With U.S. inflation reaching 8.6% in May and stocks experiencing their biggest drawdown since June 2020, the economic uncertainty is inevitably affecting consumer confidence and shopping habits. According to a Forbes Advisor/OnePoll survey, 51% of U.S. consumers “are buying fewer non-essential groceries, and 39% are buying fewer groceries altogether.”

The current financial situation is impossible for advertisers to ignore; after all, as consumers tighten their belts, brands themselves will feel the pinch. But the way in which brands respond to economic uncertainty requires a delicate balancing act.

**Striking the right tone is important for remaining sensitive and responsible, and brands that get it right have the opportunity to foster long-term relationships with consumers. So, what are some of the key considerations for advertisers as the cost of living soars?**bold text

Take Meaningful Action

Research has shown that 82% of consumers make purchase decisions with purpose in mind, so it’s becoming increasingly important for brands to demonstrate clear values and take meaningful action to reflect them.

The recent announcement that all of Patagonia’s profits will be used to combat climate change is a strong example of the power brands have to enact positive change. While this may be an extreme case, there are plenty of other steps brands can take to remain sensitive during the current financial downturn.

A recent Opinium poll asked consumers what they expect from brands during the cost-of-living crisis. Over half (57%) said they want brands to keep prices fair, while a third (33%) cited more value for money promotions. Additionally, 30% wanted brands to reward existing customers’ loyalty, and 87% expect to hear from brands just as much or more during a period of economic instability.

It’s easier for some brands to incorporate cost-of-living messaging into their campaigns. For example, food and drink brands, supermarkets, and finance companies could offer promotions to give consumers cheaper deals or reward customer loyalty with vouchers. But other brands could still show they care by donating to charities helping with the cost of living or by giving to food banks.

Brands could also place more focus on necessities rather than high-end or luxury items, promoting goods that consumers need rather than “nice to haves.” Danone recently scaled back its product range in response to rising financial pressures and the changes in consumer spending.

These actions will have long-term benefits for brands, too. Showing sensitivity and empathy during the cost-of-living crisis is likely to drive meaningful connections with consumers and foster increased loyalty.

Communicate Responsibly

While adopting clear values during the global economic crisis is a good way for brands to show they care, they must ensure they are communicating this purpose in an ethical way. If brands claim to be donating to charities, for example, or are advertising a particular money-saving promotion, delivering on these commitments and making sure all related messaging is completely transparent is absolutely critical.

Brands that fail to live up to their claims often pay a heavy reputational price, with greenwashing being an obvious example. Recent research revealed that while big oil and gas companies spend around $750 million each year on environmentally focused communications, only 12% of their average capital expenditure goes to low-carbon investments. Coca-Cola also came under fire last year for presenting itself as a sustainable company despite producing vast amounts of plastic pollution.

In addition to honesty, creatives should be mindfully crafted to ensure messaging is not forceful. Advertisements that emphasize limited-time offers can create a feeling of urgency and lead to overspending, while “buy now, pay later” initiatives may seem to offer more flexibility on the surface, but they can actually lead to long-term debt.

Therefore, if brands are adopting promotions or deals to help with the cost of living, they should give consumers longer to opt in or suspend time limits altogether while inflation remains high. They should also communicate this clearly in messaging, which could become a new cost-of-living measure in itself: “During the cost-of-living crisis, we’re pausing time limits on all our in-store promotions to give you the chance to benefit from them without breaking the bank.”

Native Advertising And Contextual Targeting

Alongside messaging, brands should consider the types of ad placement they are using. Opting for ad formats that complement, rather than disrupt, the consumer experience while incorporating brand messaging in an authentic way can help brands keep their creative responsible. Native advertising, for example, isn’t intrusive and fits in seamlessly with its environment. It also uses a more subtle selling approach, avoiding the overly pressing content that can prompt impulse buys.

Paired with contextual targeting, native advertising delivers relevant content to consumers based on their interests. So not only does it create a better user experience for them, but it also allows advertisers to better tailor messaging to consumers for improved campaign outcomes. This means that, during the current financial situation, advertisers can target consumers with products based on their needs rather than non-essentials they may not be able to afford.

Incorporating strong AI-enabled measurement systems on top of this allows advertisers to continuously optimize campaigns, taking consumer behavior into account to ensure the right ads are reaching the right audiences.

By adopting money-saving deals and focusing on bare necessities, brands can show consumers they’re mindful of economic hardship, but they must also ensure their messaging is transparent and that they’re acting on their purposeful initiatives.

Taking these considerations into account can help brands communicate with audiences in a tasteful way, without adopting a hard-sales approach. This will better enable them to connect consumers with products they actually need in times of economic uncertainty rather than encouraging frivolous spending.

(As published on Forbes)