As market complexity looks set to continue, expect renewed challenges for owners, operators and marketers, not only in building strategies for accelerating growth but also in building resilient businesses with purpose, social responsibility and sustainability at their core.
Environmental claims
The climate emergency is the defining challenge of our time. In 2023, brands that set out their stall about their sustainability and environmental credentials will be expected to start turning those warm words into tangible plans and actions. Consumers – and employees – are becoming increasingly savvy about environmental claims, complaining vocally about companies that appear to be falling short of the mark. Consumers are more empowered than ever before, and a quick Google search can often fact check green claims. Consumers voice their complaints among their community, to their wider community via social media, and to the (very active) regulators in the UK. Similar trends are seen across Europe, North America and beyond.
Nobody’s Perfect
Even companies that commit billions of dollars towards environmental schemes will come under pressure if they aren’t doing enough in other areas, as HSBC found out in October 2022 when they were the subject of an ASA ruling. HSBC claimed they were providing huge financial support to help companies on their journey towards ‘net zero’. They failed to mention in the same breath that they also financially support high polluting companies and industries, so the ASA found the overall impression of virtuous environmental credentials to be misleading in the absence of that information. It was a strict decision that will reverberate throughout 2023 and beyond.
Looking ahead, if brands want to be seen as credible, dependable and responsible, they must find a balance between promoting their sustainability initiatives and not contradicting any internal practices – after all, nobody is perfect – but brands can no longer afford to stay silent.
Greenwashing
The ASA recently conducted research into consumer understanding of common phrases like ‘net zero’ and ‘carbon neutral’, and found that there was little consensus as to their meaning. The research also found that consumers don’t fully understand the role offsetting plays in carbon neutrality. A bigger challenge for brands this year is to create a style of communication which conveys their environmental credentials in a way that resonates with their community.
Which regulators are holding brands to account in the UK? The Advertising Standards Authority (ASA) and Competition and Markets Authority (CMA). How active and serious are they?
ASA:
- The ASA published 15 rulings about environmental claims in 2022, across a range of sectors. 14 or 96% of those were upheld on all or some counts.
- The ASA has the power to publish a public ruling, to generate negative publicity, to have campaigns/claims removed, among other measures.
CMA:
- The CMA is currently investigating 3 companies in the fashion sector for their green claims.
- The CMA can also generate negative publicity around its investigations (even before they are concluded), to seek binding undertakings, and pursue prosecutions that could result in fines or even imprisonment in the most serious cases, among other measures.
The Power of Gen Z
As Gen Z enters the workforce and become key consumers (Gen Z is predicted to surpass millennials as the largest consumer base in the US by 2026 Businesses and Gen Z Consumers | NCR Primer ), brands will need to work out how their marketing reaches and hits the right note with this new demographic.
Equally, when deciding where to place their brand loyalty, Gen Z will put a high premium on brands that are authentic, transparent and follow the right kind of social and environmental causes. For these young activists, social and environmental justice are inseparable, and they will follow influencers and brands that illustrate the same values as they do and will demand that the brands they follow and entrust their consumer pound use their resources to play their part too.
Gen Z consumers are more likely to buy sustainable, high-quality, products. 73% of Generation Z consumers are willing to pay 10% more for sustainable products, according to a report from First Insight. They value personalised products and are often drawn to brands that share their point of view on political issues.
When brands and influencers are perceived to get it wrong, the backlash will be quick, immediate and loud (such as Balenciaga’s controversial campaign featuring a child model clutching a teddy bear dressed in bondage outfits). Brands will be expected to react quickly to distance themselves from the controversy, such as Adidas swiftly ending its brand ambassador partnership with Ye (Kanye West) after Ye wore a “White Lives Matter” t-shirt and then published anti-semitic content in October 2022. This was followed by Gap, Foot Locker, TJ Maxx, JPMorgan Chase and Vogue also cutting ties with him.
Activists are now the most important group for brands, even if they don’t buy your product or service. Because a handful of digital activists can bring down share prices by convincing existing customers to boycott your brand
Forbes
Brands won’t be expected to play it safe and only reflect the zeitgeist of the moment. Brands will instead feel pressured by their changing consumer base to use advertising as a force for good. Gen Z will want their advertising to disrupt, change awareness and challenge the status quo. Brands that get it right will instantly see their brand loyalty soar.
Pursuit of Perfection
Whether brands live up to their comms or not, those that try to show a high degree of social responsibility and awareness of social causes, will often find that it is impossible to please everyone. This ‘Pursuit of Perfection’ for brands will be that wherever they try to perfect their brand image by highlighting the ‘right’ kinds of social causes, they will always risk alienating other parts of their consumer base who disagree with their moral or political stance. We’ve seen this most clearly in the context of Nike’s support for Colin Kaepernick’s stance of taking the knee – which resulted in a significant backlash and #justburnit backlash. Following the decision, Nike faced protests and boycott threats, but also won many plaudits for its stance and a jump in sales clearly indicated that Nike's solidarity with Kaepernick was being repaid by the consumer.
More recently McCain faced public backlash after it launched its ‘Anything Goes’ campaign with the drag queen Baga Chipz, with complaints about the apparent sexual innuendo inherent in a dragvertising style of ad.
Brands will also face the risk of appearing hypocritical or not going far enough in their efforts if they do not practice what they preach. Again, Nike was called out for paying social media lip service to Black Lives Matter when it became clear that it was not fostering internally the change it was promoting externally; 77% of its high ranking vice presidents at the time were white.
Other recent examples of this paradox include Brewdog launching an ‘anti-sponsorship’ campaign against the Qatar World Cup. Brewdog accused Qatar of winning their bid through bribery and attacked the nation for its attitudes towards homosexuality, women, migrant workers and corporal punishment. The public backlash on Twitter was swift, pointing out that Brewdog would still profit hugely from the World Cup, as it continued to show all the games in its pubs.
Whilst the ‘Pursuit of Perfection’ will force marketing directors, chief people officers and the wider Board to make some difficult judgment calls about trying to do the right thing whilst avoiding an unintended backlash, brands will find that outrage from this newer consumer is quick, explosive and loud, but will also be forgotten quickly provided the brand reacts swiftly enough. Yesterday’s chip shop paper, today’s social media reel, gone in 24 hours, forgotten by next week?
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