Mind Your Business



Now, next, not likely – A framework for making marketing decisions in the covid era.

Shane  O’Leary

By Shane O’Leary

Strategy Director

Date: 21 April, 2020

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Every marketing director is under pressure to shift budget and pre-empt what life will be like after lockdown. Here’s a simple, actionable framework across three horizons that will help you make business critical decisions.

 

What to do now?

The natural reaction to a crisis is to hunker down and cut discretionary spending. Marketing is usually the first to go. In the UK, 60% of marketers are delaying budget commitments and 24% of brands have paused all ad spend for Q2.

Judging whether to advertise right now is more than an economic decision. The advice of marketing science needs to be tempered by the wider commercial, social and ethical reality. It’s hard to justify investment in advertising when many organisations are facing low demand, cash flow problems and at worst are laying off staff or struggling to survive.

But for those that aren’t in do or die scenarios, there is an abundance of research and case studies to support the claim that brands shouldn’t go dark, even if their supply is restricted. We know from the work of Binet & Field that a brand’s growth is strongly related to its share of voice beyond the market average (Extra Share of Voice – ESOV). Delivering ESOV in a recession becomes much easier as category competitors cut spend. We also know that brands who go dark during recessions suffer significant declines that can take years to recover.

Advertising’s role is about both delivering sales today but also about priming people to buy tomorrow. If you have the budget, the move with the best long term ROI is to put money into brand building activity now and reap the benefits later. Think of it as pre-emptive investment ahead of the curve designed to put you in good position for a sharp rise in demand when people start to spend again.

Though it might sound trite, there’s also a huge amount of media value in the market at the moment. Those with deep pockets will deliver huge ROI by negotiating favourable rates and agreeing long term deals now.

If you can afford to take the long view, cold strategic logic would indicate it’s beneficial to strike now when your competitors can’t.

 

What to prepare for next?

This is the most magnified consumer education period for digital services ever. We’re living in a vast, forced public experiment. The average person is being pushed by circumstance to interact with, download or buy from a digital service that they likely wouldn’t have otherwise. People are trying things they would’ve dismissed before and a lot of these changes will stick post-crisis. This is creating new behaviours across all categories.

To give three examples:

Paywall growth –  Because print and online media is suffering, we’re seeing an acceleration of media companies moving towards subscription models. With print and digital revenue declining, the paywall trend is speeding up. We’re also seeing hard hit podcast creators turning to Patreon to supplement their income and the launch of new video streaming services like Disney+ and Quibi. Many people will emerge from this with a host of new subscriptions they didn’t have beforehand and brands will need to edit their media choices to reflect that.

Esport explosion – Gaming is an industry that has seen a huge jump in participation. Twitch, YouTube and Steam are all seeing upticks in viewership. In the first week of quarantine, Verizon reported that US gaming traffic was up 75%. Yearly like-for-like game sales also increased by 44%. The week of March 22 saw 1.2 billion downloads of mobile games, the biggest week ever. While real physical sport is on hold, the virtual world is taking its place. Instead of hosting the Bahrain Grand Prix in real life, Formula 1 decided to create an online version with celebs like One Direction’s Liam Payne and real drivers taking part in a shortened race that was race streamed globally. Gaming is already bigger than cinema and music, but brands are still only starting to become aware of its potential. This is set to change.

E-commerce evolves – Western e-commerce lags behind China when it comes to innovation, but this period will change our habits and alter our expectations. For example, once people start to use services like Zoom regularly and with 5Gs growth we could see brands start to offer live video ‘virtual chat’ style customer service. As everything from yoga classes to the Leaving Certificate moves online, there will be rapid growth in online education. With brands creating virtual fashion shows and music festivals we’ll see growth in virtual entertainment and shoppable online events. And with online grocery shopping booming many people may not want to go back to physically filling their trolley each week.

 

What’s not likely to happen?

There have also been plenty of claims, particularly from Silicon Valley, about how human behaviour is going to fundamentally change. But to quote adland legend Bill Bernbach, ’It took millions of years for man’s instincts to develop. It will take millions more for them to even vary. It is fashionable to talk about changing man. A communicator must be concerned with unchanging man, with his obsessive drive to survive, to be admired, to succeed, to love, to take care of his own.’

What we’re not going to see is a complete move away from all the things we enjoyed before. It’s critical that businesses ignore sensationalist predictions. We shouldn’t be seduced by overstated predictions and unfounded futurology.

  • People will return to shopping, cinemas, gigs, festivals, bars and restaurants.
  • We’ll be more likely to engage in remote work, but people will still yearn for the relationships and camaraderie of a physical office.
  • We’ll limit our travel for a while, but once disposable income returns, people will want to get out and see the world.
  • We might be forced to watch old games and simulate sport virtually right now, but live sport will come back and we’ll be filling stadiums in droves again.

The timeline for this return to some normality is opaque. But it’s crucial that businesses plan for it and can respond with agility as soon as the context allows.

One of Bill Gates’ favourite quotes is that we ‘we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten’. Covid will drive change in some areas, but for businesses that can survive it’s important that they don’t overcorrect and blow up their business model pre-emptively.

 

What are the three key questions marketers should be thinking about?

First, what should I be doing now to ensure my business sustains and can ride the uncertainty?

Second, what should I prepare for next? What will be the immediate changes in behaviour when we emerge?

Third, what’s not likely to happen? What sort of knee-jerk moves and sensationalist predictions should I ignore?

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