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Mark Penn

As the year comes to an end, it’s time for business leaders to take stock and realize the recession many of us feared this year did not hit. In fact, with consumers still spending healthily and sitting on lots of disposable income, now marks a bigger marketing opportunity than ever. In the December 2023 edition of Hitting the Mark – originally published in Barron’s – I share what leaders need to learn from the recession that never came.

As always, if you have questions or comments, please reach out to me.

Companies Cut Marketing as If a Recession Was Coming. It Didn’t.

Fears of a recession drove too many companies’ executive decisions this year. They hunkered down and cut marketing spending and maybe digital innovation, too. Then the news came that there was no recession—in fact consumers were spending on all sorts of consumables. Companies that bet on recession lost out.

The old, trusted brands faced little competition, since their nemeses pulled back. Consumers turned to familiar faces, and so the big companies pocketed market-share gains. Those chief financial officer-driven orders looked good on paper—in reality they cost businesses tremendously. Consumer timing outside of a recession is as impossible as stock market timing. Consumers often defy logic and expectations – and this year they were spending.

Pulling back wasn’t entirely irrational. This time last year just about everyone was scared of a looming recession. Reuters polled economists in Oct. 2022 and found 65% thought a recession would occur within the next year. In Dec. 2022, 80% of Americans thought the country was either already in a recession or would be in the following year, according to the Harvard CAPS/Harris poll.

But the recession never came. After steady growth all year the economy grew by 4.9% in the third quarter of 2023, driven primarily by consumers. Consumer spending increased 4% for the quarter and was responsible for 2.7 percentage points of the total GDP increase—signs of a strong economy.

Consumers Keep Spending…and Spending

Consumers turned out to have more money to spend than ever. Thanks to Covid-era stimulus bills and shutdowns, median net worth rose 37% from 2019 to 2022. Americans still have an estimated extra $1.7 trillion in savings. Even in the third quarter of 2023, disposable net income grew 3.8%, nearly triple what economists were forecasting. With the economy mostly returning to a post-pandemic normal, consumers are eager to spend on experiences.

Consumers went on a shopping spree this summer. Spending at movie theaters, restaurants, sporting events, and casinos all rose in August. Spending on international travel and airline transportation shot up in September. Overall last quarter, the consumer spending increase was spread almost evenly across goods and services.

It’s not just wealthy consumers who are opening their wallets. Retail sales have risen six months in a row. The holiday season is already off to a good start. Online spending for Black Friday was up 7.5% this year, according to Adobe. That’s right in line with a forecast of 7-9% for e-commerce holiday sales growth this year. Overall holiday season sales are estimated to rise 3-4%, less than the pandemic years, but that’s still a healthy increase.

The Challenger Imperative

So challenger companies that pulled back on spending wasted a whole year not getting their name out there and putting up a fight for new customers. Smaller brands suffer disproportionately when everyone cuts their marketing budgets. People will fall back on what they know rather than try new, unfamiliar things.

Companies need to recognize their mistake of pulling back in fear of the recession that wasn’t. The lesson for 2024 is to resist that fear again and think twice about cutting back on marketing and other engines of growth. Consumers are still sitting on lots of disposable income and the percentage of Americans who think the country will avoid a recession entirely has nearly doubled in the past twelve months. The Fed is holding rates steady and is hopefully done with its policy of economic blood-letting.

The established companies want the upstarts to keep doing nothing and giving away market share for free, but challengers must keep their foot on the gas pedal. They have even more ground to make up after this lost year. The recession never came, but the consequences were real and serious. Hopefully those trying to predict consumer trends will learn the lesson that many stock-market timers have learned—you pull back from advancing in the marketplace at your own peril.

Until next time,

Mark Penn

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By: Ray Day

CONTACT:

Ray Day
ray.day@stagwellglobal.com 

We wanted to share our latest consumer and business insights, based on research from Stagwell. Among the highlights of our weekly consumer sentiment tracking:

$1.2 MILLION WOULD BUY HAPPINESS FOR MOST

Americans are convinced their lives would improve if only they could climb a few rungs on the pay ladder, based on our survey with Empower.

