The latest IPA Bellwether report shows that businesses are cutting marketing budgets as a direct consequence of Covid-19 and Brexit. One could argue it’s an understandable response in the face of such economic turmoil and uncertainty. However, our evidence suggests that is the wrong step. It is the brands that double down on investment to stay relevant and front of mind with their customers who will be rewarded in the long term.
Slashing marketing budgets can seem like an easy solution for a business under pressure, but it is very often a misplaced economy. Brands that remain visible and accessible typically deliver superior shareholder returns, are more resilient and recover quickest in times of crisis.
Our data shows that putting on the brakes even for a short period of time can be damaging, while brands that go dark for six months or more will severely limit their name recognition among consumers and their ability to drive future sales. To take an example, we tracked a brand which pulled out of advertising in one region after the last financial crisis but continued investing in another – the brand lost 2% of its market share within a year in the former while holding steady in the region where spend was maintained.* When activity was resumed in both regions, market share continued to lag in the first as the business struggled to regain the ground it had lost. It was not a case of simply turning the tap back on.
Despite the challenges brought by Covid-19, a regular rhythm and pulse of advertising activity is key. In fact, the current situation means there is an opportunity for those that don’t hold back to steal a march on their competitors. So how can marketing teams build their case internally? With business leaders keeping spend under close scrutiny, marketers will need a strong pitch to convince budget holders that any investment will be deployed smartly and will help deliver clear commercial returns.
Understanding consumer trends is essential, including what patterns of behaviour will stick long after the lockdowns ease and what new ones will emerge. This level of insight will help identify the right audiences and channels to target and which ones to overlook. It will reduce wastage and ensure that campaigns connect and resonate with key customer targets.
We have captured a growing call for brands to drive change and show how they are helping to mitigate the impact of the pandemic. For example, one in three people would like to hear more about how businesses help their employees, the community and their customers. Not everyone wants a return to the norm post-Covid; a quarter of consumers say they want to see something different from advertising this year and beyond.**
But these are gradual shifts and sometimes changes in public attitudes can take longer than you would think. This can be particularly challenging to predict for campaigns which are often months in the making. For example, the percentage of the population who described themselves as optimists remained relatively static from 2016 all the way to June 2020, with no noticeable downturn immediately after the outbreak of the pandemic.*** Staying close to the empirical evidence is vital to understand how creative ideas are likely to land with public sentiment.
Pitch-perfect messaging is half the battle, but businesses must also assess how current social restrictions are changing how and where potential customers are likely to see advertising. Luxury cosmetics and beauty brand Clarins, for instance, recently announced it is sponsoring ITV’s drama Finding Alice in a bid to reach people while we are all spending more time at home, having identified an overlap between viewers and its target purchasers.
Change brings opportunity and a chance to innovate – but it has to be done in the right way. Understanding what consumers are thinking, feeling and doing during these difficult times will allow marketeers to pinpoint their campaigns and unlock spend. There is hope and recent figures from the Advertising Association and WARC paint a promising picture for a rise in UK ad spending in 2021. It will be the brands that follow through on this prediction, who maintain investment and spot trends early that will be best placed to capitalise when the financial recovery gets underway and the world starts to look a bit more normal.