A theme on my weekly leadership calls and a recurring conversation with home service clients is the forecasted decline in consumer spending on home improvements and maintenance. Research from McGraw-Hill indicates companies that advertise “aggressively” during a recession can have up to a 256% increase in sales compared to companies that cut back. Advertisers with a focus on customer opportunity and long-term ROI should take advantage of low-cost channels (like direct mail) and double down on data.
Here are some of the ways our home improvement clients continue to succeed despite this shift in demand:
- Experimenting with different offers and creative to optimize leads while not over-discounting
- Using client data to find optimal underserved areas where you get more for your ad spend
- Offering financing or free service visits where applicable to increase leads in the funnel
- Educating the value of home improvements in creating equity wealth to drive home value
- Moving budget into postcards vs. competing with political ads on the airwaves / internet
- Shifting the narrative from “replace” to “repair and maintain” to build a steady lead stream
- Being deliberate in channel choices to reach the best audience and ensure no wasted spend
- Measuring advertising KPIs beyond leads, like average ticket, to determine campaign success
- Partnering with an agency that understands them – Valpak mails 10B home services ads per year
Many business owners are tightening their ad budgets as a result of high/rising interest rates. (BIA projects a 4.9% decline in 2024 local advertising spend among home service businesses.) But the money is still there. With homeowners not selling, home equity is at record high and home equity lines of credit (HELOCs) are increasing in demand. Capitalize on this demand by continuing to advertise while your competitors pull back to gain market share and deepen customer loyalty.
Political ad spending is also projected to top $11 billion next year, driving up the cost of advertising through good old-fashioned supply and demand. Businesses are reporting displaced ad buys at a moment’s notice because political advertisers are willing to spend more and want the airtime. Home improvement leads are converting at a lower rate too, making the mailbox even more attractive as a low-cost scale opportunity. It’s why BIA projects direct mail will once again remain the top media channel for home improvement in 2024 with a 33.9% share of wallet.
Home service brands must remain tactical and reduce the urge to slash advertising spend when competition is soft. At the end of the day, you have to make sales. And right now, there’s no media more reliable or steady than direct mail. It’s the place you can shelter your spend and get returns.
Jay Loeffler is Valpak’s Chief Revenue Officer, responsible for national, franchise and local sales strategies. With both sales and marketing leadership experience, Jay has a proven track record of driving sales growth in a broad range of business sectors.
