Just when all seemed to be going well, new evidence suggests a swing back to the kind of short-term activity more associated with recession’s darkest days. Could their collective wobble have something to do with the ill wind blowing across Europe from Greece? Or does it reflect some uncertainty about what the impact of a new Conservative administration might be? Nobody is quite sure.
There is certainly no obvious reason for the almost schizophrenic behaviour highlighted in the latest IPA Bellwether Report. It shows that, despite marketing budgets being increased for the 11th consecutive quarter, more companies are resorting to discounting and promotional activities to boost sales. Even Paul Smith, a senior economist at Markit and the report’s author, is at a loss to explain the dichotomy. "This could have something to do with uncertainties within the wider economic environment," he says. "Or it may be that the growth of recent years is not sustainable and is returning to more realistic levels."
Tim Lefroy, chief executive, Advertising Association
"There’s a significant amount of uncertainty in people’s minds at present. That’s partly because of a possible Grexit but also about what the new government’s priorities might be. This is particularly true for certain sectors. There will definitely be pressure on food advertisers in the wake of the government’s new anti-obesity strategy. As a result, some companies may resort to short-term measures to get some sales in the bank. It may be a very exciting environment, but it’s also a very tough one. That said, I don’t think marketers are nervous. The underlying economic outlook is still pretty good."
Bob Wootton, director of media and advertising, ISBA
"Although everybody is relieved that we have an administration that is small-business-friendly and that corporation tax is being reduced, day-to-day business remains as tough as ever. While long-term prospects may be better, it’s still dog eat dog in the auto market, while the discounters still have a big impact on the retail sector. Clients continue spending on advertising but are slightly more cautious and asking themselves if they necessarily need to do things in a particular way and at a particular time. Also, marketing managers may be instigating smaller and cheaper projects that don’t need signing off at a senior level."
Rod McLeod, head of marketing, Volkswagen UK
"The auto industry has always been highly competitive and always will be, but we at Volkswagen have never thought a short-term way and are not feeling under pressure. We’re much more concerned with spending strategically and investing, particularly in digital, to enhance the overall experience for our customers. The UK economy is growing strongly, but I suppose a lack of confidence might be caused in part by the impact here of slowing economies in South America and China. The possibility of a Grexit won’t help, but the effect on us will be much less than if we were part of the eurozone."
Lisa Thomas, UK group chief executive, M&C Saatchi
"There are now so many places where marketers can spend their money and, if you are in a business driven by sales (and most businesses are), it’s enticing to invest in agile communication that can easily be turned on and off. So it has become tempting to take a short-term and slightly cheaper option. The danger is that you stop thinking about how you build your brand in the long term. While the possibility of a Grexit and a new government at home could be perpetuating recessionary behaviour, it’s possible that marketers are just taking time to get used to the new channels."