Advertisers crack jokes about the end times and turnip lattes as inflation bites

By Julia Horowitz, CNN BusinessUpdated: Tue, 08 Nov 2022 13:54:12 GMTSource: CNN BusinessA woman maneuvers her car onto a street called "Wits' End." The sky is an ominous red, and strange things

By Julia Horowitz, CNN Business

Updated: Tue, 08 Nov 2022 13:54:12 GMT

Source: CNN Business

A woman maneuvers her car onto a street called "Wits' End." The sky is an ominous red, and strange things are happening. Mailboxes are spitting out letters. Umbrellas aren't rain-proof. A radio announcer warns of a "crisis on the horizon" and "another tough year."

Arriving home, the woman — carrying a green tote from British home goods company Dunelm — turns to her housemate: "Seen the state of it out there?"

But there's good news, if good news counts as a soft "teddy" blanket she just purchased for £10 ($11.46). The message: It may feel like the Apocalypse, but shopping can bring comfort at home.

As the cost of living skyrockets and fears of a tough winter recession loom, retailers across the world are desperate for customers to pull out their wallets, especially as the all-important holiday season kicks off.

In major economies, there are some signs retail sales are tapering. And the mood is bleak. Consumer confidence has plunged as decades-high inflation and rising mortgage costs spark alarm.

All the same, some households still have pandemic-era savings left, and unlike a year ago, stores have ample (or even too much) stock. The result is advertisements, including the one from Dunelm, that tip their hat to the grim atmosphere, while hoping to persuade those with any impulse to spend to hit the shops.

"Every advertiser is aware the customers they're talking to are feeling cost of living pressures," said Matt Bourn, director of communications for the Advertising Association, a UK industry group.

What advertisers are thinking about

Advertising budgets are under pressure — see Google's stalling growth for evidence — as recession concerns push companies big and small to slash costs.

Yet that doesn't necessarily mean fewer ads. Companies can benefit from marketing during a downturn, helping them to maintain their relevance and allowing them to quickly recoup customers when conditions improve.

"We are seeing brands who want to make sure they're keeping consumers during this time," said Jeanine Poggi, editor of Ad Age. "If brands stop marketing, or pull back on their marketing, when things bounce back, they're taken out of consumers' minds."

Even so, companies and their creative agencies know the importance of striking the right tone at an uneasy moment when every ad dollar counts.

Some are addressing the angst over soaring food and energy prices head-on. In Germany, the promotions app Kaufda has launched a campaign at 700 Shell gas stations across the country with the tagline: "Get a fright when refueling, not when shopping."

UK cell phone network Giffgaff, meanwhile, opted for a tongue-in-cheek approach for an ad released in September.

Viewers are taken forward in time to December 2023. The top influencer, we're told, is a houseplant named Paul, chatbot marriage has been legalized — and the price of "pretty much everything" has gone up. Yet as a man in a trendy coffee shop sips his turnip latte, Giffgaff assures prospective customers that it's offering fixed prices for all of next year.

"It would have been strange for us not to reflect the cost-of-living crisis, I think, because it seemed so pertinent," said Simon Massey, co-founder of the London-based Neverland agency that developed the campaign. "The question was how."

Ultimately, the team decided to deploy levity — not to downplay the gravity of the situation, Massey said, but because "people have enough to worry about" without doom and gloom in their commercials.

Advertisers are always intentional, thinking deeply about their color palettes, casting and set design. Now, those choices also need to reflect the economic climate, said Stu Outhwaite-Noel, chief creative officer at Creature, the London agency that developed the Dunelm campaign. His team deliberately chose to spotlight home items that may be in demand as energy bills rise, including a slow cooker and a bedding set.

"We didn't want to promote any flippant or frivolous spending," said Outhwaite-Noel, adding that the team quickly ditched potential products like wall decor or pink yard flamingos that they "would have considered last year."

A different holiday season

Campaigns that debuted this fall set up what's poised to be a uniquely difficult holiday shopping season for retailers.

The upcoming period accounts for up to half of yearly sales for some stores. And despite inflation, a boom in spending is still expected over the next two months, producing hundreds of billions of dollars in revenue in the US market alone.

Spending on ads is due to ramp up, too. In the United Kingdom, it's projected to hit a record £9.5 billion ($10.9 billion) during the final three months of the year, which will also include the World Cup, according to the latest forecast from the Advertising Association.

But companies will be expected to display an awareness about the pervading economic anxiety that's affecting their customers.

Early campaigns released so far emphasize deals and savings. The latest from discount brand TK Maxx, the British counterpart of America's TJ Maxx, shows crowds coming out to high-five a young woman who saved money on her family Christmas presents. US department store Kohl's — which is launching early promotions amid signs strapped shoppers want to spread out spending over a longer period — is going with the tagline "More Gifts, More Savings."

"There's really a response to where consumers are right now, in terms of thinking about holiday spending," Poggi said, noting brands are trying to determine "where they may cut corners."

"It doesn't mean people are not going to shop for the holidays, but they are going to be thinking more about promotions."

While many commercials will still be positive and focus on celebrating "togetherness" after the darkest days of the pandemic, "layered within that will be a consideration of the way people can do that with the budgets they have," said Bourn.