United States: Reaching the consumer

Consumer Profile

The average age has been more or less constant since 2010 despite a slight upward trend. It reached 38.6 years in 2022. Around 15.6% of the population is under 13 years old, 67% ages between 13 to 64 years old and 17.4% is over 65 years old. The population growth rate is 0.6%. The average size of a household is 2.51 people, with 28.5% of households living alone, 35% of people living in two and 15% of households of 3 people (Census Bureau, 2021. The percentage of women out of the total population in the US is 50.5%. About 83.1% of the population lives in urban areas (Data Reportal, 2022). The most populated areas are in the eastern half of the United States (Great Lakes, Northeast, East and Southeast) and in the western states. The least populated populations are mountain areas, deserts and boreal forests in the extreme north. In 2020, the main cities by population are New York City, Los Angeles, Chicago, Houston, Phoenix, Philadelphia and San Antonio. The level of education is high with 91.1% of adults aged 25 to 64 having completed secondary education, 50.1% of the population 25 to 64 years old who had attained a tertiary degree. The main occupations are administrative and trade jobs, followed by health, management, business, finance, transportation and construction.

Purchasing Power

The GDP per capita PPP in the United States is 63,206.5 USD in 2020. According to the Bureau of Labor Statistics (BLS), the mean wage for workers in the United States in May 2021 was $58,260 per year. Purchasing power has decreased recently, due to the impact of the Covid-19 pandemic. In the United States, the average household net-adjusted disposable income per capita is USD 51,147 a year, much higher than the OECD average of USD 30,490 a year, and the highest figure in the OECD. The personal consumption expenditure grew by 6.6% in March 2022 compared to a year before, according to the Bureau of Economic Analysis. The Gini index on income inequality has stabilized at 0.41 since 2016. Overall, women earn just 83.8% the amount their male counterparts make, according to data from the Bureau of Labor Statistics for the first quarter of 2022. Wages in the east of the country are higher, while the south has the lowest wages. Asian-born households have the highest median wage, ahead of the non-Hispanic white population, the Hispanic population and the Afro-American population.

Consumer Behaviour

The United States is a very developed consumer society. While the population had a fairly high level of confidence in the past, the financial crisis first and the Coronavirus crisis later has pushed consumers to move towards lower-priced products. US consumers are more likely to pay attention to promotions and compare prices. The most popular supermarkets are Walmart and Sam's Club (more than a fifth of market share), followed by Kroger, Albertsons, Costco etc. Americans are generally willing to travel to major shopping centres. Most US consumers shop and buy on various channels, making the whole buying process long and complicated. For retailers, omni-channel selling - both online and offline - is key to success. Online shopping increased sharply during the Covid-19 pandemic and remained dynamic in 2022. During the peak pandemic, the second quarter of 2020, consumers spent $200.72 billion online with US retailers, up 44.4% from $138.96 billion in the same quarter of the previous year, according to the Department of Commerce. Retail e-commerce sales for the first quarter of 2022 was $250 billion, an increase of 2.4% from the fourth quarter of 2021 (Census Bureau).
The Conference Board’s index - index of consumer confidence – decreased by 0.3% in April 2022 to 119.2, following a 0.1% increase in March. The index is nonetheless up 0.9% over the six-month period from October 2021 to April 2022 (Conference Board).

Generally, consumers are open to international companies and brands. According to McKinsey's August 2020 report, the COVID-19 crisis has caused a surge in new activity, with an astonishing 75% of US consumers experiencing new purchasing behaviour in response to economic pressures, shop closures and changing priorities. Overall, 36% of consumers have tried a new product brand and 25% have incorporating a new private-label brand. Among consumers who have tried different brands, 73% intend to continue to incorporate the new brands into their routines. Gen Z and high income consumers are more inclined to change brands. Social networks have a large impact on consumers, 34% of Generation Z make purchases through social media every single day. Moreover, social media creates opportunities for virtually every type of brand to engage with their customers: food and foodservice brands have the highest overall social media following, with clothing and footwear companies in second place. When buying online, almost 80% of US consumers indicated that they preferred using a debit or credit card. Some 71% of consumers are worried about big data and 34% do not trust tech companies with regard to personal data.

Among consumer trends in the United States 'Made in America' is an important issue. Some 70% of Americans consider it significant to buy American products. Also, responsible consumption is increasingly attracting consumers who want sustainable, transparent, clean products.  Some 48% of consumers say they want to change their habits to reduce their impact on the environment. Young people are even more concerned about the subject and are willing to pay more to reduce their footprint. The second-hand market is constantly growing and buying and selling websites are multiplying. The $35 billion secondhand apparel market will more than double to $82 billion by 2026 according to the ThredUp report. The collaborative economy is highly developed in the United States, especially in large cities. The trends that emerged during the pandemic persisted in 2021 and are expected to continue in 2022. Consumers want to save money, to eat healthier products and to make socially responsible choices (McKinsey, 2022).

