Responsible advertising is the key to responsible growth

Advertising can play a positive role in supporting the green transition. Market growth and consumer price – both topics of Credos’ ‘ABQ’ series – are an important part of the equation.

George Grant, Credos Editor

2024 has been called the ‘year of elections’, the year when over half the world will vote. For those countries whose electoral winners are not pre-determined, economic growth is likely to be a central battleground for competing parties. Sir Keir Starmer has made achieving the “highest sustained growth in the G7” one of Labour’s key pledges to the electorate, while the Conservative party remain adamant that they are the party to achieve long-term growth. In the US, Biden has overseen a 3.1% expansion of the US economy in 2023. Pointing to such growth may be an important part of the Democrats’ campaign.

But there has been a concurrent rise in calls for discussion about the wider impacts of growth on society and the environment. LEAD 2024, the advertising industry’s largest UK event, had the theme of ‘Responsible Growth’ running throughout the day, with the advertising industry coming together to try to understand its role in realising the ambitions of growth that is responsible, inclusive and sustainable.

Our industry is a powerful market force, promoting competition, innovation, and market dynamism, leading to better quality products and the information to widen consumer choice. Without a healthy advertising sector, markets see stagnation and lack of investment, while existing market leaders can develop a stranglehold. Facing accusations of fuelling over-consumption and waste by stimulating demand, advertising’s role in enabling sustainable growth will be an important one to show. But with the right approach, the advertising industry can help build growth and prosperity for people in the UK, while respecting the need for sustainability in the choices they make on which products and services to buy.

Advertising’s market effects

A 2016 poll asked advertising planners and strategists whether they agreed with the statement “most successful advertising grows markets” – two-thirds (67%) did. Such confidence in advertising’s ability to create demand and increase consumer spend reflects the general view of advertising, both within and outside the industry. Contrary to this belief, however, the vast majority of advertising does not grow markets or overall consumption. Instead, advertising’s primary impact is in the competition for market share between brands. Four consecutive studies into this topic have reached the same conclusion, with the most recent finding that 88% of the commercially successful campaigns in the IPA Effectiveness Awards did not grow their market as a whole.

So, what does this mean for advertising in relation to sustainable growth? The relatively low percentage of advertising leading to increased consumption should provide optimism for an industry that is looking to support the green transition and operate as sustainably as possible. Advertising’s effect on brand share makes it primarily a tool to divert spend towards better options for the consumer. With a consumer base that is increasingly conscious of brands’ sustainability credentials, this market reallocation effect is a powerful lever for diverting spend to more sustainable options. Research has shown that “70% of consumers would be encouraged to buy from a retailer with environmental and sustainability initiatives in place” [1]. Advertising can clearly create the encouragement and prompt consumers towards options that are more sustainable.

To achieve this, continuing to combat and discourage greenwashing is essential. Greenwashing can not only mislead consumers but also erode public trust in the validity of green claims made by brands. For advertising’s positive market reallocation effect to work properly, consumers need to be able to trust the claims they see. The ASA’s work is world-leading and should lead to greater trust in environmental claims, but there is still a lot to do to raise the public’s awareness of the ASA and its crucial role in policing green claims. Unprompted awareness of the ASA remains low at 11%, and is especially low amongst 18-34-year-olds (perhaps the most environmentally concerned demographic) at just 4% [2].

Moving towards a more sustainable future requires input from business, consumers, and government. For businesses, transitioning to more sustainable production practices is a crucial first step, but it is their customers who will ultimately dictate which businesses succeed and which ones fail. Advertising occupies a unique role at the intersection of consumers and business, with the proven ability to stimulate more environmentally-conscious buying decisions. Using that ability well can accelerate our green transition.

Advertising, price, and sustainability

Advertising’s relationship with price at the consumer level is a complex one, with both upward and downward impacts. On the one hand, advertising can have the effect of supporting premium pricing amongst brands, raising the cost of some products, while advertising budgets, at some level, must be factored in to the eventual cost to the consumer (estimated to amount to four pence in the pound [3], on average). On the other hand, quite apart from the economies of scale enabled by advertising and the confidence in investment in innovations that it gives companies, advertising’s role as a competitive force holds consumer prices down. Competition on price is a massive element of overall advertising expenditure across almost every sector.

Advertising’s effect on price is a significant, but nuanced one, then. And, in the context of sustainable growth, pricing is an important element. Reducing prices for consumers is a benefit for society, but promoting low-cost, low-quality products over those with greater longevity and durability can contribute to overconsumption and unnecessary waste. One industry which has faced particular scrutiny in relation to its pricing is the fashion industry. Fast fashion – the rapid production of often low-quality clothing at a low price to respond to constantly changing fashion trends, and the subsequent discarding of that clothing – has been particularly targeted by environmental campaigners. When it comes to industries such as these, advertising and marketing can be used to combat overconsumption and wasteful habits by promoting higher quality, more durable products that can be reused or even rented for special occasions.

Advertising’s role here is complicated. It is unreasonable to ask all fashion companies to raise their prices and reduce their volume in pursuit of a high durability, high-cost model such as Patagonia’s [4]. Equally, there needs to be a continued supply of affordable clothing options for consumers. However, for those consumers who can afford it, adverts championing higher quality, longer-lasting products are one way to transition to a more sustainable business model supporting economic growth through a shift in focus from cheap volume to quality at a premium price. Yvon Chouinard, founder of Patagonia, quotes Gränsfors Bruk, a Swedish axe company, in his book on sustainability:

“A high-quality product, in the hands of those who have learned how to use it and how to look after it, will very likely be more durable…increased durability means that we take less (decreased consumption of material and energy), that we need to produce less (gives us more time to do other things we think are important or enjoyable), and destroy less (less waste).”

Supporting premium pricing among brands that put responsibility at the centre of their business models is something that the advertising industry should embrace. Encouraging those consumers who can afford it to switch to higher quality, more durable items, whether that be clothes, heat pumps, or electric vehicles, will help move us towards a more sustainable future.

Conversely, advertising does also have a place in promoting second-hand, pre-loved items, particularly with the continued rise in popularity of platforms such as Depop and Vinted. It was eBay, though, who were part of ITV’s Ad Net Zero award winning campaign, styling Love Island contestants in entirely second-hand outfits [5]. The campaign resulted in a 7,000% increase in searches for “pre-loved fashion” – proof of advertising’s trend-setting power.

Conclusion

Growth and prices will continue to get headlines leading into this year’s elections. People in the advertising industry need to be aware of their role in both conversations, as well as appreciating their potential to stimulate positive change in different ways. We can help consumers make better, more environmentally positive purchase decisions; we can help bring prices down through healthy competition and innovation; and we can support premium pricing for brands that really offer sustainability through quality or durability. Advertising has always had many roles. Using some of them to speed the green transition in UK society is both a privilege and a responsibility.

References

[1] https://homeofdirectcommerce.com/news/70-per-cent-of-uk-consumers-assess-sustainability-credentials-before-making-purchasing-decisions/

[2] Credos trust tracking research, 2023

[3] https://adassoc.org.uk/credos/does-advertising-increase-consumer-prices/

[4] https://www.patagonia.com/stories/quality-is-an-environmental-issue/story-93237.html

[5] https://www.campaignadnetzeroawards.com/winners-2023