Recession Talk Is Dead, Why People Buy, and Do Consumers Remember Ads?

In a world full of constantly changing technology and information, this monthly newsletter keeps marketers up-to-date on the latest trends that will impact their business. I hope you enjoy it!

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Let's start this off with some good news. The?Federal Reserve ?says they are no longer predicting a rescission, and overall ad spending is up. In addition, a new?FTI ?consulting report predicts that US online retail sales will reach 1.14 trillion this year, up by 10% YoY. Finally, many of the largest platforms reported strong Q2 growth spurred by increased advertiser spending.?

• Alphabet's ?revenue rose 7% YoY, and Google specifically reported 3% growth from $58.14 billion in ad revenue, up from $56.29 billion last year. YouTube also saw an increase of $7.67 billion, up from $7.34 billion the year before.
• Meta ?revenues were 32 billion, up 11% YoY. The other interesting note is that daily active users were up 7% YoY. Two of the most significant factors in its growth were its AI and automation tools and specifically Advantage+, as well as the growth of Reels. Reels has become much more of a true TikTok competitor, with three-quarters of Meta's advertisers now using Reels.?
• Shopify ?reported 31% YoY sales growth showing some life from the DTC space.??
• Amazon's Q2 revenue rose 11%, with advertising up 22%YoY. Amazon says much of the increase in revenue can be attributed to faster delivery times. They say that increase in sales and advertising is directly correlated to their double down on 1-2 day shipping for most products.??

Despite some good news, consumers have yet to be convinced that we are in a stable economic spot, with 62% saying they are still more budget conscious than they were previously. However, they feel optimistic, with consumer optimism levels at their highest since 2021.?

So while consumers spend, they continue to do so cautiously, with many still seeking flexible payment options. Fintech companies specifically reported growth in the volume of?BNPL ?payments.?While some of the increase is because more merchants are integrating BNPL into their payment options, consumers also increasingly feel comfortable using BNPL, with the CEO of PayPal saying they see a 25% to 30% increase in first-time users of Buy Now, Pay Later.??

Regarding what is encouraging consumers to buy from brands, the three things at the top of the list are better prices, free delivery, and fast and convenient delivery.?So it's no wonder why Amazon has seen such stellar sales growth in Q2. They credit much of their success to infrastructure improvements leading to even faster delivery, and they aren't stopping. Both?Amazon ?and Walmart are doubling down on delivery speed. Amazon specifically will double the number of same-day delivery facilities as it tries to keep its lead on Walmart and other marketplaces. As the retail media race heats up, fast and convenient delivery is one of the things that sway where consumers buy second only to price. For Amazon and Walmart, this will undoubtedly be great news. They should expect to see their increased delivery speeds increase sales and advertising dollars spent on capturing consumer demand. However, for brands trying to convince consumers to still buy from their website, that may be a different story. Many brands have reintroduced shipping fees to refocus on cost savings. As marketplaces continue to focus on speedy and free delivery, you may see marketplaces make up an increasingly large amount of your total sales and spending - all the more reason to take an omnichannel approach to sales and marketing.??

A new study by?Provoke Insights ?showed that most people only remember up to a tenth of the ads they've seen in the past 24 hours.?Specifically, 41% of respondents said they remembered 1%–10% of the ads they'd seen in the past 24 hours. Another 20% said they remembered 11%–25% of ads, and 16% said they remembered 26%–50%. The issue is that we have created a system of monetizing content almost exclusively reliant on advertising to support it. It leads us to a place where there are so many ads (and bad ads) everywhere that it becomes increasingly hard to stand out. However, the report shows social media and TV have solid ad recalls. Three-quarters of those who watch TV weekly said they remembered at least half of the ads, and 77% of those who use social media weekly said the same. Also, users are most open to ads that provide entertainment value, with 58% of Americans saying they expect advertising to be entertaining. Creative in advertising has become increasingly important, and consumers are expecting more and more from brand ads. Despite some of the sad-looking numbers, consumers said that ads are helpful when shopping and help them choose what products to buy. Advertising is still moving the needle for many Americans as two-fifths recall ads while shopping and influence the products they choose. Look at your ad creatives and media mix in the year's second half. If your creative is an afterthought, you can't expect your media to do all the heavy lifting. Also, re-consider your media mix. Are you appropriately investing in the channels with higher ad recall? Especially as consumers start preparing for gifting, a higher brand recall will serve you well.?

In the B2B space,?Intuit ?has launched its B2B ad network targeting small businesses called SMB MediaLabs. SMB media labs can reach over 6 million QuickBooks online customers across the web, including digital media, audio, social platforms, and CTV. Overall there are a limited number of accurate and good data sources for targeting B2B, and Intuit is sitting on a ton of 1st party data that would allow them to target this highly sought-after group accurately. With the depreciation of the cookie, advertisers are increasingly looking for more first-party data sources, so Intuit's launch will likely be well received. Right now, it's a managed service that usually comes with higher minimums, but I'd expect this to eventually go self-service and allow more brands to test with more flexibility. Either way, if SMBs are your target, you should consider an investment here.??

Finally, Threads is getting new features, including sharing a Thread post to your Instagram DMs, adding custom alt text to photos, and a new mention button. So why does this matter? These and future new features will continue to keep users engaged with Threads long enough for them to roll out advertising.??

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Megan Conahan is an 18-year veteran of the digital marketing industry. Over the last 18 years, she's consulted with Fortune 1000 brands on negotiating the ever-changing digital marketplace demands and creating unique solutions to set them apart. Megan is an EVP at Direct Agents, an independent and minority-owned digital marketing agency.?