Consumer Recourse to Credit

In the United States, the use of credit and debit cards is widespread. With card payments, around 70% is made by debit card, while credit cards are used in the remaining 30%. However, the amount of purchases made with credit cards is higher. Household debt has increased significantly in recent years and exceeds the pre-crisis level. In the second half of 2018, outstanding debt reached $ 13.29 trillion. More and more Americans are in debt (about 73% of the population). On average, an American has $ 137,000 in debt, and 38,000 if one withdraws mortgages. Consumer credit is used primarily to finance vehicles, education and sustainable products. The rise in defaults, threatening financial stability, and a possible rise in interest rates could have a negative impact on consumer credit.

Growing Sectors

Leisure, culture, education, vehicles, transport services, tools,  equipment for the home and garden, newspapers, books and stationery, holidays, home textiles, household crockery and utensils, alcoholic beverages.

Consumers Associations

US Government , Lodge a Consumer Complaint
CR , Consumer Association
CFA , Federation of American Consumers

Population in Figures

Total Population:

333,287,557

Urban Population:

83.1%

Rural Population:

16.9%

Density of Population:

36 Inhab./km²

Men (in %)

49.2%

Women (in %)

50.5%

Natural increase:

0.38%

Medium Age:

37.8

Ethnic Origins:

According to the U.S. Census Bureau, the majority of Americans have European, Middle Eastern, or North African ethnic backgrounds, accounting for over 73% of the population. Another 17.6% of the population is of Hispanic or Latino origin, 12.7% of the population is African American, and about 5.4% is of Asian origin. American Indians and Alaska Natives make up about 0.8% of the population and Native Hawaiians or other Pacific Islanders make up about 0.2% of the population.

Population of main metropolitan areas

Source: Citypopulation.de, Latest available data.

Age of the Population

Source: World Bank, Latest data available.

Consumption Expenditure

Media in Which to Advertise

Television

TV advertising in the US is expensive but it reaches consumers massively. While TV will command a strong USD 72.72 billion in ad spending this year (a 5% increase compared to 2016), increases are forecasted to be sluggish through 2021, hovering between 2.0% and 2.5% each year. As more dollars are further allocated to digital, TV’s share of total spend will decline from 35.2% in 2017 to 30.8% by 2021.Despite the range of OTT platforms and the trend for time-shifted viewing across a range of devices, linear TV remains the primary medium to consume video in the US. While this will continue to be the case for the foreseeable future, linear TV’s dominance is in decline.

Main Televisions
News Corporation
Disney
Time Warner
Viacom

Press

There are some 1,300 daily newspapers in the US, most of them with a local or regional readership. In regional and local newspapers, it is efficient mainly  for a product with strong potential in a specific region. Hard-copy circulations are in decline as readers go online. In the foreseeable future print media will continue its downward trajectory, with magazines slipping 2.0% and newspapers down 5.0%. The magazine advertising market is composed of two main segments: consumer magazines and trade magazines. Advertising in specialised magazines is a more affordable option for small- to medium-size companies. It is the best advertising option to reach a focused target, consumer group or to sell industrial and commercial products. The consumer magazine advertising market in the US has estimated value of USD 16.6 billion this year, and will remain essentially flat through 2021 (USD 16.7 billion). Of all the media types, newspaper advertising is the only market expected to see a decline in revenues between 2017 (USD 16.8 billion) and 2021 (USD 12.2 billion). Unlike magazine advertising, digital advertising in the newspaper market is not growing quickly enough to offset print advertising losses.

Main Newspapers
The Wall Street Journal
The New York Times
USA Today
Los Angeles Times
Daily News
New York Post
The Washington Post

Mail

The total ad spending in this sector has been stable in recent years, at around USD 45 billion. This form of advertisement is widely used for political campaigns, nevertheless its use for commercial purposes is slowing down (mainly due to digital advertising).

In Transportation Venues

Out-of-home (OOH) advertising has the strongest projection of the traditional media types, though its promising outlook is mostly the result of the expected growth in digital out-of-home advertising. Overall, OOH ad revenues are predicted to grow from USD 9.2 billion in 2016 to USD 11 billion in 2021.

