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08/11/2011 Can Marketing Adapt to a Depressing Economy?

Income inequality is increasing in the U.S. Lower and middle class incomes have declined for the last 30 years, falling as much as 15% since 2007. At least that’s what I’m seeing more and more in the news these days. In the mean time, wealthy people continue to get wealthier. If people are even talking about this issue, it’s mostly in political discussions. However, this skewing could have major implications for the advertising industry.

The latter half of the 20th century was the golden age of advertising. We’re seeing proof of that in the wild success of the AMC show “Mad Men.” It was a time of growing economic equality and the burgeoning of an American middle class whose wages rose alongside its social ambitions. When you connect that with the growth of sophisticated communications, such as broadcast TV, marketers had a field day promoting all sorts of things. 

It was a time where you could create a commercial and, if it were successful, you’d create the real product to sell.

That world is disappearing faster than we imagine. For those of us in the marketing industry, we’re looking at a world where a very small group of people can afford almost anything, while a burgeoning group of people can barely afford the necessities. It raises a number of practical and even moral questions (don’t run away ad people, you can deal with it!).

The people in the poorer middle and bottom are going to be more and more price and deal driven. They’re not going to have the disposable incomes for luxury or high-end goods, and they’re going to have to buy fewer things, not more things. Recent reports show people fleeing from cable and satellite TV subscriptions, with providers losing almost 600,000 customers in the second quarter of 2011.

People at the top of the income heap do have money to spend but, from a marketing standpoint, they are fewer and fewer. Marketing to them will have to be more pinpointed and exclusionary.

Which raises a question for brands: If part of branding is to create desire and inspire people to aspire (think cars, fashion), is it right to market this way to people who have less and less money to spend? Or maybe we don’t really care (brands really don’t, they just want to sell).


For those non-luxury brands how do you justify marketing in the face of decreasing demand and return? People with less money will want deals, not brand.

This is where social marketing might bridge the gap. As long as people are online that is. Although if they can afford their Internet connection, smart consumers might band together to share Internet subscriptions with their neighbors through WiFi groups. 

People will look for free content and entertainment. They’ll look for targeted offers and deals. They’ll look for recommendations from other penny-pinchers. They’ll want group buying power to lower prices even further. They’ll want advice on how to feel and live well even as their incomes decrease. They’ll want ways to stay healthy, even if they can’t afford organic food and expensive gym memberships.

Social channels offer ways for brands to do this. It’s not as sexy as advertising. It assumes much longer buying cycle. But it might be the only way to build brand loyalty in an era of decreasing disposable income.

It will mean that we marketers will have to lower our sights as well, to less expensive, less flashy and more meaningful storytelling and communications. It will mean that we’ll have to get our hands dirty and help our clients understand the struggling middle and lower classes, instead of the jet setters we’d rather hang out with.

Or maybe nothing will change. Except that more of our clients will go out of business, which means fewer marketers and advertisers.

But the times are changing, for the worse. The question is whether we’re able to tap into those insights and use them in a positive way for people, businesses and marketing.


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