Macro Trends for Summer 2024 - What It Means for DTC as we roll into Summer 2024

DTC/ecom is likely to get tougher this summer.

BAU marketing tactics will likely result in higher CACs / lower ROAS as belt-tightening by consumers means they’re more picky about where they spend their dollars 💸. (see below, “what can we do about it?”)

Also note that political spending for the 2024 election is ramping up, so CPMs will be on the rise from now through early November.

Why is there a consumer spend pull-back?

Consumers are feeling the pain of the economy, even if the macro analysis is positive for investors.

The macro data points:

• Consumer
  • Consumer debt is up ($1.115 trillion in Q1, up 13% from 2023 Q1)
  • Real spending by consumers in April was down, driven by slowing wages
  • Savings rate is at 16 month low
• Jobs are down, so it’s less likely someone will be switching to a higher paying job
• Inflation is flat (which means prices are still going up, including rents)
• GDP is down

Why are investors happy and consumers aren’t? 🤔

• Investors like the slowdown as it means the Fed is more likely to cut rates. That’s why the markets are up 10%+ this year as investors have priced in rate cuts.
• BUT the consumer doesn’t care about the markets, they care about their lived experience which is less savings, more debt, slowing wages, and less available jobs on the market.

So what can we do about it?

Keep doing the strategic and tactical work to stay above the median (aka better than average).

1. Know that CPMs will be on the rise for the next 5 months BUT PAY ATTENTION TO CPCs.
   1. there's so much talk about CPMs but a brand can often track growth against traffic and CPC costs. This obviously includes CPMs but it doesn’t isolate the conversation. CPMs can be up but CTRs usually rise as well and if CPCs are flat or better, that's how you combat CPM. Additionally, if CTR tracks to historical averages, then your CVR needs to increase to compensate.
   2. the best way to improve CPC and/or CVR is:
      1. Creative diversity: ie. different production streams + broader ideas/swings. Test big swings on creative to find true pockets of performance, not small iterations.
      2. Landing Page optimization: This so easy to say but it's more than module placement. It’s about pre- and post-click journey continuity, ie. how do landing pages tie to the broader content/product marketing to audience storytelling.
2. Manage to business KPIs (CAC/ROAS/bROAS/MER)
3. Manage expectations for your brand based on all of the above.