With 7.9% Inflation Should Brands Pledge To Stop Advertising To Reduce Prices?
The annual inflation rate is now at an out-of-control 7.9% with no end in sight. Supply chain issues, energy prices, and other factors, are forcing brands to raise prices to maintain margin. The “brand prayer” is that their customers are loyal enough to the brands to absorb the higher costs.
But think about branding under normal circumstances. Brands spend billions per year (nearly $300 billion in 2021) in advertising in order to, in large part, increase the perceived value of their respective products. Let’s call it “Adflation,” where great advertising connects with the consumer and then allows the brand to increase prices/margins. Nothing wrong with that under normal circumstances. It’s a free country and that’s what great branding is all about. But customers paid more not because the products cost more, but because they wanted those brands more due to successful advertising campaigns.
Now, there’s nothing normal about 7.9% inflation. So how do we feel about “Adflation” during a real inflation crisis?
Here’s an idea.
No, not just an idea, but a challenge to brands. How about rewarding years of loyalty from your customers by NOT advertising for a year, applying that saved money to the cost of goods, and making your products more affordable during this inflation crisis?
Then make a public statement about it. You will deserve credit for showing this kind of loyalty to your loyal customers. Issue a press release, have your CMO go on national TV, take over your website and socials with the message, drop flyers in the boxes of all your products. Whatever you can think of to get the word out cheaply and efficiently, do it.
Of course, those who do it first will generate the most press.
Not all brands can do this. And likely not one brand will.
This idea isn’t for everyone. Some brands will die if they don’t advertise for a year. Those less-known brands recently launched and/or who may be struggling to get off the ground, for example. Or brands with relatively small ad budgets. Any cuts may disproportionately hurt their business while giving its customers little pricing relief.
But big, well-known, high margin consumer brands with enormous ad budgets (e.g. Budweiser, Ford, McDonald’s, Coke, etc.) are ideal. You’ve got decades of brand awareness and affinity from which to feed, certainly for one year. Your loyal customers will love you even more, even if it only means fifty cents off a twelve-pack. At least you’re trying and by trying you show your customers that you respect them and acknowledge the inflation pain they are feeling right now.
I admit it’s unlikely any brand will do this. Shareholders would come down on them harder than a full-priced keg of Bud dropped from the roof of One Wall Street. But people are hurting right now financially and otherwise. They need good news. Saving your ad dollars for one year to reduce prices is just the kind of disruptive signal to send your customers right now.
And, ironically, the perceived value of your brand in your customers’ eyes will only, well, inflate.
Will Burns is a consultant, brand strategist and CEO of Ideasicle X. Follow him on Twitter @WillOBurns.
