Should advertisers pay more attention to payday?

You can tell when payday is approaching at our offices by the state of the kitchen. In the few days before we get paid the work surfaces are cluttered with tinfoil and Tupperware. A sign of mismanaged monthly budgets requiring leftovers for lunch. Then on payday, the splurge. Fish and chips, pizza, even the odd Chinese takeaway.

But are these trends typical of consumers at large? Do consumers reign their spending in at the end of the month and then splash out once paid?

In order to understand more about spending patterns at large we surveyed 200 consumers about their payday behaviour. The biggest change was a noticeable uplift in spend in the week after being paid. A third of adults spent a little or a lot more. This uplift was most pronounced amongst 18-34s, with nearly half (47%) spending more.

Other studies have found that low income groups are particularly likely to splurge after payday. Our other finding was around where people were most likely to spend their extra cash. The most popular categories were food, clothes, alcohol and DVDs.

We also cross-referenced these findings by asking another group of 217 consumers to record what items, across 17 categories, they had bought in the previous week. This spend data was then cut by distance from payday.

We found that for twelve of the categories people were more likely to have made a purchase in the week after payday than in the remaining weeks. Likelihood to purchase only declined in two categories after payday week. These two different approaches show that consumers claim to spend more after payday.

Of course, there are issues with claimed data. As David Ogilvy pithily stated: "Consumers don't think how they feel, don't say what they think and don't do what they say."

If Ogilvy were less of a gentleman he might have said consumers are prone to making stuff up. Luckily for us, Shapiro, from the University of Michigan, came up with an ingenious payday experiment that didn't rely on claims.

He used data from Check, a smartphone app that tracks account balances, to monitor the spending patterns of 23,000 people across 300 days. This showed that on payday spend spikes on average by 70%. Even when bills are stripped out this rise still averaged over 40%.

There's plenty that brands can do with these findings: primarily around phasing and messaging. In terms of messaging portfolio brands should consider rotation. They should advertise their premium products just after payday when customers are flush.

In contrast, value products, or indeed promotions, should be focused on the lead up to payday. Targeting these messages is straightforward as our survey showed that 64% of people were paid at the end of the month.

The second suggestion is that brands should upweight payday week as it's easier to prise money from consumers. This argument is particularly strong in key categories, such as alcohol, clothes and food, or for brands targeting 18-34s.