John Dick: ‘Play Hardball and Steal Share’

As someone who’s always asking consumers for their thoughts on spending (and politics and AI and more), our friend John Dick knows people are feeling, as he says, “gusty economic headwinds.” But the CEO and founder of CivicScience says this is the optimal time for brands to be opportunistic: If they’re willing to switch mobile carriers and banks, looking for a better deal, they’re just as likely to do so with their breakfast cereals and shampoo.

“The brands that are really smart about identifying their vulnerable competitors, who have the most sort of adjacent, kind of similar customer, it’s the time to go after and play hardball and steal share,” he says.

You can hear more from our latest conversation with John Dick (including his read on spending by Gen Z and millennials) in our video or read our lightly edited conversation.

TRANSCRIPT

John Battelle 
Welcome to another Signal Conversation. This one is a repeat conversation. We’re not running an old one. We are bringing our friend John Dick from CivicScience back to help us understand what have become somewhat turbulent times. John is a serial entrepreneur with extensive experience in new business formation and marketing, host of a successful podcast and a great weekly email newsletter, which is read by a who’s who, business leaders, marketers, policy makers and even celebrities. He also plays in a band called Moscow Mule, which I respect as an aspiring band player myself. Welcome back to Signal.

John Dick
Good to be here. I think you read that maybe exact same bio the last time I saw you on stage in its Signal, in person.

That is that is entirely possible.

I’m due to update it, but it’s great to be with you.

Well, if you were to update it, what would you add?

Oh, man, I guess I don’t know, my life hasn’t gotten all that much more interesting, still doing all those things. So yeah, we’ll just ride with it.

A lot has happened since we caught up about two years ago. I’m curious, given what you do, which is sample and ask questions of, literally, I think, a million questions a day of consumers, what’s on their minds right now?

What isn’t John? The sort of prevailing mood is, frankly, one of fear, anxiety. Look, uncertainty is just a bad thing for the economy. It’s a bad thing for markets. It’s a particularly bad thing for consumers. I’ve been saying and writing this a lot the last several weeks. There are some just uncanny, kind of eerie similarities to things that we see in our data that we saw in the early days of the pandemic, in terms of how the consumer is feeling and how they’re reacting to the sense of uncertainty, the kind of quote, unquote unprecedented nature of what’s going on right now, and it’s causing, I know we’ll get into a lot of this, but just really across the board, shifts in behavior and spending and prioritization. We’re seeing even this is a very direct correlation to the early days of COVID. Is just consumers not even wanting to leave the house as much as we would expect to see them leave the house right now, even with the weather getting better and so on. It’s just a strange time. I feel like the consumer would rather just know that the worst of the bad news is certain to come, so they could adjust to it. The kind of will they, won’t they state of things is almost even worse for them and it’s just manifesting itself all over the place.

So give me a few examples. Let’s say in, you know, in online commerce or retail shopping, how are those behaviors changing?

There’s just generally a lot of pulling back happening, kind of across the board. But I want to qualify that, because every consumer, almost like as unique as their fingerprint, prioritizes different categories of spending. A lot of it has to do with just the sort of sense of emotional well being. This is a very, very consistent sort of post-COVID, post pandemic stress disorder phenomenon we’ve seen is how consumers, consciously and subconsciously view their consumerism as a gesture of self care. So they prioritize spending categories that make them feel better or safer or more comfortable or indulgent and and they’ll fight to the death to preserve their spending in those categories, and then they’ll cut everywhere else. That hierarchy of prioritization, really varies widely across almost to an individual level, but certainly demographic segment groups that we see. We’re gonna see shifting away from shopping in store and more shopping online, frankly, for no other reason than the internet’s a deflationary tool, right? So people can shop for better deals online. We’re definitely seeing pullbacks in certain categories of ‘Dining Out’. Lot of QSR, for example, is getting hit, but there’s just so many nuances to it.

You all may recall, if you saw my talk at Signal conference a couple years ago, how much consumer confidence today varies by party affiliation. So we’re watching Republicans behave differently than Democrats based on sort of how pessimistic they are at the moment. Of course, that’s very highly correlated with how much you support Donald Trump or not, and how much you trust that he’s got some plan and that it’s all going to work out. We’re seeing difference differences in old and young, rich and poor and so forth. So it’s a very complex state of things, but I would just say the overarching kind of uncertainty and fear is the one thing we can paint a fairly broad brush across everyone with.

Is there anything you’re seeing in the data that is doing better in these times?

Not really. Nothing that immediately comes to mind. Certain categories of prestige retail continue to do okay. The higher income consumer just is able to spend more money now. Another kind of nuance, or kind of a perfect storm of what’s going on right now is when you have the combination of tariff concerns and tariff price concerns, which tend to hit middle income to lower income consumers harder, because they’re the ones that are expecting to feel the price increases that come with those with those tariffs. So that lower income consumers are feeling anxious and beginning to pull back due to tariff concerns. At the upper end of the income spectrum, you’ve got your sort of upper middle class to upper income consumer who’s concerned about a recession. Recessions are going to affect their stock portfolio, their home value, all these kinds of things that you know. Interest rates aren’t going to come down, as you’d hope. Even that higher end consumer is concerned on a more macro level, so it’s affecting their investment strategies, their retirement planning. They’re delaying certain kind of long trips that they might otherwise want to take, larger purchases that they’re going to want to take.

