What brands can learn about payday
Using new research, ZenithOptimedia’s Richard Shotton explains what brands can learn about consumer behaviour on payday.
“I’m a million different people from one day to the next” – Richard Ashcroft, lead singer of The Verve, in Bitter Sweet Symphony
The lyrics of The Verve aren’t necessarily the first place media planners look to for guidance. However, in Bitter Sweet Symphony Ashcroft touched on a human insight that has eluded most economists. Classical economists assume that our preferences are stable. Yet this isn’t the case.
A brand that appeals one day might not the next. Therefore, brands can boost their impact by picking the right context to communicate; whether that’s targeting by mood, editorial or time of day. However, there’s one context, currently not given enough attention, which should be added to this list: payday.
ZenithOptimedia surveyed 200 consumers about their payday behaviour. The biggest change was a noticeable uplift in spend in the week after being paid. A third of adults spent a little or a lot more. This uplift was most pronounced amongst 18-34s, with nearly half (47%) spending more.
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Other studies have found that low income groups are particularly likely to splurge after payday. Our other finding was around where people were most likely to spend their extra cash. The most popular categories were food, clothes, alcohol and DVDs.
We also cross-referenced these findings by asking another group of 217 consumers to record what items, across 17 categories, they had bought in the previous week. This spend data was then cut by distance from payday.
We found that for twelve of the categories people were more likely to have made a purchase in the week after payday than in the remaining weeks. Likelihood to purchase only declined in two categories after payday week. These two different approaches show that consumers claim to spend more after payday.
Of course, there are issues with claimed data. As David Ogilvy pithily stated: “Consumers don’t think how they feel, don’t say what they think and don’t do what they say.”
If Ogilvy were less of a gentleman he might have said consumers are prone to making stuff up. Luckily for us, Shapiro, from the University of Michigan, came up with an ingenious payday experiment that didn’t rely on claims.
He used data from Check, a smartphone app that tracks account balances, to monitor the spending patterns of 23,000 people across 300 days. This showed that on payday spend spikes on average by 70%. Even when bills are stripped out this rise still averaged over 40%.
There’s plenty that brands can do with these findings: primarily around phasing and messaging. In terms of messaging portfolio brands should consider rotation. They should advertise their premium products just after payday when customers are flush.
In contrast, value products, or indeed promotions, should be focused on the lead up to payday. Targeting these messages is straightforward as our survey showed that 64% of people were paid at the end of the month.
The second suggestion is that brands should upweight payday week as it’s easier to prise money from consumers. This argument is particularly strong in key categories, such as alcohol, clothes and food, or for brands targeting 18-34s. Who knows, it might even work for those trying to market Verve CDs.
Twitter: @rshotton