Should you be saving or spending your marketing dollars?

The COVID-19 pandemic has sent all businesses, big and small, into an economical whirlwind. Being one of the few crises of this magnitude, it has led to businesses around the world scrambling for solutions and reworking their communications plan to stay afloat. Recently, the International Monetary Fund (IMF) said the growth in Asia is expected to stall at 0% in 2020 - the first time in 60 years. According to a report, while there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of the COVID-19 on the region will be severe and unprecedented. The global economy is expected to contract in 2020 by 3% — the worst recession since the Great Depression.

As the economy enters into a likely mother of recessions, most businesses have opted to cut cost, implementing measures with such hiring freezes, pay cuts, and reallocation of resources - some of which include advertising and marketing dollars. But going against the grain of instinct, several industry players believe that it is during times like these, that businesses should be maintaining or increasing their advertising budget.

One of the world’s largest advertiser P&G for example says that the pandemic is a good time for the FMCG company not to cut back on spend, and instead “remind” consumers of its brands. During an analyst call earlier this month, CFO Jon Moeller said the company would be “doubling down” on spend as media consumption sees spike. Meanwhile, an article on Forbes noted that the higher level of advertising effectiveness as there is lower “noise level” as competitors cut back on their ad spend, and a drop in ad rates during a recession period. Advertising during a recession period can also keep brands on top of consumers’ mind, possibly generating future sales. 

Separately, a report by market research company Nielsen warned advertisers not to be overly cautious when it comes to advertising. The report said despite notably higher media consumption, a majority of advertisers pulled back on advertising campaigns and deferred others in an effort to bring investment in line with consumption and sentiment. Nielsen added this was likely a misstep, as the increased media time was likely the new “prime” time to brand build and interact with an engaged audience—albeit with the right tone and product/ service offerings. The report also showed that although certain sectors, such as health care brands, gaming companies and eCommerce operators, did lean in with disproportionate and opportunistic ad spending, the shift wasn’t widely adopted enough to encompass the depth and breadth of consumer interests or needs as the situation intensified. A survey done by the World Federation of Advertisers (WFA) also showed that there is a drop in annual marketing budgets with 57% of respondents saying they are cutting marketing spend during this period. WFA added that four out of five (81%) marketers from major multinationals surveyed were deferring their planned campaigns.

"The knee-jerk reaction from advertisers at a time of crisis is typically to pull back or defer spends; however, COVID-19 is characterised by a situation where increased time at home means expanded media time and heightened consumer attention. For brands looking to authentically connect with the consumer during this difficult time and offer a solution, this is a time to lean in," Ranjeet Laungani, managing director, media (North Asia) and marketing cloud (Asia Pacific), North Asia Nielsen Media, said. 

While brands that really want to cut through the clutter during this period should be advertising, some may find it tricky to balance promoting their products and services without looking opportunistic or insensitive. One way to navigate through that is to focus on content. Kapil Tuli, professor of marketing at Singapore Management University said the content created during this period needs to be authentic, subtle, and add value. “Brands need to acknowledge that it is not business as usual, and convey it to their consumers in a manner that is authentic, subtle, and meaningful,” he said.

This could mean launching initiatives such as donating to the frontline workers or even retaining the company's own employees. For smaller companies who cannot afford to contribute to the bigger cause, Tuli said the important thing is to address the situation, and show consumers that it has taken steps to ensure that the purchase process is safe. The reassurance will increase consumer willingness to try out their offerings and improve the chances of them supporting the business again.

Content needs to be creative as well. With more brands shifting their advertising online, the digital space is getting crowded. In this case, it is not about spending more money for advertising alone, but rather supplementing it using creativity to garner strong brand impact, according to Lau Kong Cheen, senior lecturer, marketing programme, school of business, Singapore University of Social Sciences. Brands can leverage on influencer marketing to reach out to consumers, and get influencers to use livestreaming to garner stronger engagement with target audience. Additionally, with more people searching for information and entertainment online, brands can also create content that is relevant to the brand’s offering. The content can be educational, advisory, instructional, and entertainment-based.

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Change your messaging 

Lewis Lim, associate professor of marketing practice of Nanyang Business School agreed with this, adding that smaller businesses should also show how that they are making adjustments to accommodate to new demands, such as helping consumers who are not able to go out. Small business owners also have the advantage of engaging directly with their consumers and maintain a warm relationship, and can do so by conveying more personal messages through their advertising efforts.

Lim is of the opinion that now is not the time for brands to be focusing on advertising on its products and services alone. Rather, brands should be engaging with their consumers and letting the market know that they are there ready to help customer, and always looking after the customer’s interest. He added that brands should not be using their marketing budget for tactical promotional advertising alone, but instead should invest more in communicating brand value to consumers during this time.

“For the longest time, because of the growing economy, companies have been busy pursuing opportunities, running campaigns, and launching new products. Now is a good time for companies to take a step back and think about its core business and the value they can bring to consumers,” he said. Lim brought up the example of LVMH, where the brand produced bottles of hand sanitiser with a basic packaging. By not using its brand logo to advertise for the sanitisers it produced, LVMH gets thought of as a company who thinks for people instead of one which is trying to sell its products during this sensitive time.

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The COVID-19 situation is not the same as a typical economic recession. Due to the implementation of stay-at-home measures, traditional advertising tools may not be as effective as before. Advertisement posters in malls and public places, on public transports and in stores have lost their ‘eye-ball’ effect due to diminished human traffic, according to Lau. Lim also agreed that out-home-home advertising will be less effective during this period, and should not be the focus of brands who want to advertise.

The situation has also affected brands differently as well, depending on the nature of the business. Lau told Marketing that while a typical recession period would see the similar impact on brands across all categories, the COVID-19 situation has split businesses into two sides of the spectrum in terms of impact. “On one end, brands in the hygiene, health food, and supplements [sector], have benefited from this pandemic. On the other hand, brands in the hospitality, tourism and travel are at the other end of the spectrum where they experience a drastic drop in customers because the market situation does not cater to their business model,” Lau said.

Brands who are struggling financially, especially SMEs, should be reallocating their advertising budget instead of increasing it, Lau said. For brands who are not able to offer services but can still operate such as F&B, retail, and essential services, they should reallocate their advertising budget from offline to online and use digital advertising to keep consumers informed of that change. According to a study by marketing services company named Conductor which works with brands including Citi, SAP, HP, Siemens and WeWork, more than half of marketers (63%) believe that SEO is important during the COVID-19 pandemic. Of the 63%, 34% said its importance will increase slightly while 29% said it will increase steeply. Marketers surveyed also cited SEO as a top performing channel (66%) for them in 2019. This was followed by a tie in paid search (50%) and email marketing (50%), content marketing (26%) and digital advertising (26%).

Lau added that brands should use mostly below-the-line advertising. For brands who have been made temporarily irrelevant such as the hospitality, travel, and entertainment, their marketing strategy should be skewed towards digital content marketing since they are not able to engage with sales at the moment.

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