January 4, 2011

VAT increase will lead to more focussed marketing campaigns

While the VAT increase which came into effect at the beginning of the year should generate more than £13 billion per year by the end of this current parliament, Mark Littlewood, managing director of oneagency.co, says that the rise could negatively impact high street and online sales.

“With companies like Sony focusing on new year ‘VAT back’ promotions, now is the time for retailers to address the implications of the imminent rate rise and decide how they are going to deal with it in the short and long term.”
Mark Littlewood

Targeted marketing campaigns with an emphasis on search engine marketing are expected to be the most efficient way to gain post-rise business, according to research undertaken by LinkShare and supported by Mark.

“The VAT rise doesn’t have to have a negative impact on retailers. For retailers who in the short-term choose to offset or absorb the increase, it could demonstrate a new level of value, inspiring greater customer loyalty. Coupled with an individualised marketing campaign, increased emphasis on measurement and ROI, and implementing proven online marketing techniques, retailers could start to restore the balance of reduced marketing budgets relatively quickly.”
Mark Littlewood