Advertising is not created in a vacuum. For advertising to work, a campaign must fit into the larger context of the customer’s life.
Say you want to sell designer jeans to 20-somethings…the customers’ ability to pay the inflated prices will impact the results, thus the economy’s health is always a factor in a campaign’s success, even when there’s no mention of it in the brief.
Millennial Buying Power Not Powerful
Millennials are doing far worse financially than generations before them. The net worth of Americans aged 18 to 35 has dropped 34 percent since 1996, according to research released by Deloitte. High prices across the board are largely to blame. Education expenses have climbed 65 percent in the past decade. Food costs have jumped 26 percent, health care is up 21 percent, housing jumped 16 percent and transportation rose 11 percent.
One of the results of this slide into economic oblivion is the growing housing crisis. Across the nation, there are more than 14 million young adults living in their childhood home. Of those hoping to buy a home at some point, 90 percent of millennials reported having to put their plans on hold, compared to 77 percent of Gen Xers and 61 percent of baby boomers.
“Millennials are facing a double whammy,” said Matt Regan, a housing and public policy expert for the Bay Area Council. “They are behind a couple of eight balls. They are living through one of the biggest housing crises in history while saddled with the biggest student loans in history. They are often at the bottom of the income ladder and they are getting forced out of the region or moving back to their old rooms at home.”
Bay Area Residents of All Ages Feel the Heat
Around 70 percent of tech workers for top tech companies living in the Bay Area say they can’t afford to buy a house near where they work, according to a recent study from Blind, which polled around 3,000 tech workers. Many of the employees surveyed are high-skilled talent — engineers, product managers, and data scientists — who may be able to make rent but can’t afford to buy a home.
The median home price in the nine-county Bay Area region is $830,000.
While the pricing problem is acute in the Bay Area, the high costs of housing is a nationwide problem. Right now, 1 in 4 renters in the U.S. spends more than half their income on housing costs. For many people, this means there is not enough money left over to buy other necessities. Luxuries like a family vacation are out of the question.
Someone’s Making Money
In the past decade, the nation’s highest earners — households making $100,000 or more — watched their incomes rise 1,305 percent more than those in households making less than $50,000 a year.
Many people who work in advertising are in the earner’s category. Some advertising power couples may even be able to buy a home in the Bay Area. My question is this: Can the lucky few also relate to the people who can’t afford to buy the things being advertised? Things that wealthy professionals may take for granted—a new iPhone, Lyft rides, attending pro sports events, dining at trendy restaurants, a new pair of designer glasses or stylish watch—never enter the consideration set for millions of Americans.
FYI, U.S. retail spending has grown about 13 percent since 2005, to roughly $3 trillion a year, but researchers say much of that growth is tied to population growth, not consumers spending more.