Who do you believe?

Given the variance between consumer sentiments surveys conducted within the same month as markets slipped down the back of the Loch Ness Monster and gold bars headed for record highs, and the equities market regains a measure of lost confidence, it is time to explore the new realities of a significantly divided perspective on future economic directions.

The volatility in the equities markets around the globe reflects a media focus feeding uncertainty but the future is still relatively stable for those who take their lead from the digital media. The appropriate response for advertisers and marketers requires a closer appreciation of the differences between mainstream consumers and digital consumers.

If you believe the Westpac-Melbourne Institute, Consumer Sentiment fell by 3.5% in August from 92.8 in July to 89.6 in August. Bill Evans, Chief Economist at Westpac reports that shortly after the release of the Consumer Sentiment Index for July, which plunged by 8.3%, Westpac changed its interest rate forecast to incorporate 100 bp’s of rate cuts by the Reserve Bank beginning with 25 bp’s in December.

According to Evans, key drivers of that view were expected volatility in global financial markets, undermining consumer and business confidence and a loss of growth momentum in the Australian economy. Bill tells us that “despite extraordinary fluctuations in market pricing we are comfortable to maintain that view, while recognising that a continuation of the global market uncertainty could force the RBA’s hand to cut rates a little earlier than our original December target.”

By contrast, Morgan’s first complete consumer confidence survey conducted after the recent stockmarket crash and recovery, consumer confidence was virtually unchanged at 108pts. Gary Morgan says that “Australians’ assessment of their personal financial situations this time next year showed a 4% increase to 35%, saying they expect their family to be ‘better off’ financially compared to 21% (down 6%) that expect to be ‘worse off’.”

Glenn Stevens appears to take the latter view as the RBA confirmed their view of a very robust growth outlook with upside inflation risks. Bill Evans now admits that additional evidence that inflation risks have receded will be necessary before our central bank sees a case to cut rates. Gary Morgan reports that, “A clear majority of Australians – 56% – say ‘now is a good time to buy’ major household items compared to only 18% that say now is a ‘bad time to buy’.

An examination of consumer sentiment over the past year shows that digital consumers (eg. Business Spectator, Crikey and Eureka) have maintained a longer-term level of confidence supporting the Morgan perspective. The print media reader (Fairfax and Murdoch) is more likely to be pessimistic about the next year, supporting the Evans viewpoint and concerns about great big new taxes.

A similar difference emerges between those that consider the Government is on the right track compared with those that believe it is heading in the wrong direction. Interestingly those that remain undecided or turned off by all the major parties are more optimistic about Australia’s future. This all suggests that political perspectives and a measure of gaming in response to the pollster’s questions and methodologies may be shaping the sentiment surveys.

A vast majority of bigger-spending, internet customers research their purchase options on the web before buying online or visit the bricks and mortar stores to do their features and benefits comparisons before returning to the internet to gain the advantage of the strong Aussie dollar. This means that it is time to place ads on search engines and the new media to inform customer searches, lower overall costs of market expansion as the economy rebounds and shorten the sales cycle for these premium customers.

Who you believe will drive smart company’s advertising and marketing effort in the next three months. If you follow Bill, believing that the RBA will have to prise open private sector spending and consumer purses with an early rate cut, you will be building inventory and taking big holiday season orders for the print media New Year sales promotions. If, however, you believe that the RBA is following the Morgan perspective and is still concerned about the two speed economy despite a small fall in full-time employment, then you will become much more focused on the digital and online customers who are much more willing to open their wallets.

So, smart companies will focus on the customers that are more confident, are bigger spenders and take their business perspective from a high level of access to the online media. This requires a reconsideration of the preferred advertising channels as it has been found that when there is a high level of market uncertainty the knee-jerk reaction for many entrepreneurs is to cut back on advertising and market research rather than use the new media channels to build brand presence.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.