The Effects of the Government Shutdown on Marketing

As the federal government shutdown continues, the effects are being felt by greater swaths of the country — including marketers

There’s no doubt that federal government employees are the most affected by the shutdown, but other parts of the economy are beginning to feel the effects. For example, retail marketers are reportedly shifting their attention to bargain shoppers, particularly those comparing prices via their mobile devices, according to Retail Dive.

There’s also an impact on marketers’ data sets: Government-held data that marketers use for consumer and industry insights may be unavailable or otherwise inaccurate. According to Yahoo Finance, “Other data releases affected by the shutdown include those of the Bureau of Economic Analysis, Bureau of Justice Statistics, Bureau of Transportation Statistics and the Economic Research Service.”

Some companies have taken to offering discounts or special programs for affected government employees, particularly in regions with a heavy federal government employment presence. Some larger brands have started to weigh in more publicly, including Columbia Sportswear, which took out full-page ads in newspapers with the tagline, “Make America’s Parks Open Again.” REI and North Face also tweeted about the impact to national parks. Kraft Foods ran a letter about the shutdown in a full-page ad in The Washington Post, highlighting its “Kraft Now Pay Later” pop-up grocery location in Washington, D.C. The store offers free Kraft products for furloughed government employees, and the brand urged other companies to add products to its shelves. Kraft was careful not to mention the wall or President Donald Trump in the ad, and said “for us, this isn’t about politics.”

Marketing News spoke with Joseph Watson, Jr., a professor of public affairs communications at the University of Georgia, about marketing during the shutdown.

Q: Are brands hurting as a result of the shut down? The affects seem more obvious on smaller businesses that exist in areas that have a heavy federal government presence, but are larger brands feeling the effects?

A: Yes, businesses with a substantial customer base inside the Beltway and in surrounding communities are definitely feeling the impact of the ongoing shutdown more acutely. But even larger businesses without a major presence in communities with a large federal government presence may be impacted if they are government contractors. It has been reported that major corporations like AT&T and IBM that you do not think of as being impacted by the shutdown have been forced to halt work on impacted federal contracts. By some accounts, there are nearly twice as many federal contractors as federal employees today.

Q: One major brand, Kraft Foods, opened a pop-up store in D.C. to offer free food to government workers. What do you think is the purpose of the move? To gain positive PR?

A: Most brands that are offering free or discounted goods and services to impacted federal employees are doing so as a means to gain positive media coverage. This can serve multiple purposes. It can enhance their reputation if they are viewed as a white knight coming to the aid of beleaguered employees, but it can also help market their products and services. By leveraging the earned media that is generated by their promotions they can entice consumers that are not impacted by the shutdown.

Q: You mentioned in an interview on Marketplace that this sort of move can have some negative consequences, as anything related to the shutdown is highly partisan. Is that a risk worth taking?

A: Engaging in marketing associated with the shutdown definitely poses some risk. That said, if the messages reflected in the advertising or promotional materials are carefully crafted, you can mitigate that risk. The key is to focus content on mitigating the impact of the shutdown and avoid getting embroiled in the substantive debate that is at the heart of the shutdown. This is definitely a risk worth taking for businesses that can craft sound messages that thread the needle on this issue.

Q: If this shutdown continues, will marketers start sticking their necks out more? Do you think some have been waiting to see what the political climate looks like or how different regions’ opinions are falling on the issue?

A: Some businesses are not going to be comfortable marketing their products and services in close proximity to a contentious political issue. For those who are comfortable and become comfortable, there is clearly an opportunity for them to enhance their brands and reputations if they calibrate their messages properly, regardless of public opinion on the debate driving the shutdown. Recent public opinion surveys show that a substantial majority of Americans view the shutdown negatively, though Democrats view it more negatively than Republicans. I suspect that many businesses have been trying to assess how entrenched the shutdown is and digest public opinion data. As the shutdown continues, we are likely to see more marketers jump on the bandwagon. Obviously, in areas where public opinion might be favorable on the shutdown, such marketing attempts will not represent the same opportunity as in areas that reflect the broader national sentiment against the shutdown.

About the Author | Sarah Steimer

Sarah Steimer is the managing editor of Marketing News. She may be reached at ssteimer@ama.org or on Twitter at @sarah_steimer.