Consumers Hate AI, Prime Day Clues, and Cookies Are Forever

In a world full of constantly changing technology and information, this monthly newsletter keeps marketers up-to-date on the latest trends that will impact their business. I hope you enjoy it!

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Before we get started, I have a quick plug. I recently teamed up with the talented Libby Rodney at the Harris Poll and Direct Agents to launch a monthly trends series. This month, we talked about planning for the holidays. We discuss holiday shopping converging with back-to-school, the impact of the upcoming election, and financially strapped consumers. You can watch or listen here.

The US ad market has experienced growth for 14 consecutive months, with a recent 1.9% year-over-year increase, and GDP grew by 1.5% in the year's first three months. However, despite this growth, advertisers face tight budgets and pressure due to economic uncertainties, including inflation, which is a significant concern for 84% of consumers. However, despite the concern, the labor market remains strong, grocery inflation is low, and many retailers are lowering prices. Most US consumers (78.1%, to be exact) also expect their financial situations to remain stable or improve in the next 12 months, the highest confidence level since June 2021.   Despite the strong labor market, negligible grocery inflation, and lowered prices from many retailers—factors you'd think would make cost-conscious shoppers feel more optimistic—there is still a pervasive sense of unease. This could be attributed to early election anxiety, creating lasting uncertainty despite positive economic indicators.

Consumer experience is also at an all-time low, according to Forrester's annual Consumer Experience Index, which has now reached its lowest point since 2016. The primary causes of this decline include frustration with shrinkflation and the increasing use of AI chatbots. A survey by Bizrate Insights revealed that only 9% of online shoppers believe AI improves their e-commerce experience. In comparison, 14% feel it worsens the experience, and 56% think it depends on the technology's application.

The connection between these trends is clear: despite positive economic indicators like job stability and low grocery inflation, broader uncertainties, and dissatisfaction with shrinkflation, consumer experiences, especially regarding AI, are tempering brand perception. This impacts advertisers who, despite market growth, must navigate tight budgets and shifting consumer sentiments.

For marketers, we need to be human again.  

• AI will not solve everything; frankly, the technology is not there yet to make it consumer-facing for customer service.  There is a rule in business that says you need 5 positive interactions to make up for one negative interaction.  AI creates negative interactions with our brands, and we must make up for it.  Think about how and where you use AI and in what capacity it should be used for customers.  
• Emphasize value.  One of the reasons Prime Day was such a success (more on that shortly) is because of the value consumers perceived they received.  Offer discounts, provide value, and bundle.  Earn goodwill by easing their frustrations with prices.  
• Speak to the frustrated and anxious consumer.  Election times are challenging for the American psyche.  Realize that you can show up and add fun and levity to their day with something as simple as being more personable, both in advertising and in customer service.  Find little ways to surprise, delight, and win back any recently lost consumers.  

Ok, now we can talk about Prime Day.  According to Adobe Analytics, $14.2 billion was spent from July 16 to 17, up 11.8% from a year earlier.   We saw that financially conscious consumers are prioritizing deals on everyday essentials over big-ticket items. According to research firm Numerator, the average order size on Prime Day is $57.97, with the average spent per item $28.06, highlighting the focus on practical spending.  There were Prime Day competitors, of course.  The newest was TikTok, challenging Amazon Prime Day with "Deals For You Days." However, despite TikToks big ambitions, the event was a little lackluster.  Part of the issue could have stemmed from the discounts not being enticing enough.  The average discount during the TikTok event was 18% compared to the average discount on Prime  Day at 22%. Despite this lackluster showing, TikTok is targeting $17.5 billion in US GMV this year—10 times what it generated in 2023.  Despite growing pains—like issues with counterfeits—TikTok Shop is gaining traction with shoppers. Over one-fifth of US marketplace buyers (20.2%) made a purchase on the platform in the seven months.  TikTok has some things to work out, and I'm not entirely sure they will hit their target, but they are becoming a force in shopping and should be considered as consumers increasingly like to transact where they find products.  

Prime Day is always an interesting proxy for Q4. Here are some takeaways we should all think about as we continue to plan:

1. People are willing to spend where they see value.
2. We are more interested in ever than exclusive deals and limited-time promotions.  Lean into the scarcity mindset.  
3. Despite spending on value, consumers are still cost-conscious. Think about your product strategy, gift guides, and promo calendar to focus on more affordable products.   
4. Make sure you are first.  Over half of shoppers purchased something they'd been waiting to buy until it went on sale.  Ensure your brand is the one to capture that demand. 