• 59% of Americans believe money can buy happiness – even higher with 67% of Gen Z and 72% of Millennials.
• 71% agree that “having more money would solve most of my problems,” including those with salaries of $200,000 or more.
• Respondents think they need to earn roughly $284,000 each year to achieve happiness (versus the U.S. median household income of $74,000 annually).
• How much wealth would buy happiness? 59% overall say it’s $1.2 million – climbing to $1.7 million for Millennials.
• The majority of Americans define financial happiness as paying bills on time and in full (67%) and living debt-free (65%).
• For 42% of Americans, even $25,000 would boost their financial happiness for six months.

SHOPPERS SPLURGING THIS HOLIDAY SEASON – ON THEMSELVES

With holiday shopping in high gear, younger consumers say they’re willing to splurge, according to our Holiday Shopping Trends report.

• 81% of Gen Z and Millennial shoppers say they’re ready to spend this holiday season, despite 62% saying they’re not financially prepared.
• 44% of Gen Z and Millennials previously went into debt to pay for gifts, and 63% said they tend to be impulsive when holiday shopping.
• Two thirds say they see the holidays as an excuse to indulge in personal gifts and luxury items for themselves. In fact, 46% would rather spend more money on themselves than others.
• 57% of Gen Z and Millennials are allocating a significant portion of their budget to pet gifts, and 10% are willing to spend more than $100 on pets.

POINT-OF-SALE DONATION REQUESTS IRK SHOPPERS

While Americans strongly support charities, most don’t like being asked to donate to charities at the cash register/point of sale, based on research with NerdWallet.

• 67% do not like being asked to donate to charity at the cash register/point of sale.
• Gen Z (84%) is most likely to donate to charity at the register compared with 75% of Millennials, 67% of Gen X and 58% of Boomers.
• 25% say they give at the register because small donations don’t feel as costly.
• 33% who donate at the register say they would not donate to charity at all if they didn’t donate there.
• 13% say they donate to charity at the register because they feel guilty if they don’t, 10% say it’s easier than saying no, and 8% are embarrassed to say no.

COMING UP: ETHISPHERE AND STAGWELL DISCUSS RISK AND REPUTATION

Ethisphere and Stagwell will present new research and answer questions on “Seeing Around Corners: How Business Should Prepare for the Next 12 Months” during a Dec. 13 one-hour free webinar.

• The conversation will include fresh consumer and business data from The Harris Poll on when to speak out and when not to; the role of ESG and Purpose today; the key wedge issues driving the election cycle – and company narratives; and what it takes to build a strong reputation today.
• Register using this link.

ICYMI

In case you missed it, check out some of the thought-leadership and happenings around Stagwell making news:

• Even a joyous holiday season can cause stress for most Americans
• The Economy Is Up But the Middle Class Is Down: Big Take Podcast
• Employee Confidence in Senior Leadership, Culture, and Engagement Soars When Leaders Communicate Effectively About the Middle East Conflict, New Research Finds
• How to track communications ROI
• The Future of Reputation
• How AI Is Shaping the Newsroom of the Future
• The Fifth Industrial Revolution is Emerging. Here Are the Opportunities At Hand

Originally Released On

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Sarah Arvizo
pr@stagwellglobal.com

By

Mark Penn, Chairman and CEO, Stagwell

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hello@stagwellglobal.com

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In a move that will accelerate our product development capabilities in the Stagwell Marketing Cloud, we have entered a unique partnership with Google Cloud to develop generative AI marketing solutions for our clients. This collaboration will accelerate our ability to identify, build and scale AI products, getting market-shifting technology in the hands of our partners faster than ever. We are united with Google in our aim to democratize access to the value large language models and gen AI tools can bring to enterprise. We will begin development immediately on solutions spanning brand campaigns, data analytics and insights, and a proprietary Stagwell LLM purpose-built for our clients. Read more in this Digiday exclusive.

