Reddit data reveals new consumer behaviors: ‘they’re doing more research before buying’
Doom and gloom dominate much of the news cycle, whether it concerns financial, political or sociological movements. Amid it all, consumer behaviors are shifting. Reddit shares exclusive data with The Drum that suggests how brands should react.
Redditors are re-evaluating their spending habits amid rising inflation / Adobe Stock
No, the impending economic downturn is not a guaranteed calamity for brands. In fact, the current state of affairs offers a range of new opportunities for brands, according to exclusive Reddit data for The Drum – pulled from first-party datasets, a recent survey of nearly 1,000 US Reddit users and third-party research by GWI and Comscore.
Insights reveal that consumers are increasingly concerned about looming economic threats. Over the last six months, Reddit has seen a 29% uptick in mentions of ‘inflation’ across US news subreddits and a 203% increase in mentions of ‘recession’ in career-planning groups. Meanwhile, popular subreddits such as r/frugal and r/moneydiariesactive have grown significantly in recent months as users compare and evaluate personal financial habits. As of June, r/personalfinance is now one of the platform’s most-viewed subreddits globally.
Consumers are planning ahead – and Redditors are especially financially-conscious. Compared to the general public, in fact, Redditors are 55% more likely to set personal budgets and are 75% more likely to self-identify as ‘financially secure.’ They’re stringent, too; many are looking for ways to cut down their spending ahead of a possible downturn.
As people everywhere re-evaluate their spending habits and priorities, brands face new challenges and trepidations when it comes to building staying power and capturing consumer dollars.
Reddit insiders suggest that there are a handful of tactics that brands can adopt to ensure they remain relevant during a recession.
1. Be where the research happens
Internet users, and Redditors in particular, are more wary than ever when it comes to purchasing decisions. But they aren’t forgoing or delaying major purchases, necessarily; they’re simply taking more time to make the right decision. Per data from Q1, instead of skimping on big buys, 72% of Redditors are making research a priority before making a decision. They spend more time reading and comparing reviews and searching for good deals.
“[Consumers] are going to make educated decisions and do really thorough research, especially if it’s a high-consideration product,” says Mary Ann Belliveau, head of large customer sales at Reddit. “They’re just doing a ton more research; they’re being more thoughtful, more mindful and they’re going deeper.”
For brands, being in the spaces where this research and deal-hunting is happening is paramount. It behooves brands to buy ad space in specific digital environments where reviews and real-life conversations about products and services are happening.
Creative and messaging are also major opportunities, according to Belliveau. “Our advertisers know that the people are worried about money and concerned about inflation – so they’re communicating with creative in a way that speaks to people and makes them understand: ‘This is something that is of value, and I’m still going to buy it because it’s important to me. But I’m not going to be frivolous with my spending.’”
2. Shine a light on value-add
During times of economic uncertainty, non-essential purchases often become low priority. And if conditions grow more bleak, consumers will only become more scrupulous; 66% of Redditors said that if the economy worsens, they will question each and every purchase. Many said they’d slash subscription services, cut down on excess spending and switch over to generic options.
To ensure they don’t get axed from consumers’ budgets – and also to win over those teetering on the edge of a purchasing decision – brands need to be explicit about the ways in which they add value to consumers’ lives. Brands must strategize new ways to become essential in consumers’ minds.
In its recent research, Reddit uncovered three unique cohorts of users: loyalists who won’t change their spending habits regardless of economic shifts; budget-cutters who are gung-ho about eliminating unnecessary spending; and a middle category of consumers who are on the fence about a range of personal finance issues.
“I would encourage brands to focus on that middle population that’s on the fence,” says Rob Gaige, head of global insights at Reddit. “They’re looking for a reason – [they’re saying,] ‘give me a good reason, give me something that makes me feel that I need to choose your brand and not go to the generic.’”
An effective way to make the argument, per Gaige, involves moving beyond the functional value and highlighting the emotional and purpose-driven value of the brand. “Start talking about how your brand is committed to helping stop climate change or how your brand is committed to fair trade and committed to paying a living wage to everyone in your value chain. All of those things start going beyond the functional or physical value of the product and help distance you from the alternative that might meet just the basic product KPIs.”
Without a wholehearted, purpose-centered sell, Gaige says, these hem-and-hawers are bound to switch over to a cheaper, generic alternative.
3. Play a team sport
On Reddit and many other online platforms, it’s clear that when the economy suffers, we all suffer. Communities come together in solidarity during times of uncertainty to support one another.
The brands that win, Reddit insights suggest, are those that launch and support initiatives with the power to uplift entire communities.
Gaige likens the sentiment to participating in group fitness classes. “People love group fitness – it gives you the motivation to keep going; you thrive off of the successes of others; you can visit with each other when things don’t go quite right or you don’t stay on your plan,” he says. “It’s very much the same thing happening on Reddit. People are bringing their stories, their small wins. There’s something really beautiful about saying, ‘Look, it’s the first time I actually made my budget work for the week,’ and everyone celebrates that and gets behind them.”
In many online communities, financial fitness is a group sport. Users share coupon codes, hacks and new personal finance apps they discover. “It’s a really important insight for brands to keep in mind,” Gaige says. “You’re not just marketing to the individual, but marketing to them as a team.”
Belliveau points to a recent Discover campaign as an example of how to effectively connect with and support the unique communities on Reddit. “Discover came in and ... did a really nice job of tailoring their creative specifically for different communities. And they did it a whimsical way ... they made funny, subreddit-specific jokes and they really leveraged the data and insights. They did so well; [the campaign] had amazing results.”
4. Offer guilt-free indulgence
During challenging times, small splurges and indulgences offer consumers a sense of escape and comfort that, even momentarily, can help ward off anxieties about the future. Independent research from GWI indicates that 60% of Redditors will spend more money online shopping during the coming year – and one-fourth say they would continue to splurge even if economic conditions decline.
“We know that in recessions, red lipstick sales go up,” says Belliveau, in reference to the phenomenon coined by Estee Lauder’s chair Leonard Lauder in reference to the growth of lipstick sales during recessions. “There are things that people look to for comfort if they’re financially concerned about other things.”
Redditors’ behavior demonstrates this trend too. “[We see] this idea of ‘If I’m going to have a strict budget for my food, I’m going to [follow it] from Saturday to Thursday and then Friday nights, I’m treating us, because it’s a time for bonding with the family and a little bit of a treat.’ It’s almost like building the opportunity for spontaneity and building in a little bit of ... extra cash to be able to do that.”
For brands, there’s an opportunity to tap into this desire by appealing to the sense of escapism and indulgence that resonates with consumers during periods of economic stress.
All of these insights, according to Belliveau, go “so far beyond advertising.” The most fruitful relationships – for all parties involved – are those in which brands have a deep, accurate understanding of what their consumers value. “Everyone’s a consumer. Everybody needs something. But if you really understand the values and the priorities, you’re just more apt to be successful, because you’re going to speak to the communities in a way that they’re going to respond to.”