If necessity truly is the mother of invention, then we live in the most innovative times. Last month, the Office for National Statistics (ONS) revealed that the UK had entered the deepest recession since records began, with GDP tanking by 20.4% in the second quarter of 2020.
For anyone working in the advertising industry today, there has never been an event that so clearly and dramatically illustrates the need for bold ideas, approaches and interventions as the coronavirus pandemic and its commercial fallout.
Against such a stark economic backdrop, it has been heartening to see how our industry has responded, creatively. Although the IPA is aware how hard agencies’ revenues have been hit during the crisis, the work being put out into the world by agencies serves as a reminder of what we can do and what we must do to return our clients, our country and ourselves to growth.
Everywhere we look, there are campaigns that capture that spirit of resilience and renewal necessary to shift the nation’s mood and behaviours: advertising that is kind in tone, gentle in humour, encouraging as it nudges behaviours, and harmonious in how it approaches both purpose and profit.
From restrictions to recovery
Look a little harder, and we see indicators that life and business are beginning to move in the right direction. The Bank of England’s chief economist Andy Haldane has suggested that strong consumer spending has helped the UK recoup nearly half the losses caused by the coronavirus pandemic. In our own industry, July’s Advertising Association/Warc Expenditure Report forecast that advertising spend will drop 15.6% to £21.4bn in 2020, before recovering to £25bn in 2021. The findings echo sentiment from the IPA’s own Bellwether Report, which showed the greatest-ever cuts to marketing budgets in Q2 2020 but predict a rebound in 2021 – not a ‘V-shaped’ recovery, but more a ‘checkmark’ shape.
There is still a long way to go. While these indicators point in the right direction, that direction is only towards where we were at the end of 2019. For anyone who feels a sense of unease at the apparent disconnect between ‘deepest recession since records began’ and a modest recovery in 2021 – that disconnect is not imagined. There is real work to do in order to change consumer behaviours and fuel economic growth. As evidence of one institution that has recognised just how imaginative and interventionist it must be in order to battle the economic damage of coronavirus, I give you – the British government.
It shouldn’t be controversial to point out that a UK government – and a Conservative one, at that – has stepped a long way outside its political comfort zone in order to enact measures aimed at averting economic crisis. It has paid the wages of 9.6 million workers through the furlough scheme; helped to keep businesses large and small afloat with the Coronavirus Business Interruption Loan Scheme and Bounce Back Loans; allowed business rates relief and tax deferrals; and introduced ‘Eat Out to Help Out’ to boost consumer spending and help support the hospitality sector.
Measures such as these form the backbone of the government’s economic stimulus package. Imagine how much more powerful they might be were they to be co-ordinated with advertising’s proven ability to influence consumer spending and power growth? Regrettably, we have also seen policy outliers from this government that are less in step with their efforts to support business recovery. The proposed restrictions on HFSS advertising – including a pre-9pm TV ad ban – are not in line with their intent. The government’s own impact assessment concluded that such a ban would have the effect of reducing a child’s daily calorie intake by just 1.74kcal – the equivalent of half a Smartie. At the same time, the businesses that have helped the country get through the worst of the coronavirus crisis would be impacted: food manufacturers, retailers, broadcasters and publishers.
At this crucial time, the government should be partnering with the advertising industry in shared endeavour: to kick-start the economy by boosting consumer spending and fuelling growth. It is why we are backing industry-wide calls for the government to introduce an advertising tax credit policy that will help to boost demand for advertising and marketing services, get our clients growing again, and act as a stimulus for the wider economy.
At a moment when every industry has taken a financial hit from Covid-19, a policy of advertising tax credits is the kind of bold – and, yes, unorthodox – measure that can move our clients forward as restrictions continue to lift. To do this in partnership marries the pro-business policy muscle of government with UK advertising’s creative firepower and ability to boost both consumer confidence and GDP. Research from the Advertising Association has previously shown that every £1 invested in advertising fuels an additional £6 in economic activity.
Drive relevance, evolve relationships
It is in that spirit that the IPA continues to ‘Reimagine’ – to build new relevance for agencies as true partners for growth for our clients and, as it turns out, for the post-Covid-19 UK economy. We continue to ask the same questions, and seek the answers, that we did before the coronavirus pandemic, but with increased urgency – there has rarely been a more important time to consider what the future holds, and what we can do to ensure the best possible outcomes are promoted.
To that end, the IPA is currently undertaking research into how the consumer landscape will be transformed and what the subsequent implications will be for the marketing industry, for a report later this year that will offer IPA members and the wider industry a refreshed vision of how advertising can best serve brands, and how brand-agency relationships will likely evolve to adapt to emerging consumer needs.
With summer over and the industry in a back to school mindset, the IPA is teaming up with The London School of Economics and Political Science (LSE) to bring its online MBA Essentials Certificate course to agencies at a heavily discounted price. The first cohort will start in November and will be able to benefit from the business acumen to help clients create value for customers and for themselves, and to survive in a world of change.
We recognise that agencies have done a huge amount of ‘reimagining’ over these past six months – through necessity as much as choice – and are experimenting and winning at new ways of operating and working, and at how they serve clients under radically different circumstances. Innovation and adaptability are two things this industry is exceptionally good at. As ever, the IPA is committed to leading from the front – to champion UK advertising and its economic value and to put in place initiatives that drive agencies’ relevance and prosperity.