Advertising is at its most powerful around Christmas – what do people think of Christmas ads and what responsibility does the industry have during the festive period?

George Grant, Credos Editor

 

Most of us who celebrate Christmas can agree that it is a holiday about family and connection. But it is also about the traditions and customs we look forward to once the temperature drops and the nights start to draw in. Christmas exists in the festive mix of spices – cinnamon, cloves, star anise, cardamom; it exists in the sudden appearance of fir trees in the local garden centre and the first bite of a mince pie; and, yes, it exists in the Christmas adverts that we see on our TVs, our streets, and our newspapers.

Adverts are a strong part of that unique Christmas medley. From the moment we notice the first Christmas ad (“surely not, we’re only just taking down the Halloween decorations!”) to the inevitable fighting back of tears while watching the annual John Lewis masterpiece, adverts are a very real part of the Christmas experience.

And adverts have played a similarly important role in the shaping of Christmas today as we know it: following the Victorian era, during which family and gift-giving became central themes of the celebration, mass advertising allowed businesses to use the festive season to sell their products.

Christmas advertising today

The magic of Christmas is such that businesses place huge value and importance on the holiday every year. Data from the Advertising Association/WARC shows that in the UK £9.5 billion is set to be spent on advertising over this year’s Christmas period, representing a 4.8% increase on last year’s record £9 billion, with television retaining £1.5 billion in the quarter. Advertising spend around Christmas has been steadily increasing since records began, and the season has come to play a pivotal role in advertisers’ annual planning strategies. 2023’s rise comes despite Britons having £3 billion less to spend this Christmas. In such a difficult economic climate, brands will be looking to advertising more than ever to stake their claim for the public’s hard-earned pounds this year.

It goes without saying, then, that advertising at Christmas is loved by businesses, but what about the public? To investigate public opinion of Christmas ads, the Advertising Association worked with ‘Opinion Matters’ to conduct a survey of a 2000-strong sample representative of the UK’s regional, age and gender balance. The survey asked people two simple questions: “do Christmas adverts help you get in the mood for the festive season?” and “do they help you with ideas of what presents to give to people?” The results are in, and the story is clear: for many of us, Christmas ads foster festive spirit and help us buy the perfect presents.

Fostering festivity

Our survey found that, of those who celebrate Christmas, 63% think that Christmas ads help them get in the mood for Christmas, particularly women, with almost two in three (66%) agreeing with the statement. Young adults (25-34) are especially affected by Christmas ads, with 74% of those who celebrate Christmas saying that the ads help them get in the mood. This may be due to the age group being linked to early parenthood when Christmas magic is at its strongest. This group has also grown up with the advent of the famous John Lewis ads, an annual tradition that has led to a Christmas campaign renaissance in the UK.

Picking presents

Just under half of us (48%) believe that Christmas ads help us pick out the right presents and, interestingly, that figure is even higher among the 16-34 age groups: combined, 64% of them find that Christmas ads help them with their gift-giving decisions. It makes sense that advertising helps in this way – after all, two of advertising’s primary functions are to help customers choose between products and to find new ideas. Whether that be an outdoor ad for a local Christmas gift fair, or a big budget campaign for this season’s must-have toy, advertising lets people know about the options, new and familiar, available to them.

Advertising’s responsibility

As much as advertising has positive influences over the festive season, it also bears considerable responsibility, especially during a period in which some can feel pressured into spending beyond their means. Credos found in its most recent quarterly survey into public trust in advertising that one-third of people can feel that advertising puts pressure on them to spend money. Interestingly, these views towards Christmas advertising are in line with the ‘fostering festivity’ and ‘picking presents’ findings, with younger people feeling more positive than older respondents: only a quarter of 18-34-year-olds felt pressure to spend, compared to 40% of 55-74-year-olds and 58% of over-75s.

The ASA and Clearcast have clear rules on what brands and advertisers can and can’t do around the Christmas season to curb as much of this pressure as possible. It is our responsibility to make sure that we are conscientious about messaging, and following those rules is fundamental to this.

ASA and Clearcast Christmas rules

Excessive spending

This first one relates specifically to Credos’ finding about pressure to spend at Christmas. The ASA stresses that, especially during such a financially tough year, it is advertisers’ duty not to encourage excessive spending. ‘Buy now pay later’ schemes need particular caution, to ensure that advertisers do not encourage excessive spending through the use of credit.

Alcohol advertising at Christmas

According to the Bank of England, in the UK, spend on alcohol increases markedly in December compared to the average month. Parties and family gatherings inevitably lead to a jump in sales, but the ASA and Clearcast both have very clear rules on the portrayal of excessive or irresponsible drinking at Christmas. CAP rules are require that no one looks, or is, under 25 in alcohol advertising, while the ASA stress that depictions of irresponsible quantities of alcohol being served or consumed have caused campaigns to be pulled for breaching their rules.

Christmas imagery

There are some images advertisers frequently call on to invoke the spirit of Christmas. Snowball fights, crackling fires and carol singers, while popular images and traditions, have been earmarked by Clearcast as potential hazards for advertisers. No snowballs should be thrown in the face of innocent bystanders, decorations shouldn’t be hung over lit fires, and carols must not be shown sung alongside gambling, alcohol, or violence.

