Audio streams trump everything when it comes to music.
That may seem obvious, but one could argue that it is both sudden and scary to see just how quickly consumer behaviour has changed. Nielsen recently released data on the rise of music streaming and the net of it was that audio streaming had a 76.4% year-over-year increase for music consumption in the U.S. Comparatively, CD album sales were down 16.3% in the same time frame and digital album sales performed even worse (down 20.1%). In the blink of an eye, the downloading/stealing/wanting-singles-and-not-albums concerns have been completely obliterated because of services like Spotify, Apple Music and Tidal. And it is not just music. Look no further than Netflix, or the fact that people now consume 1 billion hours of YouTube videos a day.
But this is not about really about streaming as a new form of media.
What Spotify and Netflix has validated is that consumers quickly adopted the model of paying a monthly subscription fee to be given access to an entire library over a one-time payment for ownership of physical goods. Unilever purchased the similarly modeled Dollar Shave Club for roughly $1 billion in 2016, less for the products that they sell (razors and shaving cream) and much more for the subscription revenue model (and database that it’s attached to). Still, when the products shift from the physical to a digital stream, there is something deeper that all brands must consider.
It’s a cloud-based brand new world now.
If consumers are actively moving to a place where they want to own less, and prefer to access what they need on-demand, on-the-go and without a long-term commitment, how does your marketing evolve? You may not see a correlation in your current quarterly sales. You may not see a correlation between this dramatic shift in consumer behaviour to your current marketing strategy. But this trend is spreading. In the second quarter of 2016, the home ownership rate in the U.S. fell to 62.9% percent, which was its lowest level since 1965. The truth behind the data is that younger people are more likely to rent than own a home now. This is partially because of salaries and the work available to the younger generation, but the tech industry has allowed them to adapt their lifestyles to this reality, which means you need to as well. The belief that we all grew up with – study hard, get a degree, get a job, get married, have kids, get a mortgage, buy a home (and a car and a big-screen TV) – is dwindling. This newer generation wants experiences, are much more digitally nomadic and, ultimately, don’t want the burden of more “stuff” as they attempt to suck as much juice out of this life as possible.
How can a brand survive if all it sells is stuff that people are wanting less and less of?
There are several questions you can ask yourself about marketing today in world where consumers will want less tomorrow:
- How can you leverage your current database to better understand how consumers are spending their money beyond your brand?
- What new kinds of marketing channels might best reach consumers who are shifting their buying habits so rapidly?
- How have those in different industries with similar customers to yours disrupted their own business model?
And it’s less about seeing all the consumer trends you have to fight against in this world and more about the opportunities that come with it. Look for your offerings that can be digitized, packaged and sold in a library or cloud-based way. Find the new digital product or service that your brand can create and market. Perhaps the best question marketers can ask themselves when facing a future free of stuff is this:
If you had to quit your current company and build a startup in the same vertical, how would you build it?
The above posting is my new/regular column for Strategy Magazine. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here: