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Cutting marketing won’t solve inflation conundrum

Once again, the British government isn’t showing the way as its new cost of living ‘tsar’ urges businesses to slash advertising

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Boris Johnson's 'Brexit Bus' promised £350m a week for the NHS

Boris Johnson's 'Brexit Bus' promised £350m a week for the NHS

Boris Johnson's 'Brexit Bus' promised £350m a week for the NHS

As much of the western world wrestles with rising inflation, the prospect of a recession in a number of countries and a seismic shift in the global geopolitical order, many in the marketing and advertising world are bracing themselves for what could turn out to be a white-knuckle ride like no other.

As always during periods of great economic and political uncertainty, businesses will look to trim costs and do their level best to keep the show on the road. While there will always be considerable pressure on marketing budgets, brands need to tread very carefully and avoid knee-jerk reactions where possible.

Knee-jerk reactions don’t come any dumber than the UK government’s recent inflation-busting plea to businesses to use some or all of their marketing and advertising budgets and put the money that might otherwise have been invested to lower the prices they charge consumers.

In what appears to be more a show of jolly good British patriotism – as opposed to something that is rooted in evidence-based economic or marketing thinking – the gaffe-prone government is hoping that if they can get enough companies and their brands embrace the proposal (which is a campaign in its own right), it would, well, get inflation “done”.

A populist plea from the same people who promised that the NHS would be better off to the tune of £350m (€413m) a week post-Brexit and that Irish border would be just fine and dandy once they could shake off those pesky Eurocrats, it’s also a plea that is as dumb as it is dangerous. Oh, and this is the same government that spent a whopping £164m on advertising during 2020 which, according to Nielsen, was a 238pc increase on 2019, making it the largest advertiser in the UK, ahead of Unilever which spent £137m in the same year.

In the same way that some British businesses backed Brexit after they fell hook, line and sinker for the many lies that were pedalled at the time, it’s entirely conceivable that some of these will also nail their colours to Blighty’s sagging mast in an act of misguided patriotism that will almost certainly backfire.

While it may also be an eleventh-hour stunt by a rudderless and morally bankrupt government sailing in the direction of a general election iceberg within the next 18 months, it shows a breath-taking ignorance of marketing and the role it plays in open, competitive and market-driven economies. It also gives a two-finger salute to the vast reservoir of empirical research that underpins much of modern marketing thinking.

There is no shortage of research that clearly demonstrates that marketing and advertising improves consumer choice, stimulates competition and innovation, enables companies to increase sales, boost employment which, as we know, helps drive overall economic activity.

In the UK, for example, the Advertising Association estimates that for every £1 spent on advertising it generates an additional £6 for the economy. Similar research carried out in Ireland by Core and the Association of Advertisers in Ireland (AAI) in 2017 found that every €1 invested in advertising delivers a net return on investment of €5.44 and a gross return of €8.26. 

That the marketing and advertising world may be in for a rough ride over the coming few months is a different matter. Yes, brands will be squeezing every last cent out of their budgets to make them work more efficiently and performance-led and short-term tactical campaigns will be the order of the day. 

One can already sense a hint of nervousness in the share prices of the big global advertising networks, many of which have seen their share price collapse this year. WPP’s share price, for example, is down 32pc while Martin Sorrell’s S4 Capital, once seen as a beacon of hope in an industry undergoing profound change, has seen its share price collapse by 63pc since the beginning of the year.

Meanwhile over in the tech sector, there are signs that it too is facing a bumpy ride with companies like Netflix, Twitter and Facebook, the latter two which depend heavily on advertising revenue, are warning about choppy waters ahead.

In choppy waters, however, good marketing and advertising strategies can be the difference between staying afloat and sinking.

Defence Forces get a boost

With the Government planning to spend at least €1.9bn on the annual defence budget by 2028, a new campaign to recruit to the Irish Defence Forces has been launched. Created by the Dublin-based agency Kick, the new campaign is called ‘Be More’ and involved a collaboration with Commandant Lisa McMahon and her team at the Defence Forces. Aimed at seeking new recruits for the Army, Air Corp and Navy, it is running across TV, digital, social and OOH channels.

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Connelly’s new MD

Vaunnie McDermott has been appointed as managing director of the creative agency Connelly Partners Dublin. With over 20 years’ experience in the marketing and advertising industry, she joined Strategem in 2016.

Strategem was acquired in 2018 by the Boston-headquartered Connelly Partners in 2018 and earlier this year it acquired Zoo Digital. Clients of the agency include 123.ie, Shannon Airport, Expressway and Audi Ireland.


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