New survey data from enterprise customer data platform Treasure Data delves into the impact of rising costs to consumers, how inflation is changing spending habits, and what marketers are doing in response. The survey confirms businesses and consumers alike are being squeezed by tightening budgets, which are forcing them to reevaluate their priorities.
According to the survey findings, seven in ten (69 percent) marketers have already been forced to cut budgets due to rising business costs, and many are bracing for further reductions, particularly within larger businesses. On top of that, marketers admit they waste 38 percent of their budgets due to poor optimization of customer data, which is a significant loss of almost $6 million based on the average marketing budget over the past six months being over $15 million.
“The prospect of a looming recession has forced consumers to re-organize their lives and adjust their spending habits,” said Kazuki Ohta, co-founder and CEO at Treasure Data, in a news release. “Our new survey shows that companies do not fully appreciate the extent of this changing behavior, and as a result, there is a growing divide between customer needs and what brands are actually delivering. In addition, marketers across the world must realize that wasted ad spend is impacting the success of their campaigns, so focusing on improving media efficiency is paramount in light of shrinking marketing budgets.”
The survey dives deeper into the shifting prioritization for consumers when making purchases
When asked what are the most important factors for making everyday purchases, consumers indicated that the number one factor was price, followed by value for money, and then high quality. In addition, shoppers are re-categorizing some products they once considered essential as “nice-to-have” instead. The sectors most at risk are retail (29 percent), entertainment/media (25 percent), and travel/hospitality (22 percent).
Despite these concerns over the rising cost of living, one in ten (11 percent) consumers felt that marketing communications over the past six months have actually been less sensitive and appropriate to their personal financial situation.
In contrast, virtually all U.S. marketers (96 percent) believe that they have a good understanding of how increased cost-of-living challenges are impacting their customers. Going further, the survey found that 77 percent of brand marketers say that they have changed their marketing strategies as a result of the cost-of-living crisis. The challenge is that companies are simultaneously reducing marketing spend just as demand begins to flatten and it becomes more difficult to reach the ideal audience.
In addition, the survey found 81 percent of marketers feel they are under increased pressure to prove ROI, while a majority also have doubts that their current tech stack is up to the task. Over half (57 percent) don’t feel properly equipped to get the most out of the data they use for marketing.
Other results from the survey include:
- Despite nearly all marketers (98 percent) recognizing the importance of high quality customer data to marketing success, almost three quarters (74 percent) acknowledge the presence of organizational data blind spots hindering their marketing efforts.
- Over the past six months, poor quality data has resulted in inaccurate targeting (30 percent), lost customers (29 percent), lost leads (28 percent), wasted marketing spend (28 percent), and reduced productivity (27 percent).
- Proving both the prioritization and inefficiency of customer data collection, marketers spend, on average, 14.5 hours per week managing customer data collection, with one in five (18 percent) dedicating over 20 hours per week to the task.
“Against the backdrop of an economic downturn, marketers are beginning to realize that they need to aggressively adapt to evolving customer needs, which involves providing truly connected customer experiences, which is, according to our survey, key to both retaining customer loyalty and reducing spending waste,” added Ohta. “Organizations need to focus their efforts on eliminating organizational silos, better aggregation of their data sources, and empowering their teams so that they can more effectively leverage their data to personalize their messaging and better serve their customers.”
The survey findings are based on a national survey of 2,000 U.S. consumers and 500 U.S.-based senior marketers, conducted in September 2022.