MAY 31, 2011

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Is “Mass Affluence” A Thing Of The Past?
Ipsos Mendelsohn and Digitas have recently partnered to write a paper that examines today’s wealthy population in the U.S. According to the paper, the chasm between rich and poor in this country is far and wide and will continue to grow, as will the wealthy’s influence on purchasing across all categories. For example, the richest 1% of households controls 40% of the wealth in this country, while the richest 5% controls nearly 70%. Before the economic downturn, luxury marketers embraced the concept of “mass affluence.” Encouraged by easy credit, exploding equity in real estate and well-performing stock portfolios, a larger portion of the population considered itself wealthy enough to buy luxury goods and services. Marketers, in turn, cast a wider net, creating more affordable “luxury” products for a larger market. In 2011, however, in the wake of a massive reset, the paper claims that this mass affluence may be a thing of the past. Luxury marketers must therefore adapt accordingly and in a sense return to their core competency of appealing to a group of elite consumers who increasingly value high quality and exclusivity. Luxury consumers of today are different from those in the past- they are generally more value-oriented, less flashy, and more socially conscious; but they are a relatively small group, and getting smaller. The paper identifies 5 segments within the affluent population as defined by Ipsos Mendelsohn (HHI $100K+ representing 20% of population) and examines their lifestyles, behaviors, technology, media and consumption habits.
So what? It is crucial for luxury marketers to distinguish reality from perceptions about their target audience and adjust their marketing strategies accordingly. “For the last 10 years or so, marketers have been infatuated by the term and concept of mass affluence… top retailers, top luxury brands, were playing for scale on the bottom end. There seemed to be a lot of money and energy there. Those people have totally disappeared and that language has disappeared, and no one has written an obituary for it.”- George Scribner, Digitas
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Sharp Growth in eReader Penetration
For many consumers, expensive, multifunctional tablet devices are a more desirable choice than single-purpose eReaders. But the US installed base of ereaders has more than quadrupled since 2009 and continues to grow quickly. eMarketer projects that the number of eReaders owned in the U.S. will grow from 12 million in 2010 to over 28 million by the end of 2012. Amazon’s recent announcement that they now sell more eBooks than print books supports this trend.
So what? Although functionality is limited and sales projections of eReaders pale in comparison to tablets, publishers need to be cognizant of eReader penetration growth and optimize content accordingly.
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Intel CEO: PCs Aren’t Dying
As noted in last week’s CNtelligence (see “Study: The iPad Is Becoming The New PC,” 5/23), there is evidence that consumers are beginning to use tablets as replacements for, and not just compliments to PCs. Enters now Intel’s CEO (Paul Otellini) to disagree. Otellini believes PCs will continue to play a central role because he views tablets as primarily consuming devices, while PCs are creative devices, and people will always want to create. Intel believes that the PC will soon reinvent itself to become more of a consumer electronics device, sharing many features of today’s tablets. The company projects that in the next two years, mainstream laptops will get thinner and lighter, run all day on a single battery charge, have touchscreens, get instant-on capabilities and run multiple operating systems, all without compromising performance.
So what? Intel has a lot riding on this argument, but where is the research to back it up?
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The Gamesmanship Of Shopping
A recent study conducted by Yahoo and Universal McCann found that the Internet has matured into a key tool that helps shoppers make faster, more informed decisions, and as a result, has changed the purchase process… again. Getting a great product at the right price is only one part of the path to a satisfying buying experience. There's a renewed energy and passion for shopping, and consumers are having fun. It's like a scavenger hunt where the “win” is defined as consumers finding deals that feel specially tailored for them or when they feel they've somehow outsmarted their fellow shopper. The study calls this new consumer mindset the "Gamesmanship of Shopping." The Internet is at the center of this game and allows consumers to be better informed, less impulsive, savvy, and social.
So what? Condé Nast brands would make great coaches in this new consumer shopping game, equipping “players” with trusted insider information and access to credible social networks that help them “win.”
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Google/Ipsos Study: Traditional Media Inspires Mobile Search More Than Digital Media
One would expect a study sponsored by Google to favor digital over traditional media. However, deep in a recent study conducted by Google and Ipsos lies a nugget that is actually favorable to traditional media. The study examined a variety of consumer behaviors related to smartphones, including: usage in daily life, response to advertising, online and offline shopping, search, etc. One interesting finding was that ads in traditional media inspired users to conduct searches over their mobile phones. Seventy-one percent of respondents said they have done mobile searches because of exposure to an ad. Of those, 88% said they were responding to a traditional offline ad in print or on TV; that compares to 27% who searched because they saw a mobile ad and 18% who did so after seeing an online ad. The study suggests that this offline-online bridging is made possible by the finding that 33% of smartphone users have their phones out while watching TV, and 22% while reading a newspaper or magazine. Another interesting finding of the study was that smartphone users pay attention to, and are moved to act by, mobile advertising.
So what? Yet another study, this one from Google (!), showing that traditional media activate mobile search.
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Financial Services Advertisers Shift Digital Focus
Online ad spending in the beleaguered financial services industry bottomed out in 2009, but is expected to make a full recovery to pre-recession levels by the end of this year, eMarketer predicts. And as that spending recovers, it will focus increasingly on newer formats like mobile and video. Although online display continues to be a key advertising tactic across various financial services sectors, video and mobile platforms are gaining traction. For example, Millenial Media reports that mobile ad revenue increased by 201% in Q4 2010 compared to Q4 2009. eMarketer claims that in order to maximize ROI, financial services companies are becoming more adept at getting their campaigns to work better across media in order to reach consumers at all phases of the research and selection process.
So what? These data suggest that Condé Nast should focus on providing financial service companies with effective cross platform solutions that include mobile and video capabilities.
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Quick Takes
CHART OF THE WEEK: Netflix Now Has More Subscribers Than Comcast (And Every Other Cable Company)
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Condé Nast
Feedback, questions, ideas for future issues? Please contact:

Phil Paparella
Condé Nast Research & Insights | Associate Director
1166 6th Avenue, 14th fl. | NY, NY 10036 | office 212.790.6044 |

Tamar Rimmon | Senior Manager, Digital Analytics
Robyn Hightower | Manager, Research & Insights