Survey: Recession Impact Permanent

NEW YORK New research from Interpublic Group’s Initiative concludes that the recession is having a far greater impact on consumer spending habits than previous downturns, and that some behavior patterns, as well as brand perceptions, will be permanently changed.
Recessions usually drive short-term changes in consumer behavior, with people reverting to usual patterns once the good times return. But this time around, the Internet has changed the game. Consumers have turned more than ever to the Web to seek more information about brands — from how to stretch household budgets to product reviews-and they’re not turning back.

Also, according to the research, 75 percent of consumers have altered their purchasing behavior over the past year, in some cases trading down and in others making wholesale lifestyle changes.

“Brand loyalty has been badly shaken,” said Sue Moseley, Initiative’s worldwide director of research and futures, who oversaw the research and the resulting report, which the agency is releasing this week.

Internet usage was up among respondents in every country surveyed, with the largest increase being for searches for coupons and offers, up 58 percent overall versus a year ago. Big usage gains were also recorded for online researching for general information (up 49 percent), reading consumer content online (up 48 percent) and buying products online (up 48 percent).
“Consumers are spending more time researching products and gathering opinions from other people before purchasing,” the report states. “As a result, people are thinking more deeply about products, raising huge opportunities for brands to develop and strengthen their relationship with consumers.”

The research, based on a May survey of 3,200 consumers in the U.S., western Europe and China, showed a significant drop in trust in established marketing channels. Conversely, it showed a sharp rise in people’s trust of individuals, often complete strangers, commenting about their experiences with brands online.

The Initiative research also showed 43 percent of respondents now have far greater trust in online consumer content such as blogs, review sites and forums, while 48 percent said they trusted “expert opinion.” Word of mouth among family and friends has always been high, and remains so, with 76 percent of respondents saying they trusted the opinions of those closest to them.
Moseley said that, in the past, brands were often accepted on faith because they had been around for a long time. No longer. “Consumers are looking for something tangible, something real and they’re doing much more research online to find it,” she said.

The implications for marketers, per the research, is that companies can no longer rely just on the traditional marketing model of building trust through persuasive product claims. “There is a need for a new approach to communications founded on integrity, transparency and authenticity,” the report states.

The study concludes that for most consumers the Internet is now “a tool for life,” providing multiple offerings for entertainment, information, communication and shipping. Overall, it was viewed as the most essential technology platform by 75 percent of consumers.
Even in tough times, consumers are 40 percent more likely to maintain spending on the Internet compared with all other forms of technology and communications services. And only 11 percent of those cited in the Initiative research said the Internet would be the first or second thing to go if they were forced to cut spending in technology and communications.

The research was conducted through a series of proprietary online Connections Panels that Initiative maintains currently in 20 countries, comprising 20,000 individuals.