SAGE Advice: Selling Ad Space in a Heartbreaking Holiday Season

By: Leo J. Shapiro and Steve Yahn In a heartbreaking year -- Katrina, Rita, soaring gasoline and fuel oil prices, and rising concern over the Iraq war -- holiday gift giving this year in the United States is likely to be much more personal and heartwarming than in recent years.

In short, many holiday shoppers will feel like Jim and Della in the well-loved O. Henry story "The Gift of the Magi." They will make great sacrifices to get the perfect gifts for the ones they love most dearly.

Further, people are going to shop more carefully because of mounting financial worries.

This is a year in which newspaper advertising sales representatives can put special effort into helping their retail partners create more keenly targeted ad campaigns, even though a record 54% of consumers in our just-completed Leo J. Shapiro & Associates poll say they are resolved to spend less on Christmas this year -- and are also likely to be making fewer shopping trips to save on the high cost of gasoline.

The Shapiro national poll for October shows that a slim 15% of households expect to spend more for gifts this Christmas than at the same time last year. This represents the most wary October outlook towards Christmas spending the Shapiro poll has seen in decades. In comparison, last October, 20% of U.S. households polled said they were planning to spend more than the previous year, while 40% were planning to spend less.

Who are the consumers planning to spend less? The striking thing is that they come from all walks of life, every income group, and every educational level. In terms of media usage, those spending less for gifts are remarkably similar to the general population. In our September and October surveys, 23% read a national newspaper and 78% read a local newspaper in the past seven days. Of those planning to spend less this Christmas, 77% read a local paper and 23% read a national newspaper.

Consumers who are planning to spend less this Christmas basically feel more battered and pessimistic about the future.

Consumers polled in September and October who anticipate spending less this Christmas than last are also cutting back on consumables spending and are more likely to say that they:

• Have had their family income decrease in the past month (26% versus 18% of the total sample) and past year (27% versus 20%).

 

• Have not been able to save money in the past month (69% versus 58%).

 

• Are facing financial pressure because of Katrina (35% versus 26%).

 

• Are buying less gasoline because of increased gas prices (68% versus 59%).

 

• Find it harder to get by now than a year ago (70% versus 55%).

 

• Are in a worse financial situation now than a year ago (52% versus 38%).

Thus, consumers -- almost all of whom to one degree or another feel pummeled, pinched, and suddenly fearful of the future -- are not in a mood for aggressive, hard sell holiday newspaper advertising. Consumers have already been battered enough this year, so advertisers should treat them gently, adopting a highly personal tone in drawing them to their stores and guiding them as to what gifts to purchase.

The dominant spending pattern by consumers this Christmas season will not be shop-until-you-drop, but rather shopping-just-enough. Instead of the shotgun approach to gift buying in which many things are purchased with the hope that at least one is just right, consumers almost certainly will welcome advertising advice on how they can get exactly the right gift -- for they are the magi.

Therefore, it's likely that shoppers will value print advertising over broadcast ads because they will be in a frame of mind to carefully analyze what is offered as prospective gifts.

Two tried-and-true ways that retailers can advertise in this special, but cost-conscious gift-buying environment, suggest themselves.

First, a fine-quality specialty store can promote something lower in price but signifying a high-quality item in the same product line: such as a novel corkscrew rather than a set of crystal wine glasses from the same store.

Or retailers, guided by their newspaper counselors, can promote the very best in a less-expensive category; for example, the world's best chocolate rather than the world's finest chinaware.

Given the current "pound-wise"? mindset of consumers, so-called "lower-end" merchandisers should be particularly good prospects for newspaper ad staffs.

In fact, mass retailers, even at the low end, already are showing signs of being spooked by thoughts of having their inventory still in the stores on Christmas morning rather than under people's Christmas trees. Wal-Mart fired the first wary shot, discounting its non-Christmas goods to make way for holiday-season goods, a major strategic initiative soon followed by many mall retailers.

On another front, anticipated high residential heating costs in cold-weather parts of the country will almost certainly boost sales of -- and advertising for -- perennial holiday gift favorites such as sweaters, lined-slippers, and warm outerwear. A brisk winter will also encourage brisk sales in bed comforters, electric blankets, and perhaps even space heaters and other more practical stay-warm gifts.

THE BOTTOM LINE

In sum, the remainder of 2005 could be the most high-stakes holiday sales season in decades. Any spoils will go to the retailers and their newspaper ad reps that create wise advertising that clearly and convincingly conveys the importance of wise gift giving. After all, somebody had to sell that set of tortoise shell combs for Jim to give to Della, and some merchant had to sell that platinum fob chain for Della to give to Jim.

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As Christmas approaches, SAGE Advice will track the outlook for holiday-season consumer spending for both Editor & Publisher and at www.sagegrowth.com, which researches and analyzes a variety of business-related consumer-behavior and media trends.