Consumer spending is back. But so is the marketing clutter. As consumers shift from discovery mode to buying mode, marketers are at crossroads when it comes to converting sales, says Gartner’s Chelsea Gross. Here’s what marketers need to keep in mind as summer buying heats up.
Many data sources suggest consumers across income groups are spending more this summer, as travel and experiences rebound and the weather is more favorable. If the summer of 2020 represents the opportunity to stay at home, the summer of 2021 represents the opportunity to prove you are not at home. Alongside consumer demand, marketers are introducing an overwhelming number of new brands, products and services to sell. As consumer dollars catch up for lost time, ad dollars are caught in the middle of supply and demand.
Retail advertising strategy is renewing with a sense of urgency. Generally speaking, brands and retailers are moving from acquisition mode to retention mode. The unique pandemic conditions of 2020 enabled more discovery and ability for brands to enter amid new, digitally-first routines. As this has stabilized in 2021, each brand is faced with the challenge of retaining these new consumers and delivering on the previous year’s growth targets. As business improves, so do growth targets.
There are two ways this advertising environment could evolve. Perhaps the consumer will discover new products and adapt their routine accordingly as they engage with travel and experiences once again. It is equally possible that the volume of advertising will drive marketers into a world of diminishing returns. Faced with an overload of information and less time to evaluate products, consumers may reach decision paralysis and stay loyal to the brands and products they know and love the most. Consumer dollars can only go so far.
Despite this unruly advertising environment, there are a few breakout leaders. Consider Amazon, an extreme example of e-commerce trends and retail advertising. As reported in the recap of Prime Day 2021 results, Amazon notes the records set by the small- and medium-sized businesses, but chooses not to report the growth (or lack thereof) for its larger 1P partners. If you dig a bit deeper, Prime Day 2021 sets a new tone for retail advertising that impacts the rest of the year: more clutter, harder to convert.
Some category leaders successfully responded to consumer shifts. Many effective techniques from the 2020 business environment may be applied in this new setting. For example, as consumers shifted toward price-conscious food ordering, many restaurants reacted with value options such as family meals or bundles. Restaurants maximized this trend by pairing celebrity partners with value product offerings, such as McDonald’s Travis Scott meal and Dunkin’ Donut’s Charli D’Amelio drink. As reported in Gartner’s Restaurants 2020 Digital IQ Index, the share of analyzed restaurants promoting deals and discounts in display advertising jumped from 15% in 2019 to 47% in 2020. We can only imagine that the effectiveness of these ads will lead to a larger share of bundle-focused ads in 2021.
Avoiding the clutter and staying focused on the basics is the key. For example, digital advertising (which ruled 2020) is best suited in combination with other touchpoints, especially physical stores and fulfillment. The best examples of experiential retailing are the perfect mix of product, advertising and experience, such as The Shinola Hotel or the Nordstrom NYC Flagship.
Despite this unruly advertising environment, brands need to reinvest in the right distribution and platforms, and effectively target consumers now before the summer of 2021 becomes the holiday season of 2021.
Chelsea Gross is director analyst at Gartner.
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