Govt blitz urges brands to divert adspend to price cuts

trad_disciplines2The marketing and advertising industry is set to face new pressure on budgets amid Government plans for a major campaign urging businesses to channel their marketing spend into cutting prices and ease the cost of living crisis.

The move, first proposed by new “cost of living tsar” and former Just Eat chief executive David Buttress last week, was confirmed in a speech to business leaders at the CBI this week, with Buttress telling bosses he wanted their best ideas on how to help to take to the heart of government.

He added that the Government will be rolling out the official name [of the campaign] with branding and logos shortly.

The slogan, which has yet to be finalised, will promote a message about helping out in tough times, which businesses could display to give them “kudos”, a Government source claimed, by cutting their prices for consumers using money they would otherwise use on marketing.

Buttress cited a number of examples where firms could help, including extending mobile phone company social tariffs, learning from Gregg’s breakfast club, where some school children get a free breakfast, or popularising apps that sell off cheap food that would otherwise go to waste.

He said there were four points in the year that businesses could provide price cuts to help consumers – summer holidays, children returning to school for the new term, inflation going up in the autumn, and Christmas.

The campaign is set to launch in early July but could face stiff stiff criticism from a number of organisations, especially from industry bodies such as the Advertising Association and the IPA, which have long advised brands to ensure they continue marketing spend in a downturn.

The IPA’s evidence from previous recessions and periods of buoyancy consistently shows that cutting marketing investment weakens brands in the near-term and limits growth and profitability in the long-term.

And, after nearly two years in the doldrums, UK marketing budgets have only just recovered from the Covid pandemic, but also face the fall out from the war in Ukraine in addition to the cost of living crisis.

The Federation of Small Businesses has already waded in, insisting that asking businesses to cut prices to help with living costs is a “slap in the face” for small firms.

The FSB said: “Asking this group to soak up additional costs just isn’t realistic, especially when so many are worried about basic survival, and have already cut all expenses, even necessary ones, to the bone.”

Meanwhile Wetherspoons boss Tim Martin said the proposal was a “classic example of tinkering, instigated by ministers who really don’t understand money”. He added: “The main economic critique of this Government is that it doesn’t have an overarching plan, but just reacts to events, like a doctor who only treats symptoms, not the cause.”

Related stories
Ex-Just Eat chief risks uproar over call to slash ads
Digital spend soars but IAB chief warns ‘don’t get cocky’
Ad recovery continues but there will be bumps ahead
Ad budgets up again but the fat lady’s not singing yet
‘Data-driven ads will be key’ as spend finally recovers
Brands urged to reinvest in marketing now for recovery

Print Friendly