Market Leaders:
Outfront Media
Clear Channel Outdoor

Radio

In the US there is a wide variety of radio stations at federal and state level. Companies choose to advertise on specific hour, day of the week related to radios audiences. The radio ad market will increase marginally from USD 18.2 billion in 2016 to USD 19.1 billion in 2021, excluding satellite radio advertising, which represents just a fractional share of total radio advertising. Terrestrial radio online advertising will be the fastest-growing segment. However, as with TV (and unlike print and out-of-home), digital ad revenues will represent just a small portion of overall radio revenues. Forecast to comprise 8.2% share of total radio ad revenues this year, online radio is projected to grow to 10.7% share of radio revenues by 2021. The major form will continue to be terrestrial radio broadcast advertising, although terrestrial radio ad revenues are projected to remain mostly stagnant between the period 2017-2021. For more information, consult the Global Entertainment and Media Outlook 2017-2021 (PwC).

Main Radios
Entercom
ABC Radio
Public Radio International
National Public Radio
Sirius Satellite Radio

Web

The USA is the biggest market of the world in online advertising. Digital ad expenditures surpassed TV for the first time in 2016, and the gap will widen in the next years. Digital spending will see double-digit growth each year of the forecast, soaring from USD 83 billion in 2017 to 129 billion in 2021.
Mobile has been the main driver of digital’s growth in 2017, accounting for over 70% of digital and more than 25% of total media expenditures. Growth will remain in double digits through the end of the forecast, with mobile ad spending expected to surpass TV in 2019. With a strong 9.9% compound annual growth rate from 2016 through 2021, according to the Global Entertainment and Media Outlook 2017-2021 (PwC) by the end of the forecast period online advertising should be a market worth USD 116 billion. That would make it more than 50% larger than the TV advertising market at that point. Online advertising has already outpaced TV in 2016 by roughly USD 15 billion.

Market Leaders:
Double Click
RAPP
Epsilon
Wunderman
FCB

Main Advertising Agencies

Amobee
IPG - Interpublic Group
Omnicom Group
Cramer-Krasselt
Team One

Main Principles of Advertising Regulations

Beverages/Alcohol

Long-standing regulations already prohibit false or misleading claims regarding the "curative or therapeutic effects" of an alcoholic beverage in an advertisement or on a label. In general, under the new rules, beer, wine and liquor companies can make a claim about a specific health benefit about their products on labels or in advertisements only under limited circumstances. The claim must be substantiated by scientific or medical evidence; information must be provided about the health risks associated with moderate and heavier levels of alcohol consumption; and information must be disclosed about the "categories of individuals" for which any alcohol consumption poses risks. Currently, the standard is that alcohol advertisements can only be placed in media where 70% of the audience is over the legal drinking age. Alcohol advertising's creative messages should not be designed to appeal to people under the age of 21. Advertising cannot promote brands based on alcohol content or its effects. Advertising must not encourage irresponsible drinking. Another issue in media placement is whether media vendors will accept alcohol advertising. The decision to accept an individual ad or a category of advertising is always at the discretion of the owner or publisher of a media outlet.

Cigarettes

Bans outdoor advertising within 1,000 feet of schools and playgrounds. Permits black-and-white text only advertising for all other outdoor advertising. Color and imagery advertising is allowed inside places minors are not allowed to enter.
Permits black-and-white text-only advertising in publications with significant youth readership (under 18). Prohibits the sale or giveaway of tobacco products like caps, jackets or gym bags that carry cigarette or smokeless tobacco product brand names or logos.
The current regulations prohibit the brand name sponsorship of sporting or entertainment events, but permit it in the corporate name. Sponsorship of individual teams or entries within a sporting event is also prohibited.
In 2010, the Tobacco Control Act became active and placed new restrictions on tobacco marketing, including extensive constraints concerning the circulation of cigarettes and smokeless tobacco to minors. Newly effective with this act, audio advertisements are not permitted to contain any music or sound effects, while video advertisements are limited to static black text on a white background. Any audio soundtrack accompanying a video advertisement is limited to words only, with no music or sound effects. For more information, consult the FDA regulations guidance.

Pharmaceuticals/Drugs

The Food and Drug Administration (FDA) handles most matters regarding the labeling of over-the-counter drugs. Given the health and safety issues that can arise in marketing these products, advertisers should take care in substantiating their claims. Depending on the claim, advertisers may be required to their representations with competent and reliable scientific evidence, including tests, studies, or other objective data. You can consult the Advertising guidance by the FDA for further information.

Other Rules

Under the Federal Trade Commission Act:advertising must be truthful and non-deceptive; advertisers must have evidence to back up their claims; and advertisements cannot be unfair.
Additional laws apply to ads for specialized products like consumer leases, credit, 900 telephone numbers, and products sold through mail order or telephone sales. For some specialized products or services, additional rules may apply.
For further info, consult Federal Trade Commission guide.

Use of Foreign Languages in Advertisement

Foreign commercials must always include some English language.

Organizations Regulating Advertising

FDA
FTC: Federal Trade Commission Act
FTC Division of Advertising Practices