IPA Bellwether: ‘Big discounts are not getting the same traction they used to’

“The predicted reduction in budgets for sales promotions is a sign of the times. Businesses, particularly those in hospitality and retail, are struggling in the face of rising costs, government policy and changing consumer behaviour, and they have to prioritise marketing activity that delivers long-term results – rather than temporary solutions.

“Whilst household discretionary spending is expected to remain restricted well into 2026, and consumers are seeking value for money, big discounts are not getting the same traction they used to.

“Sales promotions may boost sales but they do not build customer loyalty or long-term equity – and few consumers are prepared to purchase from those not on their mental roster of preferred brands.

“They also squeeze profit margins more than many other strands of the marketing mix, so it is easy to see why brands might allocate budgets elsewhere.

“If the expected reduction in promotional budgets does become reality, marketers may need to make choices between point-of-sale promos, which offer practical benefits for squeezed consumers and immediately impact revenue, and ‘surprise and delight’ approaches in alternative locations that have longer-term benefits on brand equity but lack the same instant results.” - Daniel Todaro, Gekko CEO

To read the published article by Daniel Todaro, CEO, please visit Performance Marketing World

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