Anyone who buys any of the mediots warped view of life, may be beyond help.
SAGE Advice: 'Stagflation' and the Ad Market
Our surveys show that more and Americans are worrying about 'stagflation' or think it's already here. Advertising to consumers unwilling to spend is a challenge that newspapers and other media must -- for the sake of their own self-interest -- help advertisers meet.
By Leo J. Shapiro, Steve Yahn, and Erik Shapiro
(August 26, 2006) -- More and more people worry about stagflation. Our Leo J. Shapiro and Associates national consumer survey in August finds that 45% of respondents say inflation is accelerating and 65% say the economy is getting worse. Almost four in ten respondents (37%) believe both that inflation is accelerating and the economy is getting worse.
The amount of stagflation worriers has increased eight points from 29% in July. Year-to-year, stagflation worriers jumped 14% points, from 23% last August.
Even if stagflation is not now reflected in economic statistics, a substantial segment of consumers feel as if they are experiencing stagflation and act accordingly. Producers of new housing feel the pinch and are changing their advertising tactics to move product to consumers reluctant to spend.
Advertising to consumers unwilling to spend is a challenge that newspapers and other media must – for the sake of their own self interest – help advertisers meet.
Advertisers and advertising media publishers, like investors in the stock market, cannot afford to debate the course of the economy. They must position themselves to survive and grow regardless of whether the landing for the economy is hard or soft.
Liz Ann Sonders, chief investment strategist of Charles Schwab & Co., says in her August report that there is a “whiff of stagflation in the air.”
Our longest period of stagflation ended in September 1971, lasted ten quarters, and resulted in a negative return from stocks.
Sonders notes that additional periods of stagflation ended in ’75, ’81 and ’82, with the most recent period of stagflation ending fifteen years ago, in June 1991. Stagflation ending in 1991 only lasted seven quarters during which the return on stock was positive.
Given the length of time that has elapsed since the last really severe period of stagflation, it is logical that age, not income or high educational achievement, distinguishes between those consumers who worry, and those who do not worry, about stagflation.
The average age of consumers who fear stagflation is 51 years – these are consumers who are old enough to have experienced stagflation in the 1970s. By contrast, only seven percent of consumers who are under 30 years old today voice a fear of stagflation.
The 37% who fear stagflation behave differently from those who do not. Should the percent who fear stagflation continue to increase, the population as a whole will act as if the entire economy is in stagflation.
Our indexes of consumer propensity to spend, based on survey data, are markedly lower in August for consumers who fear stagflation than for those who do not fear stagflation. Our index measuring active shopping – i.e., reading ads, checking prices, visiting dealers – for cars, housing and other major goods is 87 for those fearing stagflation versus 155 for those who do not. For those who fear only a worsening economy the index is 124, and for those who fear only accelerating inflation the index is 78.
Politicians will really need to worry about stagflation. The season for heavy political advertising is upon us, so one sector that might actually thrive in this short term are media selling to political advertisers. If it is true that “all politics is local,” than it must be true that an important medium for political advertising is the local newspaper.
BOTTOM LINE
It is not enough for newspapers to headline bad or good economic news without taking the time and trouble to convey to advertisers what that news means in terms of the appropriateness of messages sent to target audiences.
Consumers who are suffering through the misery of economic hard times--which appear to be settling in with the onset of stagflation--are made more miserable when they are confronted with tempting, seductive advertisements for things they cannot afford. These reminders of their inability to spend are advertising turnoffs.
Instead, newspapers must help their advertisers determine ways to put on a happy face for consumers. One tried-and-true way Is to develop promotional events that provide consumers with little bits of happiness--bites of chocolate like those that used to be served free in the early days of motion-picture theaters.