The government is set to launch a campaign aimed at getting businesses to divert marketing spend into cutting prices to help mitigate the cost of living crisis.

The campaign will seek to “amplify and channel” the efforts of brands looking to curb rising costs, encouraging others to follow suit. Businesses will be encouraged to join the campaign by introducing price-cutting measures, and in exchange will add the campaign name and logo to their branding.

The government intends to launch the campaign ‘in July’. Speaking to businesses following the announcement, new cost-of-living Tsar (yes, really) David Buttress cited examples of schemes he believes work well, from apps selling discounted food that would otherwise go to waste, to Greggs’ move to offer free breakfast to some school children.

Laudable Government soundbites

This all makes for great soundbites and the sentiment is highly laudable. The Government wants you to stop advertising and cut prices. However, the evidence suggests you shouldn’t.

Both the Institute of Practitioners in Advertising and the Ehrenberg-Bass Institute have published extremely useful research on what happens when brands ‘go dark’ and cease to spend on marketing. Here are some key findings from the latter:

• When brands stop advertising for a year or more, sales often decline year-on-year following the stop (on average, sales fell 16% after one year, and 25% after two years).
• The rate of decline is fastest for brands that are already declining before the advertising stop.
• Brand size also matters. Small brands typically suffer greater declines than bigger brands.
• Bigger growing brands tend to continue to grow after advertising stops for one to two years, whereas the sales trend quickly reverses for small growing brands.

We are all being squeezed financially right now and the natural reaction is to reduce investment in brands and to cut prices. Before anyone actually does that I recommend they read this research and learn why that may not be the best approach for the longer term health of your brand, whatever the Government might say.

Furthermore, brands that do take the decision to cut marketing budgets are in reality likely motivated to do it in order to make business savings and/or boost short term profits: not to pass back into price-cutting measures to mitigate the cost-of-living crisis.

From a government going increasingly bonkers, this campaign is well intentioned, but misguided, likely to do more harm than good. Creative brands like ASDA are already investing in support for customers through the cost of living crisis and actively promoting it.

Brand advertising builds businesses and those businesses create jobs and grow the economy, thus mitigating the current crisis. The last thing we all need now is to cut investment in marketing. This is the case that needs to be made in every boardroom.

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