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Finding the X-Factor to Mine the Uptrend in Consumer Confidence.
By Vijay Dandapani
Friday, 4th March 2011
 
The National Retail Federation, an advocacy organization which bills itself as the world's largest retail association and the 'voice of retail worldwide' recently released its annual Tax Returns Consumer Intentions and Actions Surve survey which shows a positive movement in  the number of Americans willing to spend their tax refund on big ticket items.

The survey found that "13.2 percent of Americans will spend their refund on a big-ticket item, up from 12.5 percent last year". The positive consumer sentiment with regard to spending and the economy crosses national borders as a survey in Italy's newspaper Il Sole 24 also notes a more positive belief in their economy. France too reported "stable" consumer confidence for February.

While the NRF's annual poll is designed primarily to gauge consumer behavior and shopping trends based on forthcoming tax refunds, it provides a reasonably accurate preview of consumer confidence for the quarters to follow as well as patterns of consumer behavior in a variety of discretionary and non-discretionary items. The NRF's president notes that "Americans receiving a tax refund this year seem eager to plough this money back into the economy" with as many as 11.9 percent  planning to spend their tax rebate "windfall" on vacations.

A decline in tightwaddism with regard to "luxury" and discretionary items can be gleaned from a movement northwards in the consumption of items like gourmet coffee and casual dining although fine dining still meets with some resistance. That likely will offer some welcome relief for the beleaguered travel and hospitality industry.

A somewhat unsurprising finding of the foregoing survey is that a solid 81.5% view internet service as de-rigueur. The finding of a substantial subscription to all things digital has not gone unnoticed by the many savvy venture capitalists that are planning on plowing in truck loads of money into online-tracking specialists.

The Wall Street Journal reports that online-tracking specialists Lotame Solutions Inc., Media6Degrees Inc., eXelate Media Ltd., [x + 1] Inc. and Turn Inc, all received new investments from prominent venture-capital firms. If that trend seems to run counter to the long stated, if inchoate, fears among consumers about privacy it is at least in part because a substantial majority of consumers think that the data collected by online tracking does not keep them anonymous. That is among the findings of another survey by Pubmatic, a firm that provides "ad monetization and management solutions" to the publishing industry.

Pubmatic's survey found that more than 60% of its participants thought that the purpose of advertising was not anonymous. Another article in the Wall Street Journal points out how companies are responding to the gap between perception and reality noting that "technology giants Microsoft and Facebook (have) moved to beef up and clarify their efforts around the thorny issue of online privacy—the latest steps by the Internet firms to call for stronger consumer protections."

Audience targeted media optimization is the holy grail in the search for an x-factor that successfully mines consumers' spending trends while concurrently reassuring them of their privacy. The pursuit of that objective is likely to get really intense.

As the WSJ's article on online-tracking notes "the 26 billion-a-year Internet advertising market" is the focus of much of the research spending a primary goal of which is to connect website operators with advertisers who want to capitalize on the Web's ability to target individual users. That it is shaping up to be an epic quest is clear from the Journal's summation of it as an "arms race among the start-ups for math specialists who can slice and dice data about users' online behavior to generate more revenue."

That some of these "quants" have migrated to advertising from Wall Street in search of the X-factor is a telling indicator. If successful, it likely will bring more than a windfall for those in the quest and a vastly changed (for the better) consumer experience.

Vijay is Chief Operating Officer and part-founder of Apple Core Hotels- a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.Member of the board of Directors - Hotel Association of New York.

www.vijaydandapani.com
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