We’re seeing things, we’re not the first ones to report this. We saw early signs of this in the early first quarter, about people beginning to pull back on some travel plans. Now the airlines are all reporting significantly lower forecasts for the year. Going into 2025 we expected it to be a really good summer for home improvement and home renovations. That is all kind of falling off of a cliff right now where the consumer is lessening or, if not sort of delaying to potentially canceling, to downsizing, those kinds of things.

One of the big boosts that summer home improvement usually gets is from tax refunds that consumers get right kind of comes. Those checks show up late April, early May, and that’s one of those bigger things, that and also travel that we see consumers that have a windfall with tax returns tend to invest those things in now. Those same consumers are telling us, no, they’re either going to save that money, use it to pay down debt, or use it just to cover household expenses. There’s not a whole lot from the consumers perspective that I see as a silver lining, any categories that are doing particularly well. Dollar stores, for example, are starting to see some of those higher income consumers kind of trade down into their stores. I don’t know if that’s a silver lining, as much as it is sort of a putting a finger being put in the dam to kind of slow the floods a bit.

We can talk about from a business perspective, where silver linings might be. So I’ll ask myself that question. We forget, it’s been a good solid 15 years since we’ve been in a real, honest, recessionary climate. And I’m not saying we’re there yet, but there’s lots of reasons to believe we’re on the precipice of one. The consumer is feeling that, partly because they’re being told to fear it. We kind of forget the playbook. When I we go see our clients, lots of people in those board rooms we’re talking to didn’t work there 15 years ago when there was a recession. They don’t remember what it’s like. And one of the things that we know to be very true and maybe even a little counter intuitive, is the extent to which consumers, their switching propensity increases dramatically in times of gusty economic headwinds. We’re seeing it, even in categories where it’s hard to switch mobile carriers, banks, switching behavior. Particularly the mobile carrier space, in the first quarter, was up 40% over the same quarter a year ago. It’s a gesture of control. I can’t control anything else that’s going on in the world, but I can control the relationships I have with the vendors in my life. Part of it is, it costs money to switch your mobile carrier. There’s taxes, maybe you have to get a new phone. There’s penalties, potentially you have to pay. But people are sucking those things up because they think it’s going to get worse. They want to do it now, so that they’re maybe not burdened with as big of a monthly fee come August, September, October, when it’s worse.

It’s a great opportunity for really smart marketers to grow share to conquest customers of competitive brands. Because if they’re willing to switch their mobile carrier, and they’re willing to switch their bank, then they’re willing to switch their razor, they’re willing to switch their switch their shampoo, their breakfast cereal. We know a lot of times CFOs want to kind of pull back on marketing expenses when things are uncertain and headward blowing, but it’s exactly the wrong time to do that because the brands that are really smart about identifying their vulnerable competitors who have the most sort of adjacent, kind of similar customer, it’s the time to go after and play hardball and and steal share. So it is a chance to be opportunistic from that perspective.

Have you seen anything in the data relating to that sort of desirable demographic known as youth or young adults, Gen Z, Gen Y, Gen A.

We only know about Gen Alpha by surveying their parents and what they’re writing for their kids. So that’s going to be more or less a proxy for how much those parents are spending on themselves at this state. Just how much disposable income they have and what they’re doing with it. Gen Z, of course, we study obsessively. I don’t know if this is necessarily a good thing, we’re not seeing as much of a pullback from Gen Z in terms of their overall spending. When we even when we ask them about tariff concerns, that we just don’t see that same heightened level of sensitivity to it. We’re not seeing the same pullback that we’re seeing say for Millennials and younger Gen Xers and now increasingly older Americans. They’re just they’re just they’re going to keep spending the same amount of money that they’ve conditioned themselves to spend, which is, I think, great for retailers, maybe bad long term because that those chickens will come home to roost at some point. So they’re taking on more debt.

What we are watching is savings rates of Gen Z are falling off of a cliff. So rather than putting money away, whether they’re investing or starting to save for retirement, they’re spending that money now instead of saving it. So I don’t know if that’s, like I said, maybe good for the retailers that are benefiting from those dollars, but certainly, maybe not so great for the long term economy.

