The marketing industry is finely tuned when it comes to picking up signals of a recession. This is because advertising spend is still one of the first things to be trimmed from company budgets at the first hint of an economic slow down.
Rumours of a recession have already led to several advertising agencies, including Ogilvy & Mather, and BMP DDB, making redundancies. According to OMD, businesses have also reduced media spend, year on year. But the real indicator is whether consumers are aware of a recession and are tightening their purse strings in response.
Snapshots surveyed consumer opinion on the subject of recession. The aim was to find out whether consumers are reacting to news reports that the economy is slowing down and preparing for hard times ahead, or do they remain unaffected? And which advertisers should have cause for concern if there were a recession?
Snapshots asked consumers where they would make cut-backs in the event of a recession. Britain’s favourite pastime, and one of advertising’s biggest spenders, DIY, was one of the first expenses that consumers say would have to go. Not surprisingly, gym membership and private healthcare were also top of the list. Bottom of the list were cars and groceries – perhaps because they are considered essentials.
The survey also aimed to determine whether the recent talk of a recession had affected consumers’ spending habits. Eleven per cent of those questioned claimed they had already begun to cut back on their spending.
Superficially, many within the advertising and marketing industries seem to rule out a recession, the survey shows that consumers have mixed opinions.
Thirty-one per cent believe there will be a recession, 39 per cent neither agree nor disagree and 29 per cent disagree. There was no significant difference in response from panelists in the North and those in the South.
To explore why they were of this opinion, Snapshots also asked panelists what they thought were key indicators of a recession. Half the panel believes redundancy is the main indicator of a recession, with falling house prices as the next big signal.
Snapshots asked the panel how secure their job was compared with 12 months ago. Only 13 per cent felt their job was less secure. Seventy-two per cent claimed it was about the same. Fifteen per cent said they feel more secure.
So, although there is much debate in the press over whether a recession is looming large, consumers are relatively unconcerned. Interestingly 63 per cent of the panel agrees that the media is talking up a recession, and are refusing to tighten their belts just yet.