Remember your audience

Christmas is an especially magical time for children, so advertisers must be particularly thoughtful during the period. The ASA line on kids is very clear: “Advertisers must ensure that any ads targeting or featuring children are not exploiting their credulity, loyalty, vulnerability, or lack of experience by making them feel inferior for not buying (or encouraging others to buy) an advertised product”.

Respecting Father Christmas

Somewhere between adolescence and adulthood, people can pick up the misconception that Santa Claus might not be real. Any adverts containing this message – that Santa Claus is a myth and doesn’t exist – are kept firmly away from younger viewers by Clearcast. As Clearcast quite rightly say: “don’t ruin the magic”.

A Christmas Conclusion

Christmas is a time when the advertising industry is reminded of its powerful role in society, and the responsibility that this brings. Our work brings genuine joy to millions and can be a great tool for helping people choose gifts for one another as well as a crucial lever for businesses to capitalise on increased market activity. But clearly there is a line to be walked to ensure that people aren’t pressured into buying items they can’t afford. We should be grateful for the good work that the ASA and Clearcast do and encourage advertisers to keep working with our regulators to make sure that every Christmas ad is as responsible as it is magical.

Inflation continues to be a general concern, both domestically and globally. Pent-up demand from the pandemic, tightness in the labour market, supply chain disruptions, and the war in Ukraine have all contributed to rising prices. As a result, central banks have engaged in monetary tightening since 2022 in an attempt to rein in inflation.

Real terms value adjusts export value to take inflation into account, making it a better guide to growth in exports as it removes price effects that may distort the data.

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Figure 3. Comparison of Export Value in Current and Real terms. Source: ONS UK trade in services: service type by partner country, non-seasonally adjusted (Released: 26 January 2023)

We examine the effect of inflation on export value growth using a GDP deflator (See Annex B). The GDP deflator can be viewed as a measure of general inflation in the domestic economy and can be used to determine export growth in real terms (Figure 3).

Using 2016 as our base, the actual and real terms lines diverge over time, but the rate of divergence is most significant in 2020 and 2021. In 2021 the difference between actual and real terms export growth was as much as 12%.

Considering the rate of inflation in 2022 the lines will start to diverge far more dramatically once we have the full results for 2022.

Interest rates

To combat inflation, many central banks across the world, including the Bank of England, have embarked on a path of monetary tightening. Monetary policy includes several policy tools but the key one is interest rates because of its direct effect on consumers, requiring borrowers to pay more in interest payments on loans and savers to earn more for deposits.

Although inflation is expected to fall from its current highs by the middle of the year, particularly as energy prices have fallen, there is some concern that inflationary pressures will remain at persistently high levels. At the time of writing, the Federal Reserve and European Central Bank have taken a more hawkish tone and are indicating further interest rate rises this year. A member of the Bank of England’s monetary policy committee indicated that to get the UK to its 2% target annual inflation rate would require interest rates to rise further from their current 4% level.

Exchange rate impact

One effect of interest rate movement is its impact on exchange rates. For example, if the Federal Reserve increases its base rate, it tends to make dollar-denominated bonds and interest-rate product more attractive and hence the dollar stronger. Some argue that a lower exchange rate relative to the dollar may help export competitiveness in the short run.

Comparison of Quarterly Export values in GBP and USD (Top chart). Average quarterly GBP/USD exchange rate (Bottom chart). Source: ONS UK trade in services: service type by partner country, non-seasonally adjusted (Released: 26 January 2023). ONS Average Sterling exchange rate: US Dollar XUMAUSS (Released 10 February 2023)

The top chart in Figure 4 shows the comparison of quarterly export values in GBP and USD terms. The bottom chart is a time series of the average quarterly GBP/USD exchange rate.

From 2016, there is a positive overall trend of quarterly export value, which is increasing over time. On the other hand, we can see a gradual decline in the exchange rate between the GBP and USD. In practical terms, the pound exchanging for less dollars mean that UK exports are cheaper when priced in USD.

From the data, there does not seem to be any negative impact on the growth of exports. However, this will be little consolation to importers and companies who report revenue in USD.

From 2018 onwards, there is increasing volatility in the quarterly numbers, with simultaneous declines in export value and exchange rate recorded around Q3 2022 being particularly noticeable. Greater volatility can make it difficult for buyers to plan and optimise value (why buy today if prices might be cheaper tomorrow?). That said, given that the numbers are subject to revision it is too early to say for certain what effect the sharper decline in GBP/USD rates in Q3 2023 is having on exports. We will know with greater certainty in our next report.

The UK Advertising Exports Group and DIT will host its next virtual trade mission to the UAE as part of its new series of #TradeTuesday events through the creative sectors virtual venue, UK House. 

UK House at UAE will feature 90 minutes of high-quality discussion and presentations by leaders and innovators from both advertising industries. This will be followed by exclusive roundtables to network and meet potential new business partners. 

You can meet the UK companies taking part in these exclusive roundtables by downloading our UK advertising, made global brochure here.

Download Brochure.

UK House in UAE takes place on October 19th at 11am(BST) /2pm (GST). Speakers include Natalie Amos, Four Communications presenting a new white paper on the consumers driving the travel industry’s recovery and a a series of behind closed doors roundtables with clients and companies in market.  

You can register for your ticket to attend here.