As countries around the world emerge from lockdown, businesses are having to adjust to a future rather different from the one they’d planned for in January. WARC’s Anna Hamill highlights some key trends.
Staring down the barrel of what is certain to be a severe economic recession, marketers are now preparing to navigate a period of prolonged uncertainty for their brand, the global economy, and the consumers they serve.
Few people anticipated, as they packed up their laptops in March to work from home, that they’d still be video-conferencing from their kitchen table several months later. Few expected to be taking on the fraught role of home-school teacher, or that everyday activities – such as seeing friends or taking public transport – would become unfathomable public health risks. Yet, these are the strange new realities of life during the COVID-19 pandemic.
As lockdowns start to ease and the scale of the economic challenge becomes clear, uneasy businesses are adjusting to a future which is looking decidedly different from the one they had planned for at the start of 2020.
Here’s some key trends we are seeing at WARC as COVID-19 moves into a new phase.
1. Brands are slashing advertising spend for 2020
What was hinted at in April’s ad-spend numbers is now crystal-clear: brands are pulling advertising spend en-masse, to the tune of a huge $50 billion globally in 2020., an 8.1% plunge from 2019.
WARC’s latest Global Ad Trends report, which reforecasts the 2020 ad-spend outlook by category, paints a grim picture: almost all product categories will record a decline in ad investment this year. The most severe falls will be recorded in travel & tourism (-31.2%), leisure & entertainment (-28.7%), financial services (-18.2%), retail (-15.2%) and automotive (-11.4%).
For some brands, these cuts are due to lockdown restrictions barring operation (leisure and entertainment) or near-total revenue collapse (travel). Other brands are pulling spend for now, choosing to keep their powder dry amid uncertainty about the economic recession (financial services, some retail). Others are battling for survival and have simply no choice but to cut spend, in some cases for up to 12 months.
Though best practice indicates that brands should continue to spend through difficult times in order to position themselves for recovery when consumers start spending again, the COVID-19 recession is forcing brands to make extremely difficult choices. In the words of Les Binet in a recent exclusive article for WARC: “this is more like a war than a recession.” WARC’s Global Ad Trends indicates that traditional media will be hardest hit, and fare far worse than online. Investment is set to fall by 16.3% – $51.4bn – this year, with declines recorded across cinema (-31.6%), OOH (-21.7%), print (-20.1%), radio (-16.2%) and TV (-13.8%).
2. Brands are moving back to basics: service and trust
Many brands are moving back to marketing basics: demonstrating a core purpose, serving customers in the truest sense of the word, and just trying to be helpful. Trust is crucial during this time. Most importantly: any ‘sell sell sell’ agenda has been largely parked (though, of course, any new business is still welcomed).
Consumers are, for the most part, simply not interested in pushiness at the moment: they want security and positivity from advertising during COVID-19. Even before COVID-19, some standardised brand communications – e.g. satisfaction surveys, purchase reminders – were generally not appreciated by consumers. The pandemic is an opportunity to try and engage consumers in new, more helpful ways.
Tesco, the UK’s leading retailer, took a ‘public service approach’ focusing new TV advertising on the very practical ways it was helping shoppers stay safe in its stores during COVID-19.
Raja Rajamannar, Chief Marketing Officer at Mastercard, believes that COVID-19 is a crucial test of brand trust: “This is a time of need, and if you are not friends with consumers at this point in time, they are not going to talk to you later. It’s very important that brands build trust during this time. Brands are trusted, validated or invalidated during the time of crisis,” he said recently, in an exclusive interview with WARC.
3. Brands which invested in online purchase journeys are now benefiting
During COVID-19, retailers big and small have been scrambling to set up an online presence, with mixed results. Those brands which have spent the last couple of years investing in their online customer journeys – be it via their website, app, or in new technologies such as livestreaming – are now seeing the payoff. As retail stores find a new balance between bricks-and-mortar and e-commerce, expect a boom in click and collect at ‘multi-function’ stores, pre-booking shopping slots online, seamless delivery, and more.
Sainsbury’s, the British grocery retailer, is one such example. The company has invested in upgrading its mobile app and e-commerce experience in the last couple of years which, pre-COVID-19, contributed about 8% of sales in its grocery business. Now, it’s 15%, nearly doubling in a just a few short weeks. The store’s Smartshop app, which allows contactless payments in store, has also jumped to nearly a third of all transactions – years ahead of uptake projections.
Those that haven’t invested are, in many cases, are losing out. Primark, one of the UK’s biggest fashion retailers, doesn’t have an online presence at all. Its sales dropped from £650 million a month to zero after lockdown when its stores were forced to close.
The lesson? Brands need to understand how their customer path to purchase has been altered by the COVID-19 pandemic to best position themselves for crisis response and recovery. A smooth, self-sufficient online customer experience has never been more important. Brands which innovate for the future of their category in the good times will benefit in the bad times. Brands which don’t, won’t.
4. Creativity, innovation and agility is a way of life
Marketing teams need to embrace an agile culture of innovation and creativity when every day brings a new challenge. Brands are finding new ways to work, crunching numbers quickly and making fast decisions in large, previously bureaucratic organisations.
IBM took a new approach to creative agency briefing, speeding up the creative process to create a new COVID-19 TV campaign in less than ten days. Likewise, Birds Eye – the UK frozen food giant – changed its manufacturing and marketing strategy within days to scale up supply at the start of lockdown. Mastercard pivoted its experience platform – the centre of the brand – to digital experiences as it became clear that physical experiences would end for the foreseeable future. Unilever fast-tracked the launch of a new cleaning product in China, based on emerging consumer trends around hygiene during COVID-19.
This new-found agility has transformed the culture of marketing departments and will endure once COVID-19 is all over. The lessons brands are learning now will set the way of working across the industry in coming months.