SAGE Advice: 2007 Holiday Spending Watch -- Ghost of Christmas Past

By: Leo Shapiro, Steve Yahn, and Erik Shapiro From an August perspective, it will be as hard for retailers and manufacturers to make their Christmas 2007 numbers as it was for them to make their numbers in Christmas 2006.

Only 18 percent of the national sample of consumers surveyed by Leo J. Shapiro and Associates in August 2007 and 2006 said they would spend more for Christmas this year than in the previous year ? these are the lowest proportions planning to spend more than in any previous August since 1983.

In August 2007 and 2006, about one in three (35 percent and 36 percent respectively) plan to spend the same and about four in ten (45 percent and 43 percent respectively) plan to spend less.

Given the bad rap newspapers are getting in terms of declining circulation numbers, newspapers may have to strive harder than their competitors to make their 2007 advertising sales numbers.

Advertisers will need to develop separate advertising strategies to reach and secure business from each of the three distinct segments of the Christmas market, which include: 1) the 18 percent planning to spend more this year than last; 2) the 35 percent planning to spend same this year as last; and 3) the 45 percent planning to spend less.

The 18 percent of the market planning to increase their spending over last year tend to be younger, more affluent, more highly educated and feel more financially secure and more optimistic than the general population. For instance, 45 percent expect their incomes to keep up with or stay ahead of rising prices, compared to 29 percent for the total population.

This segment is risk agreeable. They are looking for something and search advertising for what is truly new, unique, and better. They are open to buying luxuries and look for what to buy before looking for a way to buy for less.

The 35 percent of consumers who plan to spend the same this year as last are distinctly different from those planning to spend more. They tend to be older, with higher incomes, and living in smaller households with fewer children. They are more likely to feel affluent than those planning to spend less but ? given their age and approaching retirement - do not feel as affluent as those planning to spend more.

Consumers who plan to spend the same this year as last are careful buyers. They will look for practical products gussied up to look like luxuries ? special enough to serve as gifts ? that are not extravagances. And, of course, they are scanning ads for bargains.

Finally, do not neglect the 45 percent who plan to spend less this year than last. They are risk averse, but spend they will.

They tend to have less education than the other two segments and are almost as young as those who plan to spend more this year than last. They have the lowest average incomes of the three segments and are more likely to feel under financial pressure than those planning to spend more or those planning to spend the same.

They are looking for gifts that fit within their budget ? much like those who read the right column of the menu when eating out to find prices they can afford before they look at the dish that is offered.

The challenge is to organize the merchandise so that a consumer can find an assortment of possible gifts at each of a number of price points. For both the vendor and the retailer, the merchandising challenge is to figure ways to make extraordinary a product that is essentially ordinary at a very modest price increase, such as a sweater with a special feature that costs just a little more but has the virtue of being unique.

BOTTOM LINE

With the Christmas market so deeply divided, advertisers need, and will, welcome help in shaping their newspaper advertising to reach specific markets with targeted messages. Shoppers will otherwise turn to the Internet, which excels at reaching specific targeted persons.

Help in placing advertising with adjacencies to appropriate editorial content enhances the value of newspaper ad space and closes advertising sales.

As repeated and repeated before, the art of using print creatively to stir emotions is no longer widely available in conventional advertising agencies because they must allocate scarce creative talent to media that yield them the highest revenue. Newspaper advertisers need to be supported in their effort to create print advertising that stirs emotions.

The bottom line is that newspapers must go back to their roots and, as did the lithographers who pioneered advertising, give away creative talent to sell print.