulse buys,” according to the Q1 2022 Consumer Trends Report from Jungle Scout.
Brands cannot be passive and rely on consumers to just “go for it” on their own. OOH provides an opportunity to remind shoppers near the point of purchase, enforcing brand awareness and, of course, consumer spend. Further, OOH can help use context to remind consumers how a brand specifically solves the problems shoppers may be facing.
Despite inflation, consumer spending continues to rise higher than expected. To capture that share of spend, it’s not just about sustaining or increasing marketing budgets. Brands must be strategic about how and where they reach consumers. Out of home offers the opportunity to reach consumers in a space where their messaging will resonate.