#Budget2016 from a marketing and communications perspective

Posted: March 1, 2016

It is just a few days since Minister of Finance, Mr Pravin Gordhan delivered his annual budget speech and whilst the South African economy is currently experiencing challenges, there is some good news.  The anticipated increase in Value Added Tax (VAT) did not materialise, there is tax relief for some, not to mention Government grants were increased.

The biggest mistake most companies make is to reduce investment into marketing and communications during tough times.  The truth is that consumers have not stopped spending, they merely look for more bang for their buck.  Given the tax relief and no increase in VAT for example, consumers may well have more disposable income.  History has proved that those brands that are consistently advertised during tough times enjoy a greater consumer loyalty. It would therefore serve marketers well to invest more in advertising and communications to maintain brand loyalty during the economic recession.

“South Africa has seen a prolonged period of challenges, from power issues, to political issues, to exchange rate fluctuations that keep even the most adept economists guessing,” notes Odette van der Haar, CEO at the ACA, “however our tenacity as a nation in general and as marketers in particular, has continually found ways of mitigating these challenges.”

From the 1st April 2017, Government will be imposing a ‘Sugar Tax’ on sugar-sweetened beverages (SSB’s) which will impact most beverages on local supermarket shelves. Products such as: carbonated soft drinks, fruit juices, sports drinks, energy drinks and vitamin waters, sweetened ice tea, lemonade, cordials and squashes to name a few will be affected.  This is an opportunity for responsible marketing and communications as well as creativity in driving home the important message of a healthy lifestyle.  The need for greater collaboration between marketers and their agency partners in this space has not more paramount.

Again, marketing budgets should not be reduced.

“It may seem counter intuitive to increase spend during difficult trading conditions, but smart companies should use this opportunity to shift their thinking, be bold, remain visible and identify needs that their consumers may have. It also reinforces the need for agencies to develop strategies and implement effective communications campaigns that deliver a defined and measured return on investment for their clients, thus ensuring that our sector remains a critical, strategic partner to the broader business world,” concludes van der Haar.