Lloyd Balman, Head of Marketing for Retail at TD Bank, discussed the rise in experiential spending and the role social media plays in promoting it.
In the first keynote presentation of the day at the 2017 Financial Services Forum: Marketing & Technology Innovation, held in Boston on September 7, Balman announced that his goal for the year is to overcome his fear of expressing original ideas and to talk about social media addiction. He began by discussing experiential spending.
“Experiential spending is on the rise,” said Balman, “and retail spending is going down. Spending on personal consumption doubled from 2000 to 2015, especially purchases on food, entertainment, and travel. Restaurant sales are outpacing almost every other industry, but retail, in general, is suffering. Why are people spending more money on experiences than on stuff?” he asked. Balman responded with one of his original ideas—“I determined that people are spending money on experiences because they miss the social interaction. But I learned that’s not true." He then stated he was going to work his way up to the insight he had as a result of this misperception.
“Spending on personal consumption doubled from 2000 to 2015, especially purchases on food, entertainment, and travel. Restaurant sales are outpacing almost every other industry, but retail, in general, is suffering. Why are people spending more money on experiences than on stuff?”
“Cornell researchers have shown that anticipation drives happiness. A material purchase is often fraught with anxiety and impatience. In addition, the personal value of a material purchase is typically measured against others’ material possessions,” said Balman.
“Anticipation drives happiness. A material purchase is often fraught with anxiety and impatience. In addition, the personal value of a material purchase is typically measured against others’ material possessions.”
However, this is what the Cornell researchers discovered about experiential spending:
• People are happier when waiting to make an experiential purchase than they are when waiting to make a material purchase.
• People are impatient when making a material purchase, but, in contrast, are excited about making an experiential purchase, even when they have to wait.
• People are more pleasant to one another when waiting to make an experiential purchase versus a material purchase.
The take-home message: experiential spending promotes happiness before, during, and after the purchase. In addition, even when experiences don’t turn out the way we expect, we tend to view them positively. However, a disappointing material purchase usually stays disappointing.
Balman’s next point was that it’s socially acceptable to share experiential purchases on social media, but people generally don’t want to hear about other people’s material purchases. His epiphany about why experiential spending is on the rise is simply this: “It generates positive feedback from a social media perspective.”
He next talked about how mobile is becoming the predominant communications platform, with nearly 60% of Facebook users predicted to access Facebook solely using mobile devices by 2020, compared to 50% last year. In addition, 80% of imagery is retained by the brain, compared to 20% of information accessed via reading text. “So, visuals are in, text analytics is out,” he observed.
“Most social networks aren’t looking at expanding their user universe; they’re seeking ways to monetize it,” noted Balman. “The average revenue per user has gone from $13.70 at the end of 2015 to $18.91 at the end of 2016.” This was accomplished by keeping users on sites longer to capitalize on revenue opportunities related to ads.
To wrap up, Balman stated, “Social media addiction is a bigger problem than many of us think. There are many aspects of the addiction that are similar to being addicted to narcotics. One of the main drivers is the ‘network effect.’ This means that once enough people are on a particular network, that network is viewed as indispensable and becomes part of a person’s daily life. Social media has hit that point.”
“Social media addiction is a bigger problem than many of us think. There are many aspects of the addiction that are similar to being addicted to narcotics. One of the main drivers is the ‘network effect.’”
Another of Balman’s original ideas relates to the popularity of the smartphone. “The reason for its popularity is that people previously were bound to their computers if they wanted to participate in social networks. Smartphones allowed them access to social networks any time—the network effect.”
Going social has a chemical effect on our brain, observed Balman. It’s been shown that tweeting for 10 minutes raises the levels of oxytocin (the chemical that creates feelings of trust and security and reduces anxiety) in the brain by 13%. Instant notifications from our social profiles on mobile devices act like ‘reward cues’ that are received in the same area of our brain that processes feelings about food, sex, and money. A study of 18- to 85-year-olds discovered that they found social media harder to resist than smoking, drinking, spending money, sleeping, or sex.
So, the link between experiential purchases and social media is clear—people are addicted to the medium that encourages sharing personal experiences. Full stop.
ABOUT LLOYD BALMAN
Lloyd is the marketing head of Live Experiences, Brand Experiences, Retail Innovation, Distribution for TD Bank, America's Most Convenient Bank. Prior to TD Bank, Lloyd was Chief Floor Sweeper, Trucking Loader, and "Fill in the Blank" Guy for REVOLUTION events before being named Managing Director of Operations, Sales, and Marketing. In his role, Lloyd was accountable for business growth, P&L, business operations, and national account teams responsible for the US Navy, AstraZeneca, Procter & Gamble, L'Oréal, Time Warner, and Discovery Channel, among others.
Highlights of Lloyd's career include the 60th Anniversary Celebration for the State of Israel on the National Mall, inaugural balls for various administrations, and the creation of the "Iraqistan" training facilities for the Navy Seal Explosive Ordinance Device teams.
Lloyd is a graduate of Lebanon Valley College with a degree in Music Composition Theory and a minor in Audio Engineering. Hobbies include anything having to do with water. He’s a Pisces.