Speaking of Q4, more than half of consumers start their holiday shopping before fall arrives, according to Bazaarvoice's 2024 Global Holiday Season Consumer Behavior Report. The report says that a quarter of shoppers (23%) will start gift shopping by August or earlier. More than a third of people (37%) will begin by September, and more than half (55%) will start by October. Consumers also state that video, and especially social video, is the key to capturing their attention and dollars.  We have seen holiday shopping starting earlier this year, and it is beginning to converge with back-to-school shopping.  This is not to say you should have a gift guide up in August, but instead, realize that when people are shopping for back to school, they are undercover shopping and getting ideas for holidays.  Also, video and social video will be the place for product discovery this year, so ensure you have ample studio-produced content and UGC content ready for your holiday shopping push. 

Target is partnering with Shopify to expand the number of sellers and products available online. US Shopify merchants can now apply to sell on Target Plus via the retailer's Marketplace Connect app. Target, which is invite-only, launched its marketplace, focusing on quality over quantity.  While that is good for the customer, it has prohibited growth at the same rate as other marketplaces. Target sees a significant opportunity to expand its online marketplace selection to boost its bottom line. It has more than doubled the number of partners and products on Target Plus in the past year and sees plenty of runway ahead. For brands selling on Target, this expansion could affect advertising costs. However, it could also increase the number of shoppers on their platform.  For sellers on Target, keep a close eye on performance as the selection continues to grow.  

For those Temu/Shein naysayers, they finally were making a big enough splash that Amazon could no longer ignore them.  Now, Amazon plans to launch a new section on its site dedicated to low-priced fashion and lifestyle items that will allow Chinese sellers to ship directly to US consumers.  This would mark Amazon's most aggressive attempt yet to fend off growing competition from e-commerce upstarts Temu and Shein.  Amazon will ship the products directly from China to the US, with the goal of delivering them to shoppers within 9 to 11 days. China-based merchants have made up a sizable contingent of Amazon's marketplace for many years, but the company is making a renewed push to court sellers there as it faces growing competition. Amazon has to be careful because there is a good chance that they will cannibalize their own sales vs. bringing in net new customers.  The other big concern is with advertising.  Amazon has turned itself into an advertising company, and if an established merchant spending money on ads starts losing market share to a dupe selling from China, it's easy to see how that brand would pull back investment.  For brands, just keep an eye on this to ensure you aren't seeing any loss of share of voice on Amazon due to the increase in lower-priced goods.  Also, for apparel, building a brand to justify higher prices is becoming more critical than ever as we continue to see the rise of these low cost sellers.  

Amazon must also remember what happened before when they opened their marketplace to too many Chinese sellers - counterfeit.  You may remember, but in 2021, they suspended a dozen Chinese sellers. Fake reviews and counterfeit products have often plagued Amazon, making some brands nervous to invest. This caused them to launch Project Zero, which gives brands the power to remove counterfeit products and blocked 10 billion listings in their counterfeit crackdown in an attempt to calm the fears of their larger sellers.  This problem has not just gone away, as over two in three consumers across 17 countries were deceived into purchasing a counterfeit item last year. Online marketplaces such as Amazon, Shein, and TikTok Shop make it easy for criminals to identify fast-selling products, replicate legitimate sellers' listings and goods, and begin selling.  

LinkedIn, which has been making an aggressive push into advertising with the introduction of TV, short-form video, and influencers, has officially launched an AI-powered campaign tool called Accelerate.  Accelerate has been in limited testing since 2023 and will now be available more broadly.  It is all about efficiency — in particular, cutting down the process of building a LinkedIn campaign from 15 hours to five minutes, according to LinkedIn. The tool recommends an end-to-end campaign and automatic optimizations to reach the right B2B audience. With Accelerate, LinkedIn hopes to reduce the resources required to run an ad campaign, lower the entry barrier, and gain additional revenue from brands.  While this is an excellent tool for low-on-resource brands, I have a hard time thinking that it will be effective for more prominent B2B players, given some of the constraints. However, keep an eye on it, and as it improves, there is a place where it could make sense to test.  

LinkedIn is also now offering Sponsored Newsletters. Sponsored newsletters allow companies to promote their newsletters in an attempt to gain more sign ups. As how B2B buyer's consumption of content changes, having LinkedIn as a content pillar is a must-have. This allows brands to get in front of new net subscribers and use the power of content to tell their brand story.   

Finally, as you probably have seen from all the articles and hilarious memes, Google announced it won't get rid of third-party cookies on Chrome. So, all of our webinars about preparing for the loss of cookies now feel like wasted time. Ah, well, one last thing to worry about.  

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Megan Conahan is an 18-year veteran of the digital marketing industry. Over the last 19 years, she's consulted with Fortune 1000 brands on negotiating the ever-changing demands of the digital marketplace and creating unique solutions to set them apart. Megan is an EVP at Direct Agents, an independent and minority-owned digital marketing agency. If you want to chat about marketing support or just talk shop, please message me or email megan@directagents.com