All I want for Christmas are some strategy credits
Why Iceland’s decision not to air a TV ad isn’t all it seems
There’s a chain of supermarkets in the UK called Iceland. They sell mostly frozen food to a budget-conscious consumer, and they’ve had a bit of a tough time of it recently. Rising energy costs are bad news in a business with low margins and lots of freezers; those increased costs wiped out the entirety of Iceland’s profits last year. The cost-of-living crisis has hit their lower-income shoppers particularly hard. And they’ve got lots of debt, which has become increasingly burdensome as interest rates have risen; they had over £500m worth of bonds downgraded to “distressed” status last year. All in all, a pretty crappy situation.
If you think of the options open to Iceland at this point, their hands are tied in lots of ways. They don’t have lots of cash to splash. They certainly don’t have enough money to do what supermarkets ordinarily love to do at this time of year: to make a glossy, celebrity-led Christmas advertising campaign and spend millions buying media for it, in the hope of capturing a share of that all-important festive pound. I’m sure they’d love to – and I’m sure it would be good for cashflow – but they simply can’t do it.
What’s interesting is to see Iceland draw attention to that fact. Amidst coverage of other supermarkets’ actual Christmas ad campaigns, a not insignificant amount of trade press column inches have been dedicated to Iceland’s non-campaign. But why would Iceland want to alert people to something that’s the result of their dire financial situation? Why would they announce that they’re not doing something, at a time when they’re not doing a large number of things – and for mostly undesirable reasons?
Iceland’s chairman Richard Walker, son of outspoken founder Malcolm, offers his explanation:
“As a business we were faced with a decision. Do we spend millions creating and sharing a TV advert or do we invest the money supporting our customers during the cost-of-living crisis? This was a no-brainer for us. I am grateful that as a family-run company, we can make the decisions we believe are right for our business and our customers.”
It sounds pretty noble when you put it like that! But that probably isn’t the reason why they did it, because we know that they had no alternative. The reason why they chose not to do a TV advert is immaterial, because they didn’t choose not to.
Taking something that you were going to do anyway, or that you had to do, and presenting it as a difficult, sacrificial choice to do the right thing, is incredibly common. Ben Thompson coined the term “strategy credit” to describe it. It’s hinted at in Bill Bernbach’s famous adage that “a principle isn’t a principle until it costs you money”. It’s more and more common in an era where businesses are expected to do some social good – but where doing good often competes with making money.
It’s not that Iceland have done anything wrong, or that their commitment to helping their customers with the cost-of-living crisis is anything less than sincere. It’s just that, when evaluating the decisions of organisations, we have to acknowledge the difference between doing the right thing and doing the easy thing. It’s a little more impressive to do the right thing when it’s not something that you would’ve done anyway.
Image: Wikipedia user Mutney, CC BY-SA 4.0.