How an ongoing government shutdown may affect mobile marketers
By Chantal Tode
October 2, 2013
The government shutdown threatens the economy
Everyone from investors and brand executives to consumers and merchants is closely watching to see what the impact will be of the federal government shutting down. For marketers, much depends on just how long the shutdown will last, with opportunities opening up in some cases and closing in others.
With consumers closely watching the news – often from a smartphone or tablet – to stay up-to-date on the shutdown, there is an opportunity for marketers to target mobile users with ads in the first few days, when interest is still high. Some travel-related brands could also see increased demand for their mobile properties from consumers whose travel plans have been impacted by the shutdown.
“We will continue to promote our mobile products and feel there will still be strong demand for last-minute deals even during a shutdown,” said John Caine, chief product officer at Priceline.com, Norwalk, CT.
“Since our mobile platforms help thousands of last-minute bookers find a great deal every day, we'll be on hand to help anybody who finds themselves suddenly inconvenienced by the government shutdown,” he said.
Feeling the strain
The federal government shutdown Monday at midnight after Democrats refused Republican demands to delay the Affordable Health Care Act, which went into effect yesterday, or Congress would not authorize the budget for funding the government’s non-essential operations beyond Sept. 30.
As a result, thousands of non-essential government employees have been put on furlough and many state parks have been closed.
It is not clear how long it will take for a plan of action that is agreeable to both sides to take form. The shutdown could last days or months.
With the economy already in an unstable place as it continues to try to claw its way back from the Great Recession, many are worried that the shutdown could impact consumer confidence and tip the economy back into a recession.
However, given mobile’s already significant growth rates and the important role it plays throughout the day for users, any impact could be less for mobile.
“The shutdown triggers confusion and concerns from consumers,” said Greg Stuart, CEO of the Mobile Marketing Association, New York. “What they see are businesses shutting down and instability from authorities,”
“A byproduct of their uncertainty may lead to consumers to be more conservative with spending,” he said. “If the shutdown is ongoing, the entire marketing industry will feel strain and impact.
“However, mobile has so much momentum from consumers that it is likely impervious to the swings of the economy.”
Debt ceiling crisis looms
The shutdown is not the only danger the economy faces. The government is on course to break through the debt ceiling on Oct. 17.
While the country has lived through numerous government shutdowns before, it has never had to deal with the debt ceiling actually being broken, so there is significant concern over what the impact will be as it is unclear how the government will continue to fund spending beyond that point.
The timing of these events could not be worse for marketers, coming as they do during the fourth-quarter, when consumers spending traditionally picks up in advance of the holidays.
While marketing budgets overall make be lower in response, mobile budgets could be spared since much of the mobile spend is still a small percentage of overall spend. Additionally, mobile is increasingly seen by marketers as a crucial way to stay in contact with their loyal customers.
"The government shutdown causes an uncertainty in the business environment," said Eric Johnson, president/founder of Ignited, El Segundo, CA. "This will lead to some marketers being slightly more cautious.
"We expect that this will be a short-term disruption, and won’t have any mid-to-long term impact," he said.
"The government shutdown is unlikely to impact mobile marketing budgets."
The new level of economic uncertainty introduced by the government shutdown and the looming debt ceiling issue is likely to drive more consumers to check the news on their smartphones and tablets, opening up an opportunity for marketers to reach them.
“There will be a lot of mobile advertising opportunities because people will be constantly checking their phones and tablets for the news,” said Larry Chiagouris, professor of marketing at Pace University’s Lubin School of Business, New York. “It is a great short term, four or five days, opportunity for advertising.”
The increase in mobile use could even extend beyond checking the latest news as users look to adjust to the reality of closed government agencies.
“Either the government shutdown will reduce mobile activity because government workers are laid off, or it could increase mobile activity as consumers cope with non-operating government agencies,” said Carl Howe, vice president of research at Yankee Group, Boston.
“Unfortunately, we have no way to predict which way it will go, although I probably lean toward the latter,” he said.
Enabling intimate dialogues
Given the personal nature of mobile devices, there is also an opportunity for marketers to leverage mobile to help allay consumers’ concerns.
For example, this could be a good time to step up efforts around mobile coupons and other promotions as concern over the economy grows.
However, if the shutdown extends for a period of time and the debt ceiling becomes a real issue, there could be a ripple effect through the economy.
This, in turn, could result in a bigger impact on mobile marketing, slowing its overall development.
“The shutdown offers an opportunity for marketers to move closer to consumers and ease their confusion and concern,” MMA's Mr. Stuart said. “Right now, consumers are looking for trust, stability and security.
“Mobile is a personal device that enables intimate dialogue and engagement between marketers and consumers,” he said. “Companies have the opportunity to use mobile to provide value to consumers and prove their brands can still be trusted during these complicated times.
“The shutdown may curb marketers from testing new mobile tactics or shifting their budgets when there is a risk of consumers spending more conservatively.”
Chantal Tode is associate editor on Mobile Marketer, New York
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