Cost-of-living threatens what media has taken for granted
Opinion
Inflation and the cost-of-living crisis will be inescapable and impact everything in the industry.
Yet more strange times.
The inevitable passing of a truly great Briton brought a listlessness over much of the realm as it rightly mourned an inspiration and unifying force.
The Times‘ Caitlin Moran put it well — “everything has gone misty”. The day in question felt very sombre during the elaborate and magnificent state funeral.
The extraordinary attendance and record viewing figures confirm widespread recognition of a remarkable life that defined an era.
But it also created yet another distraction from the day-to-day of running things alongside Brexit, Covid, Ukraine and a new Prime Minister. To which we add more big wheels like climate and supply chains.
The new normal is one we wouldn’t have entertained lightly before.
No shit, we face a difficult winter and beyond. The summer’s Prime Ministerial candidates got much wrong, but the one inescapable thing was the central and unifying issues on everyone’s minds — inflation and the cost of living, notably fuel and food.
This is the single most important issue for our industry too, because it impacts everything else.
What will be the impact on media?
Despite a “mini budget” targeting growth but widely questioned, there are tough times ahead, perhaps some of the toughest for many years.
And when the going gets tough, scrutiny on costs is redoubled. This will challenge and possibly even threaten many of the things we’ve come to take for granted.
There are many better qualified to set out the detailed economic impacts — though as usual while they might agree on the overall thrust, they differ quite widely on the detail.
My focus is on two things :
- What this means for the money coming into the market, which will in turn fund any and every initiative, and
- How this will affect everything that is already in train.
So far the ad stats suggest that demand for advertising remains robust, as it has for many years, with some justification argued that it is a good bellwether for the economy. But has that connection always held, and what about this time?
I’m going to sound like a financial services consultant here. Over the medium to long term, yes. But in the shorter term, I’d suggest that the ad stats anticipate recoveries but lack downturns.
In other words, they’re optimistic. This is not surprising given who they are collected from. Nor is it a criticism, merely an observation of what happens if you canvass data from a decidedly optimistic population like marketers. And their suppliers who have a strong interest in positive forecasts.
As ever, and despite the good body of supporting evidence for it, few businesses will spend through. We’re approaching the annual Christmas spendfest, but afterwards?
Meanwhile other issues have not gone away
Meanwhile there are many demons.
Advertising has lost its way and become an adjunct of tech. Online is subject to increasing challenge, whether over its content or its effectiveness. Broadcast faces different challenges, mainly around dwindling younger audiences and cost inflation that would have made our predecessors blanch.
None of these are good states to be entering a storm in.
We’ll see a lot more agile, short-term planning and replanning. The annual deals with the major media that are about to be struck must embody more flexibility. Likewise trading terms.
Despite recent trends, media buying will once again gain ascendency over strategic media planning in a cost-focussed world.
Unfortunately, there will be little headroom to allow the creative renaissance we so badly need. Though this will not prevent many new startups as the cost of entry remains historically low.
Remuneration and relationships will continue to be under pressure as procurement regains its grip after a shaky couple of years. Talent will remain a major issue, especially for agencies.
As for what is already in train, it’s a long and serious list. Diversity and inclusion; brand purpose; research into audience, attention and effectiveness; working practices; future of broadcast; regulation of online; new threats to categories such a fossil fuels…
All of these too require the very headroom that will be in very short supply. All will face intense cost challenges. Some might even be seen as indulgent.
And all the while the future of both the BBC and Channel 4 are in flux. Recent events will have bolstered the BBC’s position while the industry and public view on Channel 4 is clear.
Good riddance to the last, possibly worst and surely most ignorant Secretary of State for Culture, Media and Sport so far. High hopes, then, for Michelle Donelan MP and a more considered and enlightened approach to the future of the BBC and sale of Channel 4.
But again, austerity will likely provide politicians will welcome cover for their decisions here and elsewhere. Let’s not forget restrictions on foods which are deemed high in fat, salt or sugar too with potentially serious economic impacts.
Back to my opening, I’m hopeful that now the nation’s mourning is over, society and industry reverts to face the times ahead.
Whether it’s ITV pledging a £2k cost of living bonus, numerous commitments to raising starters’ salaries, John Lewis decision to deploy some of its marketing budget on free food for its partner-employees or Asda restricting promotion of its value lines citing unprecedented demand, there are already quite enough signs that we’ve really got our hands full.
Bob Wootton spent 40 years working in advertising, first as a media buyer at some of the UK’s leading agencies before joining the trade body ISBA in 1996, where he was advertising and media director for 20 years. He is also the founder of Deconstruction, a media and tech consulting business, and presents The Guitar Show on YouTube.