There is actually maybe one very small, short term silver lining, which is the 15 to 20% of consumers that we’re seeing now accelerate purchases, in the last two, three, four weeks, goods that they’re buying, expenses that they’re making now, because their fear that those things are going to be 25- 50- 100% more expensive. We might see some in certain categories, like electronics, home goods. We’re seeing some kind of hoarding behaviors even, that’s another thing that kind of harkens back to COVID? Gen Z is,  particularly on the electronics side is partly leading that, that push of buying things now before they get too expensive whenever this 90-day hiatus on tariffs, or however long they take to reach their peak. So we might see some retailers benefiting from that in the near term, but that’s going to just be a bell curve that another cliff will see months from now. So I don’t know if that’s a silver lining, but it’s going to boost some retail sales for a month or two.

Pivoting to the other thing that everybody’s talking about, and we don’t have a lot of time, but I’m just curious, what are you seeing in your data in terms of consumer behavior related to the sort of biggest topic in the world of tech and business, which is, AI.

A couple of different ways I’ll parse it out,. The consumer, by and large, in aggregate, the collective populace, let’s just call them, Americans, and not just thinking about them through the lens of just consumers. They’re still very skeptical, concerned. I think, the fear of the potential risks of AI and a lot of that’s born of maybe the movies we all watched in the 80s and 90s and early 2000s. That overall concern, 74% of Americans are still characterized themselves as “somewhat to very concerned” about the negative impacts of AI, compared to 26% who are more positively inclined about it now. So that’s a big, almost three to one difference between just negative, negative fears, perceptions. It is improving. The “very concerned” number has fallen six percentage points over the last year. The “not concerned” group has risen 5% over the last year. I think as people are getting more comfortable with it, using the tools themselves, benefiting from some of the features and search and others, it is warming them up, but we still have quite a long way to go.

One place where it’s definitely taking hold in a more positive way is at work. Just under half of employed Americans report using some form of AI, chat, GPT, the like, in their work, at least monthly. About 22% use it at least several times a week. So it’s definitely taking hold from that sort of workplace productivity standpoint. But from sort of the broader consumer, there’s still just a lot of suspicion, skepticism and fear that will likely continue to suppress adoption of those things by consumers. But again, like I said, I think they’re whether it’s the PR and the marketing or just the familiarity with it. Those numbers do seem to be improving and pretty sharply over the last year.

Interesting. Well, maybe we’ll check in with you again in a year or two on that one.

Check in with us next month. I always tell everybody, I do a lot of presentations on this stuff, and it’s like basically throw this presentation away after I send it to you, because next week, everything I told you today could be untrue. And AI, barring some bad, catastrophic PR event or something, I expect to continue to go up into the right. It started in a tough spot.

Last question before we let you go, you announced CivicScience Advertising, which was a new privacy-driven approach and data-driven approach to advertising, particularly in the programmatic space. A couple of years ago. How has that gone? And what have you learned from doing that?

It’s going exceedingly well. It will likely, by the end of the year, if not the end of the third quarter, surpass our core intelligence business in size at the rate it’s growing. The other business is growing too, just that one is going to eclipse it by the end of the year. We believe we were on to something. And it’s, it’s, it seems, by all accounts, that we were. I think I’ve learned a few things, one about our business and one about the market. One is that, it turns out asking people questions about what their intentions are to buy something is a really good signal that they’re going to buy it. We don’t have to guess. We don’t have to assume because you bought something previously, or you happen to search for something, or that you’re likely to be in the intent bucket, we just simply ask millions of people, how likely are you to buy blank in the next 30- 60-, 90 days? And surprisingly, that’s a great signal of purchase intent. So some of that seemed obvious, but of course, we needed enough scale to prove that it worked.

The second one is how valuable these kind of psychographic attributes that we capture things we just talked about, tariff concerns, concerns about AI, political affiliation crossed with tariff concerns and economic sentiment and well being, how those hopes and fears and wants and needs that we can we can learn by asking people questions how valuable they are as targeting vectors for for media, baking that into a segmentation. So much of advertising is powered by observed behavioral information, because we have infinite amounts of it. But there’s a lot we can’t observe from someone’s behavior that we can only get by sort of tapping into their brain to understand the why behind their purchase and really instrumenting that has turned out to be really effective in generating really high performance.

The last thing is, it’s a difficult, the space is hard to operate at. There’s a lot of competition, of course. There’s a lot of competition out there that’s given the industry a bad name in the way that they operate. So we spend a lot of time trying to convince people that, yes, we’re privacy compliant, yes, we’re ethical in the way we collect data. People are inclined to not believe us, so it’s that’s a bit of time. Then, look, the big agency have a lot of power, and navigating our way in and around that and through that, is really hard to do. We’ve had a lot of success with companies that are buying their media in house, working with more independent agencies. So those are some of the challenges that we’ve had to work our way through. And I think, based on the growth we’ve seen so far this year, and expect to see through the rest, we’ve figured out our way around the landmines. It’s been extremely validating of our vision and philosophy that we thought could work, and so we still have a long way to go.

Congratulations. It’s not easy to break into that business, and I’m really pleased to hear you say that. We have to stop now. But John, thanks so much for checking back in with us, and we will check in with you often. Appreciate your time. Thanks for being on Signal.

Good to be with you.