Start-of-year features almost always seem to allude to resolutions, fresh beginnings and post-Christmas clearouts, all held together with a healthy dose of optimism. For marketers working in the majority of sectors in the UK, however, the past few new years have brought little joy.
As the UK crawls out of recession, could 2014 fit more neatly with the classic new-year narrative? With genuine signs of economic recovery, will this be the year in which consumers regain their enthusiasm for spending, broader confidence returns and marketers finally get their mojo back?
The weight of evidence now seems firmly behind an economic recovery in the UK, even if the global situation is less assured.
In November, the Organisation for Economic Co-operation and Development (OECD) revised down its figures for the global economy, while forecasting that the UK economy will grow by 2.4% in 2014.
Nonetheless, subtler analysis by Richard Nicholls, head of intelligence and economics at trends specialist Future Foundation, points to a mixed bag for UK consumers. While the housing and labour markets, as well as consumer and business confidence, all improved in 2013, the UK has not returned to 2007 levels.
"The squeeze on real earnings is still sharp. In Europe we haven’t reached the end of austerity yet, nor the end of the Eurozone crisis as a background threat to stability," says Nicholls. He forecasts consumer spending growth of 1.6% and an increase in GDP of 2.2% in 2014, but says it will not be until 2017 that GDP per capita surpasses 2007 levels.
Of particular concern for marketers is that, even with an improving economic climate, behaviours adopted during the recession will not disappear overnight.
There is a very select group behind the improved UK picture: the recovery is being led by the affluent, according to Nicholls, so, while top-line figures may be improving, this isn’t necessarily translating at a household level for many.
"Four out of five households are still where they were four years ago in terms of their income. There are clear divisions between high- and low-debt households, some regional differences between North and South and those in stable employment versus those in part-time [or] casual employment," says Andrew Curry, director of strategic insight consultancy The Futures Company.
Of particular concern for marketers in the coming year is that, even with an improving economic climate, behaviours adopted during the recession will not disappear overnight. Often dubbed the "new normal", a frugal, recession-tinted view of the world has become entrenched in a significant slice of the population. The days of the financial confidence that flourished in boom times are long gone; austerity angst is hard to shake off, even if household finances have weathered the downturn.
When Future Foundation carried out its nVision research in 2013, almost 90% of people (across every social and economic group) agreed with the statement "I will continue to be more careful with my money even after the current economic downturn is over".
"The sense of care and caution embedded in consumers is intense," says Future Foundation editorial director James Murphy.
Changing behaviour is not limited to tight control of purse-strings: a more politicised and irate consumer group is set to make itself heard in 2014. The first ripples of this began last year as anger over the utility companies’ repeated price hikes grew, more sustained and widespread criticism was levelled at certain corporations’ morally ambiguous view on the universality of tax payments, and discussion built around far-reaching topics such as the living wage.
"We are broadly tracking a group called the ‘global enraged’ and one fifth of the UK population falls into that category. They hold the belief that business will [try to] get away with it. People think business has too much influence on government and they are basically really pissed off," says Curry.
"The ‘enraged’ are similar to the population as a whole, so it means everyone knows someone who’s already enraged – and with social media it spreads quicker. There is a real volatility that business is not there to be trusted."
The value of privacy
Within this context, in 2014 brand reputation will be critical and companies will need to be both practical and strategic as consumers ask more questions and take a view as to whether the brands they select are "on their side". In practical terms, this could mean greater scrutiny as to how genuine a promotion or deal really is. Strategically, it could be that brands need to be seen to stand for something. Some are ahead of the curve in this area. A recent example is Unilever’s unveiling of its Project Sunlight initiative at the end of last year, aimed at changing consumers’ attitudes to sustainability.
"If you look back at previous financial crises, at this stage you start to see behaviour of social and common good as much as individual good, so expect to see brands positioned [in that way]," adds Curry.
Another aspect of brand reputation that will gain traction in 2014 is that of data monitoring and use. In part a reaction to the NSA revelations, surveillance has once more become an issue as the reality of how closely Big Brother really has been watching was exposed. As people become more concerned with the degree of information about them collected at a national and government level, this may cascade down to more individual interrogation of how companies use material such as purchasing data.
Understanding the consumer and their motivations becomes a more complex puzzle in 2014.
"We’re going to see consumers looking for greater privacy – but also greater functionality – from their data, as they bid to take further control of it to help them streamline their lives and better analyse themselves," says Richard Cope, director of trends at market research firm Mintel. "All of this is raising discussion about data privacy, but also its value and usability."
On a broad level, understanding the consumer and their motivations becomes a more complex puzzle in 2014.
Future Foundation has been exploring this topic in its latest book, The Big Lie, and points to the importance of not being too linear when analysing consumer research.
How people respond to certain questions can be affected by many things, from the nature of the question (Murphy gives the example of government wellbeing data, where the nation’s happiness seems pegged at about 70% – saying very few people will ever admit that they are unhappy with their lives, even if they are) to the mode of survey (people are far more likely to talk up their green concerns and purchase influences in face-to-face interviews than online ones, for example).
"This is the big lie phenomenon at work," says Murphy, one of the book’s authors. "Knowing exactly what people think and being a detective looking at what’s really going on."
This is more important because of the game-changing impact of the recession, and will be a major challenge for marketers to navigate in 2014 as competitive pressures intensify. It also brings us back round to the issue of the "new normal" behaviour.
"In 2014 the big question for marketers is whether the economy will inch back to improving year on year; most people are enjoying better living standards, confidence is growing and unemployment is coming down, so it’s a rosier picture. So what happens to the big lie then? Have the experiences learned in the recession cut so deep that it has created a consumer psyche that won’t change, or do we indulge again? This is the pivotal story in marketing in 2014," says Murphy.
Growth on the agenda
When asked how they will react to better economic times, will consumers admit they want to spend again, or continue to express maximising intentions? Marketers will hope that, although consumers may continue to give pessimistic responses in surveys this year, the reality of their underlying spending patterns will tell a different story.
So while there are broader macro trends influencing consumers in 2014 with which marketers must grapple to understand how they can most effectively adapt their communications, products or services, for example, there is also the much more basic issue of how much money they have in their budgets.
In 2014 the big question for marketers is whether the economy will inch back to improving year on year.
The Chartered Institute of Marketing’s Marketing Confidence Monitor provides an overview of how marketers see the state of things. Thomas Brown, associate director of research and insight at the CIM, says that, overall, marketers are "more positive than negative" about 2014.
More than a third of all those questioned in the Confidence Monitor expected an increase in spend in their marketing budgets for 2014 (although a third expect a reduction).
Suki Thompson, chief executive and founder of marketing consultancy Oystercatchers, believes that budgets will vary, depending on the sector. "Financial services are being cut significantly, although they’ve got to be seen to be doing this; retail is more stable than it once was," she says. "Increasing budgets are in those sectors that are more confident, such as FMCG-type companies like Procter & Gamble and Coca-Cola. In some cases budgets were cut, but now they’re coming back."
On headcount, the balance is tipped more strongly toward the positive, with 28% of respondents in the CIM’s Confidence Monitor saying there will be an increase, compared with 17% who foresee a reduction.
Perhaps the most striking sign of improvement among client organisations comes with the finding that 42% see their organisation’s attitude toward risk and investment in the coming year as high (compared with 36% who see it as low).
Half of marketers agreed with the statement "In my organisation, growth now dominates the management agenda – we’re not holding back investment due to concerns over the economy."
So what lies ahead in 2014 will vary for marketers from one organisation and sector to another; but perhaps the challenges will be faced with a slightly more optimistic spirit than in the past few years.