In a week in which the news cycle shifted to the
stability of the banking system, new research indicates inflation remains the top economic concern of consumers, and they are increasingly pointing their fingers at "corporate greed," according to
experts from Madison Avenue.
In a report distributed late Thursday, Horizon Media released new research showing that overall, inflation concerns remain acute among American consumers, and that
perceived corporate greed was one of the biggest factors to show an increase vs. similar research conducted in 2022.
More than half (55%) of Americans surveyed by Horizon cited corporate greed
as their chief inflation concern, ranking it as the second-biggest factor after supply-chain issues (which actually fell three points, year-over-year).
The only other factor to see an increase
as an inflation concern, according to Horizon's study, is "government spending," but a granular analysis of consumer respondents also found that falls along political partisanship, with 64% of
Republicans citing it as their No. 1 inflation concern.
"People accuse brands of 'greedflation' and notice 'shrinkflation'," the Horizon report notes in a section on the implications for
brands.
"People are increasingly pointing to corporate greed as the cause of inflation, saying brands are using overall inflation to mask excessive price increases, and it’s eroding
brand trust," Horizon explains, recommending: "Price transparency, especially for frequently purchased items, is a must."
Earlier in the week, long-time ad industry market analyst and former
GroupM business intelligence chief Brian Wieser published a newsletter, in which he noted the correlation between inflation and ad spending, noting that "advertising has prisoners’ dilemma-like
elements to consider."
Among other things, Wieser noted that inflation is not necessarily a negative for ad-spending growth, because most brands budget advertising as a percentage of revenues,
and if their revenues are growing because they are passing higher prices along to consumers, then their advertising theoretically should also rise.
Wieser did not address potential consumer
backlash vis a vis the kind of "greedflation" concerns identified by Horizon, but he said the prisoners dilemma cuts two ways. For brands operating in competitive categories, it is dependent on what
competing brands in their category are doing. If competitors are boosting, maintaining or cutting ad budgets, they will likely do the same.
Consumer perceptions aside, Horizon's research
suggests that premium media services may be among the most vulnerable to actual shifts in consumer-spending behavior as a means of grappling with higher costs from inflation (see below).
