By Michael Brown, Managing Director
Being Rich in experience as opposed to material worth is where it's at now, and the only thing you should be spending is social currency...
It was as long ago as 2016 that Steve Howard, the chief sustainability officer of Ikea, picked up a bit of heat when he proclaimed that the West had reached ‘peak candlestick’.
The term candlestick was a placeholder for ‘stuff’ – a symbol for the things Ikea sells and, given his job title, he was asking a perfectly legitimate question: how does a business like Ikea remain sustainable in the future if the world really has got too many candlesticks, and too many flat-packed coffee tables on which to put them on?
Since then, Steve has not been alone in calling out the burgeoning phenomena of customer behaviour. In April 2017 Lord Wolfson CEO of Next used almost identical, but possibly less poetic language than Howard, to explain the slump in fashion retail on the high street. His plaintive quote ‘People don’t want to buy more stuff’ was covered very broadly in the media, and not just in the business pages.
Other indicators out there in the markets could have been interpreted in much the same way. Take Apple; Wall Street experienced a few ripples in their Chai Latte’s when the corporation announced its third consecutive sales decline in late 2016. A situation they shored up in 2017. However, regardless of Apple's fluctuating fortunes, it is irrefutable, people are becoming more values driven and less materialistic. We know for certain that some audience groups driven by economic circumstances beyond their control are struggling with the idea of not owning anything ever. Millennials have been priced out of the property market; it’s a ladder they may not ever be able to stand at the foot of, never mind raise a foot onto the first rung. We also know high percentages of people will switch brands if there is a disconnect between their values and the actions of the brand.
At the same time purchase behaviour has swung away from commodity. Two very obvious examples spring to mind; music fans buy much less music as a physical product – they stream it from Spotify. Likewise film fans; who wants a DVD when you can stream it under temporary license from a subscription service such as Netflix?
But if people either can’t or don’t want to be rich in the materialistic sense, it would seem they do want to be rich in another way – in experience.
Reverting back to Wolfson’s observation about the performance of retail fashion, he further qualified this in his statement to shareholders: "We believe the numbers demonstrate the continuing trend towards spending on experiences away from things".
A whole lot of consumer data backs Wolfson up. The predictions vary depending on where and what you read but Mintel’s American Lifestyle Study 2017 opens with the headline summary; Experiences Over Things. The report shows significant increase in spend in ‘non-essentials’. Such things as dining out, holidays, shows, gigs, festivals of every hue should perhaps now be deemed as ‘essentials’.
Barclays’ consumer spending reports issued after each quarter through 2017 told much the same story. They cited ‘splashing out’ on the experience economy as a key driver of growth, with spending on entertainment maintaining double digit growth for an 11th consecutive quarter. Meanwhile, visits to pubs and restaurants both rose by +12%. Leisure time with family and friends was referred to as a priority over other types of spending in early 2017. Lastminute.com proved this in December 2017: They offered to wipe the memory of a treasured moment in return for a large wad of cash during staged 'clinical trials' using young people as guinea pigs. None of the participants accepted the deal! Watch Film Here
Brands like Secret Cinema and Tough Mudder are properly evolved experience economy businesses. As brands and experiences they are poles apart, but both these, and every other business in the experience 2.0 economy are united by what they sell; connected, communal moments – the connectedness and the community providing all the power in the commercial offer of these brands, and the attraction of such to an audience.
And the brands to watch are the ones that are not visible yet but have invested into the experience economy. What is the next Secret Cinema - where is that going? What might that represent on a global scale? Airbnb is one of the experience economy brands that are constantly evolving. It is trying to evolve to own the notion of experience in a much more holistic way.
The experience-savvy brands provide for yet another way for a non-materialistic audience to become rich. Not just in experience, but in social currency. They give their audience the bragging rights and the kudos in the celebration of those who were there, against the envy of those who weren’t.
Which explains the explosion in the variety of experience 2.0 businesses over the last few years; an evolutionary arms race vying to provide ever more multi-sensory and ever more immersive ways to spend both time and money.
Who would have thought locking yourself in a room with a bunch of mates, and spending an hour trying to get out would take off in the way it has. On record there are 6,881 Escape Rooms in 1,306 cities in 100 countries from Azerbaijan to Aberdeen. People are doing Escape Room-themed Gap Years. Likewise Zombie Experiences!
As we know, eating out has been extended to include all the senses; who wants to dine out these days if you cannot taste with your eyes and ears as well as your buds? You will all be familiar with Gingerline’s famous Chamber of Flavours, the Black Cat Supper Club, Django’ Bango’s Gold Rush and other such luminaries on the immersive dining scene – a trend that has been with us for a few years now.
It is these sorts of businesses that have been bringing the vision of futurologist Alvin Toffler to life almost 50 years after his 1970 book Future Shock predicted an ‘experiential’ economy in which people would spend high percentages of their salaries to live amazing experiences. It is now these businesses that are driving the economy by getting people out more, connected more and allowing people to be ‘in the moment’ – all of which are indicative qualities of an economy less obsessed with consumption. Unsurprisingly the old economy brands, the people who actually have physical ‘stuff’ to sell, are changing the way they do their advertising: experiential as a marketing buzzword risks becoming passé, brands are doing immersive now.
At this point last year (JAN 2017) Asics launched a 5K run with a difference; what they described as an film noir adventure called The Big Race. Runners were invited to track down a mysterious lady in red through downtown Los Angeles. They crashed into gigs, through walls and were chased by gangsters. As with any immersive event happening, tickets were limited, which means that when brands do immersive, the content is also crucial. The Big Race film aired in all Asics key markets including the UK, USA, China, Japan, Korea, Brazil, Russia and all of Europe.
As with the Asics case study, increasingly the product or service is getting substituted for a destination event experience at the heart of the media plan.
The Event Track Study by the Event Marketing Institute of America and Mosaic, a large scale US-based agency, is now in its fifth year. The report documents the relationship between 220 of the Forbes 1,000 blue chip corporations and their consumers in context of experiential marketing services. There are many positive take outs for marketing decision makers. These include the findings that experiential drives not only propensity to purchase, but also significantly drives sales. It further finds the medium as effective for increasing brand perception and recall.
Even more interestingly, past iterations of the report stated that more than half of those Forbes 100 corporations use experiences to launch their campaigns, to build the campaign and the campaign assets out of the event itself. This study, along with the others alluded to above, would seem to be Bellwethers of a future in which all advertising will be experienced.
Read the full Campaign article here.