As many of my posts suggest I am thinking hard about what the consumer looks like coming out of the Great Recession and what impact that new value set will have on branding. One of the areas that I have been particularly focused on is the deleveraging of the economy, writ large. While we can see very clearly the macro impact of banks moving from 35x to 10x leveraged balance sheets, we also must acknowledge the deleveraging going on at the micro level.
This deleveraging is shouted from the rafters by news agencies claiming the massive rise in savings and the destruction of any consumer product demand. However this is just not the case. There is much more nuance to this story. Certainly folks are saving more, deleveraging by increasing their savings relative to their spending, but they are also finding new ways to spend. Specifically, a rise in micropayments as: main revenue drivers, models for restructuring traditional ad delivery and essential components to emerging social platforms like the Apple App Store and Facebook.
Underneath this strategy and market velocity is the deleveraged consumer who comfortably parts with $0.99. The luxury of micropayment pricing is that a consumer can instantly make a low risk value judgment. Limiting risk allows for product experimentation leading to little failure’s or successes and the consequent expansion of brand loyalty. Another interesting emerging truth of the micropayment economy is the cost inefficiencies of credit card micropayments. If credit is not the preferred means of micropayments and debit card are, then you’ll see even more responsible spending as the cash comes directly out of the consumer’s account. This structural fact reinforces the new spending mindset of the deleveraged consumer.
However this plays out, with start-up businesses at $100 million run rates after a little more than a year in business, newspapers struggling for a business model and Apple continuing to successfully upend traditional business models of the telecom and music industries you can bet that more and more companies will be awakening to this trend. The deleveraged consumer is here and as a business owner you need to reach them.
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- Debit Card Usage Continues to Grow (pindebit.blogspot.com)
- Shoppers rely on debit cards and pay cash instead of using credit cards (telegraph.co.uk)
- Spare Change On Track To Process $30 Million In Micropayments On Social Apps This Year (techcrunch.com)
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John Gerzema is Chief Insights Officer for Young & Rubicam Group. One of the early founders of account planning in American advertising, John has guided brand strategies to global business and creative acclaim. 
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