It’s been a year of economic uncertainty with fears of recession and predictions of reduced holiday spend. But what’s the true state of marketing in today’s economy? Despite early concerns about soft holiday spending, consumer demand is on the rise—delivering the gift of more revenue opportunities to marketers heading into 2024.
Let’s take a look at the numbers.
To start, it seems initial Black Friday forecasts underestimated consumer demand. Online sales alone were record-breaking, with an increase of more than 7% from last year, and in-store traffic is estimated to have gone up anywhere from 2% to 5%, according to Forbes.
So, what drove this spike in sales? I believe it was marketers—reaching the right shoppers at the right time through targeted campaigns, driven by data collaboration. When companies combine the power of rich first-party data and third-party data from partners, they are able to create a full, complete picture of their customers. These insights lead to better personalization and customer engagement that would not be possible any other way.
As LiveRamp’s CFO, I understand the critical need when marketing in today’s economy to create data-driven advertising strategies. Here are a few trends to watch as you plan your ad spend, targeting strategies, and fresh campaigns for the New Year.
Consumer spending and finance trends
Trend #1: Uptick in consumer spending
Consumer spending grew more than 2% in September compared to where it was at the same time last year, and ticked up more than 3% in a six-month average.
The consensus has shown real spending growth (+2.7%) in 2023 and (+1.9%) in 2024 in Q4/Q4 terms. Consumer spending is a source of strength in the economy aheaod.
Trend #2: Low unemployment rate
Layoff rates remain low relative to the historical average, and the jobs-workers gap in the US continues to signal that there are still 2 to 3 million more jobs than unemployed workers seeking to fill them. We expect that workers will continue to benefit from a tight labor market and the unemployment rate will tick down to 3.7% at the end of 2023.
Trend #3: Growth in disposable income
Although disposable income growth slowed in September, it’s forecasted that continued job gains, positive real wage growth, and rising interest income will lead real income growth to accelerate, with expected 4% growth this year.
Trend #4: Financial progress
Aggregate household balance sheets remain strong, with the net worth-to-disposable personal income ratio remaining near an all-time high. We remain skeptical that the large amount of excess savings accumulated during the pandemic are still important for spending.
For example, the Federal Reserve’s Survey of Consumer Finances shows that the median bottom income quintile household only had $102 more in financial assets in 2022 than they did in 2019. The savings rate declined to 3.4% in September, but we forecast it will rise to 4% by the end of 2023 and 5% by the end of 2024.
What do current economic trends mean for marketers?
It might be hard to see past the holiday sales flurry right now, but don’t worry—there’s still time to capture more revenue heading into 2024.
Less inflation impact on spending than feared: More consumer dollars are up for grabs this holiday season, despite persisting inflationary pressure.
Sales are a high priority for shoppers: Despite higher intentions to spend, consumers see gift prices as more expensive this year, particularly among high-income consumers. As a result, 67% of respondents indicated that sales and discounts were more important to their holiday spending plans than last year. As we’ve seen last month, promotional events like the Black Friday shopping window remain more important to shoppers now than before the pandemic.
While companies braced themselves going into this holiday season, the results have been better than expected and offer a hopeful note for marketers in 2024.
The latest increase in consumer spending means more consumer dollars will be up for grabs next year and you’ll have a fresh start to reimagine campaign strategies with data collaboration. Now is the time to plan how your team will come out ahead with data—from a unified customer view to cross-screen measurement—when holiday campaigns are over and 2024 begins.
Learn how data collaboration can help you connect with even more customers in 5 Ways to Create Better Customer Experiences with Data Collaboration.
Ready to get started? Talk to a LiveRamp expert now.
Americas Retail: Holiday Survey 2023. Goldman Sachs Equity Research. November 2023.
Briggs, US Consumer Dashboard: November 2023: Thankful For a Strong Consumer. Goldman Sachs Economic Research. November 2023.