From Hype to Hope

There was a lot of hype entering?the first half of 2023 generated by AI, falling inflation, and the rate pause from the Fed among many other macro improvements. All these expectations have come true, yet here we are starting the second half of 2023 with a much more dour sentiment. All the talk about a decade similar to the roaring 20s is in the rear-view mirror. What changed? The SVB-moment happened and while real for some banks, it benefited the larger ones. This brings me to, nothing has changed from a marketing?perspective too. We've seen spending from the largest issuers drop 10% at best YoY, but the sentiment is lower by 50% IMO. This measure of 50% definitely has my bias, but discount it however you may, nobody is talking about the $5.5Bn from Amex or $4B in spend from Capital One instead the conversations are all about being responsible and efficient and effective.

The glass is still half-full, the same as it was at this time last year. The only difference is the majority perceive it as half-empty at this moment. The ground truth is, spending is as high as it was, travel is setting new highs each day, and credit card balances continue to rise; basically not much has changed other than sentiment. All the positive (hype) is now being "factored in" and the worries (hope) are taking center stage. This cycle shall turn too and the takeaway is, bear in mind nothing has changed so keep doing what you're doing as banks have been doing exceptionally well overall.

Capital One, Chase, and Citi are all neck-to-neck when it comes to the highest marketing spend in the channels we monitor on Comperemedia Omni. June DM data will determine the "winner" in a few weeks. And around the same time, we should also get details about the true winners from earnings.

I always look at things from a consumer perspective first, and nothing in our consumer data is suggesting things are coming to a screeching halt.

• Low-income households have higher employment than almost any time prior
• Inflation is declining and the lower-income HHs have seen significant wage increases (and these wages will not go down, so lower-income shall benefit and get more spending power as a result)
• Layoffs across the board have occurred among the higher earners and that "hit" tends to be absorbed a lot better
• Many fintechs struggled to get funding in the past 2 years, and the ones that remain are actually some of the best-of-breed; which are likely to see outsized returns

I am not suggesting it is the best of times, I'm just suggesting the wall of worry is very high and similar to what I covered in Green Shoots, at the heart of the SVB debacle, holds true even today.

Since I'm clearly playing economist for the day, let me share some real investment trends that we are seeing in our consumer research.

Amr Hamdi 's Investment Trends consumer research report is full of stats that seem logical when you pause to think through, but also highlight that our products today are not designed to optimize for these trends.

• Nearly half of Boomers leverage financial advisors for investing advice, while Gen Zers and Millennials are significantly more preferential to advise from friends/family, as well as social media
• Seasoned investors are most likely to hold traditional assets, while 46% of intermediate investors alone hold crypto
• Nearly 70% of consumers are more interested in low-risk investments due to the uncertain economic climate

And speaking of Gen Z, we continue to publish research on this demographic. I am amazed at how Millennials are almost being forgotten and every question I encounter is around Gen Z first. Let me go one step ahead and share that this report is not only about Gen Z but also covers Gen Alpha.

Marketing to Gen Z

Survey after survey confirms Gen Z is ripe for guidance. I've written a bit about it in Rewarding Financial Advice as well as Is the consumer's perception your reality?

The Gen Z adult is seeking help and guidance in order to succeed. They are open to any help they can get and given the lack of credible industry advice, we continue to see TikTok influencers capture their attention and in some cases dish out advice that may even be damaging in the long run. BofA's partnership with Khan Academy may have been a bit ahead of its time, but we need similar partnerships now with TikTok and Snap influencers.

As we wrap up the first half, Emily Pardo just published a report that recaps New Product Launches: Q2 2023

And lastly, two notable news mentions before I let you go for today:

• Jen-AI: I am always impressed when brands latch on to the hype around a trend and come up with their own clever variation. If you haven't seen Virgin Voyages blend in Gen AI, using Jen Lopez, it's really neat. You can create your own "personal invite" using their website. And you can view the ad that caught my attention here.

• Since it's Prime Day, an Amazon mention is mandatory, and the way Chris Frow positioned the DM piece really resonated with me.

Also, it's interesting to note that Amazon has sweetened the deal even more for Prime Day for folks using the Prime Visa card by offering 6% cash back. And, if you are willing to not tax Amazon's logistics by giving them the extra time to deliver your items, you get an additional 1% back.

As ever - Anuj