Brand building in the time of Corona – is advertising essential or futile?

The COVID-19 pandemic will go down in history as the most significant global health catastrophe of the last century and the greatest challenge that humankind has faced since World War II. As each month passes, its impact on everyday life is exacerbated, plunging the world into further chaos and uncertainty.

The challenge for the advertising industry – and our clients – is how to navigate a recovery, or even uncover an opportunity, in the wake of destruction as even the most well-established industries and stable of advertisers are struggling to stay relevant.

Ultimately, we are experiencing a key evolutionary period for industry, let alone individual brands, as we witness the survival of the fittest, post pandemic.

The dawn of the great advertising recession?

The fallout has resulted in many products and services simply not selling as consumers have been forced to change their habits. Almost all industries have felt financial impact and huge reduction in consumer usage such as coffee shops, live entertainment, travel, fashion retail – the list is endless.

Of course some have been worse hit than others. If we analyse the state of the car industry, sales in the UK in April this year fell by 97%, and recorded the lowest level since 1946 according to the industry body the SMMT. If we look into July however things started to move once more.

Regardless a ‘domino effect’ on the advertising industry has seen advertisers drastically cut their budgets or even halt marketing activity altogether.  In turn, it has had a detrimental impact on the bottom lines of many of the ad industry giants with many, if not all, reporting a slump in net sales during the second quarter as Covid-19 took a toll.

• Omnicom (-23%)
• Dentsu Aegis Network (-20%)
• Havas (-18.3%)
• WPP (-15.1%)
• Publicis Groupe (-13%)
• Interpublic (-9.9%)

The lasting impact is yet to be felt as many agencies are steadying themselves whilst the ground beneath them continues to shift. One thing can be certain – how agencies operate will change.

In some ways perhaps for the better i.e. in terms of employees taking on more responsibility (e.g. broadening of skillsets) or perhaps with new, lasting ways of working (e.g. completely flexibly); but inevitably and sadly the need for a more streamlined workforce will also mean significant job losses (e.g.Droga5 cutting 7% of US workforce).  

Is this the right reaction from brands?

The current burning question for all CMOs, particularly in badly hit industries – is advertising futile or essential? Whilst it may seem scary, many case studies would imply that there is no better time than now to invest in some strategic brand building and advertising. Bias aside, I firmly agree.

“Brands are reminding people that they exist. Research shows time and time again in a crisis that turning off advertising altogether slows down the recovery.”

Andrew Stephen, L’Oréal professor of marketing at Oxford University’s Saïd Business School

As unpredictable and crazy as 2020 has been, it is also key to remind consumers this is not the end. We all know that out of crisis appears opportunity and one of the strengths of humankind is our innate ability to learn and adapt to new realities brought on by innovation and new technology.

We must maintain normalcy whilst adapting our comms strategies, after all the first line of advertising 101 says adverts MUST be seen to have any effect, and there has never been a more critical time to stay visible.

Companies that stay present in the consumer’s mind, even if consumer spending falls, tend to see large pay offs in long term. This is something we have learnt from previous crises. The famous example of Procter and Gamble during the 2008 recession, who kept their advertising constant throughout, comes to mind – despite I accept, their behemoth status.

In April this year their response to COVID-19 was again, to double down on brand visibility off the back of organic sales increase (5% YoY) and to capitalise on reduced competitor product availability worldwide in order to lead to greater consumer trial of P&G products. The FMCG giant reiterated the importance of keeping its foot down on media spend, rather than taking it off.

“We need to work hard to ensure that we maintain mental and physical availability to the greatest extent possible, so that those consumers return to their beloved and trusted brands – which are ours – as they’re more fully available…this is why this is not a time to go off air.”

Jon Moeller, Chief Financial Officer at Proctor & Gamble

Byron Sharp states for long term brand growth, brand’s need to adopt an always on strategy. Whilst this may seem illogical amidst a global pandemic; the need for brands to retain ‘mental availability’ in a time when their ‘physical availability’ may have been reduced is integral to stay relevant.

It must be added however that Sharp’s ‘always on’ suggested approach does not include Covid specific ‘we’re here for you in unprecedented times’ ads! These he suggests are arrogant, opportunistic and at the sacrifice of creativity. A quick YouTube of the best contenders would corroborate this.

Adapt, React, Survive

Despite clear signs to stay relevant, in a recent UK brand marketers survey conducted by Marketing Week & Econsultancy, only 7% looked to invest more in the brand by adopting a ‘seize the opportunity’ approach; compared to 29% who claimed to maintain current budgets and 50% who stated they would make cuts so they can ‘live to fight another day’.

Of course this is understandably cautious behaviour; but what we do know is fortune favours the brave. Despite recession, you have still got to find a way to win, starting with being seen and staying relevant. The brands who are winning are the ones who have adapted to the needs of the consumer during the pandemic – be it circumstantial, by design or occasionally by chance.

The one constant in their success during COVID-19 has been their ability to invest significantly and reactively in their brand marketing and /or business –

• BY CIRCUMSTANCE | In the US, Netflix went from a digital ad budget of around $150,000 per day (March 13) to spending more than $500,000 per day (March 19) to dominate in a competitive Subscription Video on Demand (SVOD) market. It showed in their Q1 earnings report where they added 15m new subscribers (double their internal expectations) in line with increased platform usage during lockdown.
• BY DESIGN | UK grocery chain Morrisons has so far spent £155m on Covid-19 measures, significantly denting its H1 pre-tax profits by 25% to £148m. Yet they invested in the business to ultimately benefit its consumers and local communities by increasing home delivery capacity fivefold, recruiting 45,000 new staff members to meet increased in-store and online demand, and implementing safety procedure across stores. Not to mention deploying Morrisons assets to support colleagues, customers, local communities, the NHS, small suppliers, British farmers and charities.
• BY CHANCE | In the UK, Weetabix increased ad spend by 15%, an extra £1.65m on marketing, due to consumers in lockdown looking for familiar, reliable brands to get them through. This led to a considerable spike in sales of Weetabix during COVID-19.

The challenge for most brands mid and post pandemic is how to adapt, react & survive. And whilst we’re not telling CMOs to put it all on red and risk it all; we are saying – stay authentic, visible, present and be bold.

There are decisions to be made and it’s make or break for many.