As a media sales or advertising professional, you have little control over the rising income inequality in the U.S. But that inequality, along with declining consumer confidence, should concern your accounts.  With the right audience intelligence and advertising strategy, your accounts can still meet their goals as the economic climate changes.

How Has Income Inequality Impacted Spending?

Thirty years ago, the top wage earners drove 36% of all spending. Recently, that number rose to 50%. Looking at this trend from another angle, about 10% of households earn $250,000 annually. It is these consumers who have drastically increased spending.

These consumers are often older. They own homes. And they invest in the stock market. The rise in their assets gives them the comfort level to keep spending. The Wall Street Journal reports that these consumers are most likely to pay for luxury goods and travel experiences.

Economists also studied what’s happened with consumers who aren’t as well off. Between September 2023 and September 2024, “spending by working-​class and middle-​class households…dropped.”

While this is an alarming trend, consumers in all income brackets are still spending. But the way they are spending has changed. With the right audience intelligence, you can show accounts how to reach them.

What is the 3‑Month Spending Outlook?

McKinsey’s latest ConsumerWise study looks at planned spending for the next three months. And this report considers several categories of consumer spending to give readers a clear outlook.

Essential Goods

According to McKinsey’s data, at least 10% of consumers plan to reduce spending on some essential categories. These categories include pet food and supplies. 18% will reduce their outlay for nonalcoholic beverages.

Semi-​Discretionary Goods

Consumers are also planning to pull back on semi-​discretionary items. For example, beauty products (26%), toys (38%) and fitness/​wellness services (20%) will see a drop in demand by some consumers.

Discretionary Goods

In the next few months, McKinsey’s audience intelligence shows that larger percentages of consumers will “hold back” on some discretionary categories. In particular – furniture (43%), home decorations (46%) and jewelry (44%) will take a hit.

Another way to combat rising prices is to trade down. Trading down is now commonplace for 75% of consumers. Compared to last year, more consumers are adjusting the quantity of what they purchase. And they are cutting back on “buy now/​pay later.” This change may be because they realize that this sort of financing increases the total cost of an item.

Which Media Formats Connect to Household Income?

To achieve sales goals, your accounts may want to target high income shoppers. Targeting these consumers without the right audience intelligence can be tricky. They want personalized messaging. Using email, your accounts can target these consumers by offering a VIP service.

These consumers may have plenty of money to spend, but they won’t spend foolishly. Marketing campaigns must emphasize value and exclusivity.

High income consumers typically have professional careers. Your accounts may be able to reach them by posting content such as white papers on LinkedIn. Affluent consumers may notice LinkedIn outreach more than an ad on Facebook.

Plan to show up on the media format favored by specific audiences. For example, AudienceSCAN data shows that affluent millennials are most likely to respond to an ad on a social network (49%.) However, in the past 30 days, the top marketing format that swayed affluent baby boomers was direct mail (34%).

For 33% of lower income households, mobile app ads drive action.

How Marketing Language Drives Consumer Action

If your clients sell products that target all consumers, they should adjust their approach to generate interest and sales from each income group. Advice posted on LinkedIn emphasizes the importance of language used. For example, high-​income consumers will be more motivated by a call to action that mentions “explore” or “discover.” This language hints at fun, entertainment and exclusivity.

On the other hand, the words “save” or “deal” interest lower income shoppers who are feeling squeezed by inflation.

Photo by Alex P on Pexels.