Bringing Research-as-a-Service and AI-Powered Influencer Management to Clients with SMC

We launched significant enhancements to SMC’s AI-driven marketing tools in Q3, beginning with the debut of Harris Quest, a suite of integrated AI-based marketing research products including self-service polling and other “instant information” SaaS solutions. AI is an enabler for more performative business intelligence, and through HarrisQuest, we’re arming modern leaders with on-demand “research-as-a-service,” helping them keep ahead of the breakneck pace of consumer opinion. Elsewhere in the Cloud, we bolstered PRophet, our AI tool for communicators, with new influencer discovery and campaign management capabilities, as well as machine-learning based news monitoring. With PRophet, we’re quickly building a viable competitor to the integrated comms tech suites in the market today.

Adding to AI Capabilities with Left Field Labs Acquisition

Stagwell’s network grew in Q3 with the acquisition of Left Field Labs, a digital agency with expertise in AI and cutting-edge consumer experiences. Left Field Labs has built a 15-year track record of developing digital experiences never imagined before for blue-chip clients across tech, telecoms and business services, including Google, Meta, Amazon, Uber and Cisco. The agency’s major projects include helping Verizon to define and commercialize its 5G services and game engine Unity to reimagine remote entertainment with EDM music. Left Field Labs will join the Constellation Network to develop a bench of solutions integrating AI, immersive experiences and enterprise transformation. Read more about the acquisition in Ad Age.

Leading on Out-of-Home with Goodstuff and Assembly’s OVO Energy Campaign 

Outside the realm of AI, our agencies are working with clients on unique technology integrations to major brand efforts. In the digital out of home space, our media firms Goodstuff and Assembly collaborated to help OVO Energy in the U.K. launch a series of digital billboards that only appear when the National Grid is running on renewable energy. So that the billboards update data in real time, Goodstuff and Assembly established a programmatic buying technology that auto-bids when the grid is greener. The project builds on OVO’s “Power Move” platform, which rewards customers for shifting energy use to off-peak times when the grid is powered by renewables. The high-tech campaign appeared across more than 2600 screens and garnered big attention across the U.K. marketing industry. Read more in Campaign UK. 

Winning Awards for Digital Transformation

Finally, our digital transformation network Code and Theory, which includes Kettle and Mediacurrent, is picking up recognition after recognition for its remarkable digital experiences. In the past quarter, Code and Theory won six coveted W3 awards, recognizing the best in digital experiences, content and creativity. The awards – 3 Gold and 3 Silver – reflect client work for YETI, Tipico, Departures and the Georgia Department of Agriculture. We’re especially proud of Code’s work for YETI, “Year in Preview,” which was a first-of-its-kind interactive experience that allowed users to personalize a calendar of over 135 events spanning hunting, surfing, rodeo and other active communities. In addition to its W3 wins, the work received recognition in Fast Company’s Innovation by Design awards this year.

By: Ray Day

CONTACT:

Ray Day
ray.day@stagwellglobal.com 

We wanted to share our latest consumer and business insights, based on research from Stagwell. Among the highlights of our weekly consumer sentiment tracking:

NIGHTMARES ABOUT THE BOSS?

As more hybrid and remote workers return to the office, the toxic boss of the Zoom screen is now appearing in real life, according to our Harris Poll research.

• 71% of workers have had a toxic boss at one point in their careers.
• 31% are currently working with one – dealing with such behaviors as unprofessionalism, credit-stealing and unreasonable expectations.
• 71% of workers say they have anxiety on weekends about returning to work on Monday.
• 53% say they have nightmares about their toxic boss.
• 41% have sought therapy because of a toxic boss.
• 68% of those with a toxic boss have heard the phrase “What I say is final because I am the boss.”
• 66% say they have heard “You’re lucky to have a job in today’s economy.”
• 66% of people with a toxic boss say they’re actively job-hunting – yet most (72%) have to stay in their job for financial reasons, and 65% cannot quit because they would lose their benefits.

SKILLS OVER DEGREES A GROWING TREND

Upskilling is now more important than a college degree for many workers, according to our Harris Poll survey with Bright Horizons.

