Ovative Outlook July 2023
The media landscape is ever-changing. Each month, Ovative reports on the latest marketing trends and how marketers can take action to unlock success.
As consumers return to their daily routines and travel spending tapers, we expect them to look for ways to refresh their private lives. From lower-priced apparel purchases to beauty, consumers will find joy in “little treats.” An indicator of this shift will be Amazon Prime Day which is going on now. We expect to see strong performance for apparel, beauty, and home décor verticals.
Keep reading for the latest marketing trends impacting brands today.
Trend: Consumer are feeling more optimistic about the economy.
- Survey data from the University of Michigan and The Conference Board suggests that contributing factors to this optimism may include the resolution of the debt crisis in early June, acknowledging slowing inflation, and strong labor figures. U.S. employers added 209,000 jobs in June, and unemployment rates stayed low at 3.6%. 1,2,3
Trend: Consumers are keeping tight budgets amidst high prices.
- While consumers are more confident in the larger economy, according to the Conference Board survey data, views of their personal finances have not changed. People are continuing to keep tight budgets and shop intentionally.3,4 We see evidence of this in Ovative retail clients’ conversion rates, which were down 39% YoY.5
- Consumers were pulling back in areas like apparel and home improvement last month, but splurging on experiences, particularly travel and restaurants. However, Conference Board data suggests consumers plan to vacation less in the next six months, which may signal that travel spending has peaked. We expect spending to increase in areas like apparel and home improvement for Amazon Prime Day, and travel spending to slow over the rest of the year. 2
Consumer Spending Analysis: Splurge Spending
Did consumers splurge like they said they would? We believe consumers are biased toward splurging on experiences, but as they return from travel and enjoy summer deals, they will shift their discretionary spending back to apparel and other retail.
Action: Tailor Marketing to Shifting Consumer Preferences
- Expect customers to shop less frequently and require more touchpoints to convert as they have been spending big on “experience” categories like travel and restaurants.
- Prepare to target customers returning from summer travel and going back to their routines. Messaging around summer / fall essentials may resonate, especially leading up to back-to-school.
Amazon Prime Day 2023
Trend: Consumers may splurge on lower-priced apparel and beauty items
- Despite a tough economic climate, we’re expecting the performance from Prime Day 2023, happening now, to be strong as customers seek out deals. 79% of American adults reported they intend to shop on Prime Day, which includes concurrent savings events by Walmart, Target, and Best Buy. 11
- As consumers keep their budgets tight, they are embracing “little treat culture,” a viral term with almost 33M views on TikTok, which means to make small, affordable splurge purchases for a temporary mood boost. As a result, apparel is expected to be a leading category during Prime Day 2023, with 61% of Prime Day customers reporting they will spend on clothing and 45% on shoes. 12,13,14
Lower-priced apparel will be the leading category for Prime Day 2023, happening now.
Trend: Advertisers will diversify investments as high Retail Media Network (RMN) competition is expected
With growing advertiser demand during Prime Day, leading retail media channels like sponsored search (i.e., Amazon search ads) are becoming more crowded, and therefore, more expensive. We expect to see greater investment in upper-funnel RMN channels like video and social, where advertisers can still leverage retailers’ audiences, while driving awareness for a lower price.
Action: Prime Day 2023 Marketing Tips
- Marketers should consider strategies and messaging aligned with spending on lower-price items, after Prime Day is over. If there is high inflation, consumers will shop intentionally, and “little treats” may be a key to unlocking retail conversions.
- Marketers should watch for spikes in video and social media advertising prices. Growing retail media demand may make these platforms more competitive.
Headlines We’re Watching:
Meta Launched Threads, Its New Text-Based Social Platform
Due to its seamless integration with Instagram, the app gained over 100M followers in a week, the fastest-growing app ever. But the fate of the app is unknown as it faces a lawsuit from its rival, Twitter. Learn more about Threads and how marketers should be thinking about using the app.15
ByteDance Launched TikTok Music
The new streaming app will allow users to sync their existing TikTok accounts, rivaling Spotify and Apple Music. While only launched in Brazil and Indonesia so far, TikTok could capitalize on its strong Gen Z user base and central role in music discovery. Read more about ByteDance’s social media “portfolio model” and their latest social app, Lemon8.16
The Supreme Court Rejected President Biden’s Student Loan Forgiveness Plan
The moratorium on student loan payments, which has been in place since 2020, will end in October, an event which could slow Holiday demand – particularly among Gen-Z consumers. 17
So, What’s Next?
At Ovative, we are keeping a pulse on what is happening in the marketplace so we can best keep our clients ahead of the curve. Ovative can help your brand understand what’s going on in the media landscape and, more importantly, how to take action to stay impactful with your spend. Connect with us to ensure your marketing is reaching its full potential!