August 14, 2022 BY Jacey Edwards in Newsletter
Roomba vs. chorizo vs. Scooby Doo: NL #110
Advertising slow down could spell opportunity for some brands
With some mixed results in Q2 earnings and murmurs of a recession rumbling in the background, companies–from big tech, to publishing, to streaming services–are looking for easy ways to trim the fat.
Typically during uncertain economic times, one of the first areas to see major budget cuts is advertising. It makes sense. It’s easy to switch off the tap, (especially in digital spaces) and it feels natural to hibernate when times are tough. (Pushing ads in these moments feels a little like trying to send work emails on Christmas Eve. No one is working–so why are you?)
As it turns out, it isn’t always that simple. With years of hindsight since the Great Recession and loads of data to support it, the evidence is showing that in many cases, brands that invest in advertising during a recession actually come away as leaders of the pack. Without the noise of competitors clogging the airwaves, their singular voice is clearer, more relevant, and strategically positioned to meet consumers where they are in the cultural, emotional, and economic moment.
Coca-Cola is a great example. Instead of hunkering down or slashing marketing budgets during the height of the pandemic in 2021, the company strategically focused on, “. . . increasing consumer-facing marketing spend toward 2019 levels, improving quality of spend and allocating spend in a more targeted manner,” according to CFO John Murphy.
The results were kind of ridiculous. Coke saw a 42% jump in net revenues in Q2 of 2021. And it wasn’t just the presence of advertising that did it–it was strategically positioning Coca-Cola’s brand in the background of the present moment’s challenges. After all, Coke is the one that’ll be there through thick and thin. In other words, they empathized with their customers and chose to actively participate in the collective story. And it paid off big time.
Looking ahead, it’ll be interesting to see how brands continue to pivot in response to the ebb and flow of such an unpredictable economy. I do get some reassurance from Paramount CEO Bob Bakish’s outlook. He explains that although the digital-advertising market is flailing a bit, “these aren’t long-term issues.” Bakish went on to say that ad spending in tech and travel looked especially promising, and that in the coming months we should expect to see growth in other major sectors, even in these uncertain times.
For a guy that loves his work in digital ad spaces–recession or not–that’s some good news.
Amazon acquires i-Robot for $1.7 billion
Amazon just added another feather to its smart home cap with the purchase of i-Robot, the makers of the home vacuum phenom, Roomba.
The move falls in line with several other acquisitions and expansions of related smart home features by the company in recent years, including Ring doorbells, cameras, and security drones, Alexa-enabled speakers, and WiFi routers.
Advocates of consumer privacy were quick to sound the alarm. Concerns are mounting that home-mapping features used in products like Roomba would only add to Amazon’s growing arsenal of surveillance data–inevitably leading to more Big Brother-esque dynamics that have soured many consumers to the idea of jumping on the smart home bandwagon.
In addition to privacy concerns, some cite the fact that Amazon’s acquisition of an established market share (rather than a start up) would cut off competition and give it an outsized share of power over the industry.
While it’s safe to say that the homes of the future will probably look more like the Jetsons than the Flintstones, it’s worth asking how much dirty laundry we want robot Rosey (or Alexa) to have the liberty of sorting through.
Rent is ridiculous right now
To recession or not to recession? That is the question.
In a case of what I can only describe as economic whiplash, gas prices have skyrocketed (then steadily dropped), the consumer price index is 9% higher than last year, unemployment is the lowest it’s been in 50 years, and rent is crazy high. Make it make sense.
Even though we are seeing some aspects of our daily lives stabilize over the last month, rent increases remain in another category altogether. Median rent rates for Bank of America customers increased 7.4% year over year in July, going up the most (8.5%) for consumers with household incomes between $51,000-$100,000. Gen Zers saw a whopping 16% increase, while comparably, Boomers only took a 3% hit.
Right here in Dallas-Fort Worth, the median rent price soared by 19%, with the median rent on a one-bedroom costing upwards of $1500. Ooof. Other big cities are predictably in the same boat, including San Diego (up 23%), Austin (up 24%) and Miami (up 32%), and the squeeze doesn’t seem to be stopping anytime soon.
As for the third of Americans who rent, the pressures just keep mounting. According to a survey by the Census Bureau, 13.7 million Americans are behind on rent and mortgage payments and 4.6 million say they are “somewhat” or “very likely” to lose their homes over the next two months. Surreal. And heartbreaking.
Is there an end in sight? From what the experts are indicating, it’s hard to say when the tides will turn. But for the sake of millions of families, I sure hope we catch a break soon.
Best of the Week
Back-to-school is for everyone, not just the kids. Through the month of August, LinkedIn is sharing its 20 most popular courses for free so you can brush up on public speaking, project management, digital marketing, and yes, even Excel.
What to Watch
Since Ted Lasso season 3 is still taking its sweet mustachioed time, here’s what the Tegan team’s been streaming while we wait: The Bear, Blackbird, Keep Breathing, Alone, Tokyo Vice, Severance, The Summer I Turned Pretty, The Rehearsal, and (finally) Ozark… just to name a few.
Sites to see
Tito’s is thinking outside the box (err, can) on this one. Their landing page for the new “Tito’s in a can” campaign gently pokes fun at the spiked seltzer industry while highlighting the brand’s cheeky, brilliant, no-frills vibe.
School is officially in session. Here’s one to turn up while you’re stuck in the carpool line or on lunch-making duty. (Go ahead and throw in that extra pack of sour Gushers while you’re at it.)
More News from the Week.
- Warner Bros. Discovery cans Batgirl and Scoob! Holiday Haunt after already investing heavily in production costs to the shock and confusion of… well, everyone. (We’re calling it a Scooby Don’t, but that’s besides the point.)
- “I’ll take ‘Guilty’ for $45.2 million, Alex.” Well, Alex Jones, that is. The infamous host of InfoWars was slapped with a hefty payout in the first of a long line of Sandy Hook defamation cases. Jones is in a world of trouble for spreading damaging conspiracy theories claiming the devastating school shooting in 2012 was a hoax.
- Inflation might be the worst, but July’s job report indicates jobs have increased by 22 million since the onset of the pandemic in the spring of 2020. Unemployment also dropped to 3.5%, a 50-year low.
- No cell phones allowed at this new Fort Worth restaurant. At the cozy 40-seat Italian eatery, Catalina’s, customers are asked to deposit their cell phones in a locked bag until after dinner. The policy is meant to give guests a distraction-free experience and encourage better connections–two things we all need from time to time if you ask me.
- A French scientist admits the space telescope picture he shared was actually a slice of chorizo. Look, we all know charcuterie can be out of this world… but this cosmic faux pas is one for the books.