• 65% say the days of needing a traditional college degree to get a good job are over.
• 77% believe other forms of education like certifications and online courses offer more “bang for your buck” than a traditional college degree.
• 77% of workers say they want to develop new skills or pursue additional education.
• 76% plan to continue building career skills in their free time.
• 48% would prefer to forego the typical education-to-career path, opting to enter the job market in a less advanced job and then receive an employer-sponsored education later.

DEI HIRING STILL A STRUGGLE

Some hiring managers are feeling pressure to meet DEI requirements and still struggling with hidden biases and too-small talent pools, according to our Harris Poll research with Express Employment Professionals.

• Hiring managers say they first prioritize people younger than 30 (70%) and those who identify as female (66%), followed by military veterans (59%) and people with disabilities (53%).
• Less than half prioritize hiring those who identify as LGBTQ+ (48%) and Black, Indigenous and People of Color (BIPOC) (44%).
• 56% of hiring managers say they feel pressured to place DEI hiring requirements above hiring the best candidate.

WHAT WE DON’T WANT FOR THANKSGIVING

Don’t waste your time making three of the most hated Thanksgiving side dishes, according to our Harris Poll survey with Instacart.

• 27% of Americans absolutely hate candied yams.
• 25% dislike green bean casserole.
• 24% dislike cranberry sauce.
• 21% dislike sweet potato casserole.
• What do we like? 44% want white-meat turkey (versus 20% dark meat), 68% prefer canned cranberry sauce to remain in the shape of the can (versus 27% who want it mashed up), and 39% believe adding marshmallows makes sweet-potato dishes taste better.

ICYMI

In case you missed it, check out some of the thought-leadership and happenings around Stagwell making news:

• Should employers take a stand on politics? Workers appear split.
• Why is support for Israel lower among Gen Z and millennials?
• Why Decision Makers Need a Real Conversation about AI
• Harris Poll survey: half of Americans will travel for at least one of the winter holidays. Expect crowds.
• Unwrapping This Year’s Holiday Retail Landscape
• The $5.5 billion loyalty program market is expected to hit $24 billion by 2028
• Sephora builds brand equity through genuine LGBTQ+ support

Originally Released On

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Sarah Arvizo
pr@stagwellglobal.com

Originally Released On

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CONTACT: 

Beth Sidhu

Beth.sidhu@stagwellglobal.com

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Smart Spending & Spirited Selling 

It’s not enough to promote holiday deals; brands and retailers must take a more inquisitive approach and understand consumer behaviors and the economy. According to Allison’s “2023 Holiday Retail Landscape,” consumers have set budget limitations this holiday season, with 49% planning to spend less than $1,000. However, retailers should still expect an uptake in sales compared to 2022. Read the report to discover why a “back to the basics” approach will serve brands best this year. 

Pumpkin Spice & Everything Nice 

Does Mariah Carey kick off the holiday season, or does it happen earlier, when Pumpkin Spice lattes hit the shelves? It’s tough to say, but one thing is for certain: the flavor has cornered the market and culture year after year. Stagwell Marketing Cloud leveraged proprietary data from its Harris Quest brand tracking platform to discover the public’s true feelings about the iconic fall flavor (hint:85% still love it), and how brands should look to the pumpkin spice phenomenon as a model for making a lasting impression among consumers. Read the report.

Staying on Trend & Standing Out 

It’s out with the old and in with the new. Traditional shopping perks are still effective, but evolving consumer preferences point to new purchasing incentives, according to research by The Harris Poll and Nogin. Consumers want their shopping experience personalized – email promos and brand recommendations – all tailored to their specific wants and needs. Learn more about what consumers are looking for before they hit “buy” here.

Transforming Marketing This Holiday Season

Social media has encapsulated consumer shopping habits, so it’s up to brands to come up with clever ways to stand out and stay on target. Assembly’s “Influencer Marketing: Holiday Trend Report” captures top trends and considerations for planning your approach to holiday campaigns. Explore different ways brands can leverage influencers and nail consumer messaging here.