There’s little doubt that America’s socio-economic profile is changing. The rich are getting richer and many of the middle class have been pushed out of their own ranks – leaving a “new”, smaller middle class in their place. And, according to industry experts, this smaller, more diverse, segment of the population is less willing to part with their hard-earned dollars.
Over the past decade, overall consumers cut 4.2 percent of their spending (judged in 2010 dollars). Those cuts weren’t the same for all levels of affluence in society. The upper 20 percent of earners reduced their spending by only 6 percent, whereas the bulk of middle-class families cut as much as 10 to 13 percent of their usual spending budgets, according to a recent article by AdvertisingAge Magazine.
It may be convenient to blame the recession, however, studies clearly show that there is more at play. Paychecks from what was the traditional middle-class haven’t been going up at same rate they used to – in fact, middle-class families, on average, have not increased their income since 1997, according to AdvertisingAge.
In addition to making less money and spending less, surveys show the composition of this new middle class is also quite different. Hispanics, for instance, now encompass 16.3 percent of the population and are expected to have a purchasing power of $1.5 trillion by 2015, according to The Shelby Report. The number of biracial Americans has doubled since the 2000 United States Census, and, by percentages, Asian Americans are the fastest-growing demographic in the U.S. today. When these factors are taken alongside changes in income it paints a picture of a very different type of middle class – and advertisers need to adjust their plans accordingly.
“In the early 1970s, the median family lived on one paycheck,” explains Harvard Law professor and 2012 senate candidate Elizabeth Warren in AdvertisingAge. “Today the family in the middle brings home two paychecks. The shift from one income to two has had seismic implications for families across America.”
It has seismic implications for marketers and advertisers, too. “We’re seeing a lot more paycheck-to-paycheck buying and so in those instances, you’re talking to consumers with limited dollars,” Rick Shea, a food-marketing consultant and former Kraft Foods marketer, told AdvertisingAge.
Marketing and advertising associates need to shift their promotional approach to a method that focuses on targeting very specific consumers. This approach, when performed successfully, helps marketers spend less on their advertising while still achieving the maximum results for a given campaign.
Semcasting can help marketers do just that. Using their patented predictive modeling and analytics, Semcasting can help businesses build professional demographic profile and look-alike model reports of their current customers, across multiple mediums. This enables marketers to actively target only the most highly qualified candidates who are likely to express interest in a particular product or service. The result is that companies spend less to receive more – mimicking the behavior of our new middle class.