Economists today are busy rehearsing their ABCs. Pick up a copy of the Wall Street Journal or Financial Times, and you might encounter plenty of analysis on a U-, V-, or W-shaped economic recovery. The letters form a convenient way to convey predictions on the speed, direction, and rockiness of economic trajectories that might lead us out of the current recession.
It helps that these letters are easy to overlay on top of stock market and GDP charts.
But before you think these letters only serve as didactic tools, or paint the economy in broad strokes too large to matter for everyday business, consider this: these models allow policymakers to plan for various outcomes and help address the problems businesses face today. The subsidies businesses receive, or which monetary or taxing policies are adopted by governments, largely depend on their perception of what an economic recovery would look like.
In recent months, one “letter shape” path has emerged as a grave area of concern for economists, partly because recent trends have already started to draw out its unusual form. A K-shaped recovery describes an economy where large asset holders, big businesses, and high-net-worth individuals have an opportunity to thrive, while small businesses and regular wage earners continue to bear the brunt of economic decline.
For marketers, this demands a call to action. As the disconnect between big businesses and customers grows, the potential for missing the mark through messaging increases. Here are three tips to keep your marketing efforts relevant, useful, and aligned with the interests of consumers.
For a simple demonstration of a K-shaped recovery, compare the all-time record-breaking highs of the S&P 500 with current unemployment figures. Or compare the decisions facing the global investment firm BlackRock — that recently announced a $156 billion “dry powder” fund ready to invest in depreciated assets such as shares, properties, and loans — versus those which will have to be made by the 70% of Americans with less than $1000 in savings.
With less discretionary income, consumers will need to stretch their dollar and make sure every purchase counts. It has never been more critical to demonstrate the value of products, and to consider rethinking the balance between aspirational and lifestyle advertising and more direct, value-first advertising.
The diverging paths of the K-shaped recovery are stark, and could continue to grow if left unchecked. But while the disconnect between the stock market and the everyday health of the economy might be startling, it’s not so hard to grasp considering how giants like Amazon and Uber are in an ideal scenario — amidst struggling brick-and-mortar retail and decreased use of public transportation — to thrive.
Brands should not be afraid to confront these hard realities, as they will soon take hold of the public conversation just as other social causes — including climate change and racial equity — came to the forefront during the pandemic. Brands should speak out on inequality with the same energy they have dedicated to other causes. They should see it as an opportunity to connect to consumers and create more authentic brands.
This can extend further when your brand uses its platform to educate consumers through content, and when corporate social responsibility demonstrates a genuine interest in helping a struggling workforce.
Influence Values for the Better
The deceptiveness of a K-shaped recovery is that, by definition, it can’t last long. With reductions in consumer buying power affecting all kinds of businesses in the long term, living in an unequal society is simply bad for business. When essential workers can’t afford housing close to the cities they serve, or when the average worker can’t afford discretionary spending on travel, restaurants, and entertainment, entire businesses, industries, and cities face collapse.
In this sense, we are all, actually, “in it together,” as too many commercials have reminded us. But this messaging is only good as long as people believe it. Fortunately for marketers, here lies the key to making a difference: changing what people believe in.
Advertising has long played a role in determining the values of American society, from shaping the definition of the nuclear family to defining our aspirations for products and lifestyles. Is it time to use advertising to redefine what success is – in finding purpose in our lives, our families, our communities? In finding common ground between brands and consumers to be united not just by a product or service, but by values? Yes, we’re here to sell, but we’re also here to make connections with consumers and do good business by doing good.
Many marketers took on the moral responsibility of helping promote the recommended social, health, and communications guidelines presented by the CDC and World Health Organization during the pandemic. In the future, they should continue taking on the moral responsibility of building a more equitable world by using their platform to pose these questions and provide actionable solutions. While a K-shaped recovery could widen the gap between businesses and their customers, there’s an opportunity for brands to bridge the chasm by focusing on what consumers need right now – value in product, but also shared values with brands and their communities.