The latest Consumer Prices Index reading from the ONS, or Office for National Statistics, delivered a shock 9% rise in the index for April.
It’s the highest reading for 40 years and has put the UK firmly in the squeezing grip of a cost of living crisis.
So we’ve been asking the media, marketing and tech leaders what this means for them and the struggling British consumer.
This is a live story and will be updated with more comment as we get it…
Rebecca Pinn, Senior Strategist at Wunderman Thompson UK, said it’s time to put value signalling ahead of virtue signalling.
“The current cost of living crisis means that brands need to move from ‘virtue signalling to value signalling’.
“By expressing value and understanding of the squeeze on wallets worldwide, intelligent messaging shows a togetherness that consumers seek during difficult times.
“Brands need to show proof that they are engaged and involved in making people’s lives easier if they want to be the best choice for where people are going to put their remaining pennies.
“It’s a profound challenge for brands to reconsider their messages, while they are still working to recover from the pandemic but showing empathy is going to be the successful way to respond to an audience under pressure.”
James Leaver, CEO Multilocal, said the inflation issue will make streamlined processes a priority for companies across the board.
“There’s no doubt that inflation will help to separate the strong marketing departments from the weak. Faced with the often impossible choice of reducing profit margins or raising prices, what else can marketers do to ride out the storm?
“With prices rising at their fastest rate for 40 years and energy bills skyrocketing, some may conclude that cutting ad spend will help to keep costs down.
“But brand equity – which underpins pricing power – is a long term play, built from sustained investment. What’s more, simply reducing this investment tends to lead to competitors eating market share.
“In this climate, streamlined processes and clarity of messaging are more important than ever – especially in an increasingly noisy, digital world.
“Marketers must find creative ways to make their ad spend work harder, alongside distinctive brand assets, and with authenticity and empathy. “For the vast majority of brands, communication of value is also key.
“Ads need to hit the right note, tonally, as inflation starts to worry more and more of us, with household budgets under increasingly intense pressure.
“With ever growing complexity in the digital landscape in an increasingly global world, teams must look to remove barriers and streamline processes.
“Judicious use of technology can lead to dramatic improvements in efficiency and outcomes, with the winning teams nimble, collaborative and dynamic – determined to replace silos and friction and focus instead on efficient process and optimal impact, delivered at scale.”
Louise Martell, Chief Strategy Officer at Yonder Media, said it’s now crucial for agencies and marketers to make sure brands put their audiences first.
“Another week, another set of fear-inducing headlines – leaving people wondering what it means for them and what, if anything they can do in the face of untold pressures that look set to get worse before better.
“There’s not a marketer or agency that’s not thinking about ways to adapt and it’s going to require some truly innovative thinking to eek out brand growth in 2022.
“For me, it’s never been more crucial to think audience first and revisit their world; we’re expecting new buying behaviours as people re-evaluate everything.
“Taking the position of customer champion will pay back for brands in the long term.
Three things to do in your planning now:
- Review targeting (there may be a case to move to more precision targeting strategies)
- Take fresh eyes to messaging – it’s not just where you show up but how you show up – this is particularly important when people are feeling so uncertain and vulnerable
- Be transparent and fair with any necessary price increases while demonstrating value.
James Callahan, Co-founder / CEO, FutureDeluxe, is putting lower paid workers at his firm top of the list amid the inflation crisis.
“Given that one of our core values at FutureDeluxe is ‘people-first’ we felt it was important to address the issue of the rise in cost of living as part of our annual salary review planning.
“This year we have decided to weight pay rises in favour of people who are paid lower salaries. This means more junior, lower paid members of the team are receiving a higher percentage pay rise as it’s clear they are going to be the most impacted by the rise in cost of living.
“Experimentation lies at the heart of everything we do at FutureDeluxe. It’s not just about the creative work, but across all areas of the business – we know we have to remain flexible and willing to make quick changes to the way we operate if we’re going to succeed in today’s volatile, uncertain times.
Sairah Ashman, global CEO at brand consultancy Wolff Olins, said the industry will play an important role in helping brands respond to their consumers’ changing needs.
“Client confidence is holding up so far. Having weathered a tough few years due to Brexit and the pandemic, many are now in a stronger position to deal with the issues causing the current cost of living crisis.
“As consumers we need options urgently and will reward those companies that are being most empathetic and innovative in response with our loyalty – a challenge the marketing and creative community can help deliver.”
Jay Stevens, CEO, Redmill Solutions, said brands will need to adapt quickly and make best use of data visibility.
“Inflation is now running at a 40-year high, forcing brands to reconsider their media investment and many will inevitably be looking to cut costs.
“Analysis by Nielsen reveals that consumers are increasingly sensitive to costs and that there is more pricing comparison post-COVID.
“With these pressures in mind, brands will need to adapt quickly and require better data visibility and recency around media spend to maximise ROI and navigate the rising inflation trends.
“To add to this, media agencies will be under more pressure than ever from frugal brands asking them for longer payment terms or cancelling spend commitments entirely.
“Disruption has become the new normal, and brands need a single source of truth on their investment across all aspects of the marketing funnel, make shifts in spend depending on what’s working, and know what can be cut whilst minimising penalties”