When L'Oréal saw global sales fall slightly in the first quarter because of store closures, it cut back on advertising spend. CEO Jean-Paul Aron said that while demand for the company’s products remained high, supply was constrained. Ecommerce sales – up more than 50% compared to last year – didn’t replace in-store sales.
“It can be even frustrating to advertise on products that consumers just can’t buy,” he explained.
L'Oréal is not alone. Across the world, advertisers are moving fast. Reductions in ad spend across TV, radio and online display have seen total ad spend drop as much as 15% compared to this time last year, according to the Numerator Advertising Index, while categories such as travel and auto cut budgets more than 50%.
Commuter-driven channels such as radio and out-of-home were down 30-50%, while digital outlets such as search, digital video and mobile were up, driven by a surge in homebound usage.
And while, for the most part, we are no longer under orders to be ‘homebound’ in Australia and New Zealand, our behaviours have shifted – the impact on commuter-driven channels, for example, should linger. International and most interstate travel is still out.
Advertisers are adapting on the fly to unprecedented changes in economics and buyer behaviours, shifting channel preferences, formats and creative tactics. And while there’s no formula for advertising now, the best advertisers use battle-tested strategies.
Based on the experience of Salesforce customers and members of The CMO Club, we’ve assembled a brief playbook for advertising in a downturn, with actions built around:
All crises change customers’ attitudes and spending patterns in ways that are not always easy to predict. Leading advertisers stay very close to their customers, listening with empathy to understand how to adapt their strategies.
One US-based ad agency creative director summed up the shift in consumer attitudes: “The anxiety, the fear, the isolation, the lack of routine ... people want to see the soul of the brands – they want to feel comfort.”
In the early days of the crisis, brands scrambled to pause long-planned campaigns that suddenly seemed tone-deaf. That triage is now complete and brands are focused on longer-term responses. Customer research tools such as surveys and online focus groups can yield insights. Social listening to understand what your audience says about you, your competition and your industry is critical for brands, and that’s part of the reason Salesforce made listening products available as part of the Work.com initiative.
The right response always starts with the customer’s reality. Knowing many are having to cancel or delay travel plans, BCF launched a campaign about camping at home. Aware that people missed both the physical and social aspects of sports, Rebel Sport mobilised its loyal customer base to create content in their own backyards with a simple community-building message: ‘sport can get us through anything’.
Meanwhile, many advertisers in the US learnt shelter-in-place leads to both literal and psychological nesting behaviour. Advertising that emphasises home and hearth almost tripled in the past two months compared to last year. Baby-related advertising doubled. And despite ubiquitous mask-wearing and social distancing, categories such as skincare and hair dye are booming.
Harvard researchers, back in 2009, studied the patterns of companies that succeeded during downturns. They found leading brands were most in tune with customers’ changing needs. Audience segments changed based on stress-driven attitudes; as some consumers reduced spending, some shifted priorities and some spent more on affordable luxuries.
No single tactic paid off across all consumer segments or product categories, but empathetic listening always paid dividends.
A crisis separates effective from ineffective tactics with precision, as marketers seek to improve efficiency by focusing on tactics known to deliver fast ROI.
For example, consumer products leader Unilever has seen sales remain steady, said chief executive Alan Jope in a recent earnings call. But it’s halted ad production in many areas and shifted spending out of out-of-home. Jope says the team is “dialing up areas with strong ROI”.
Many brands are seeing strength in ecommerce and are shifting ad spend to support it. According to the Salesforce Q1 Shopping Index, ecommerce was up 20% on average, driven by essential goods and discounts. Even nontraditional categories benefit. Beverage manufacturer AB InBev’s direct-to-consumer (DTC) Ze Delivery service in Brazil reported more orders in April than in all of 2019.
Other DTC brands are also winning. Despite shuttered department store outlets, skincare brand Tula reported record sales last month. It’s investing in influencer marketing and is testing over-the-top connected TV ads tied to news cycles.
Conventional wisdom holds that consumers are less loyal and more price-conscious during crises. Some brands report success combining promotional bursts with lower prices on direct-response channels such as paid search and social – and ad prices on Facebook and Google are reported to be up to 30% lower than last year in some categories.
There is a downside to carefully-cultivated plans during a major crisis: they provide a false sense of security.
Organisational theorist Karl Wieck, an expert in corporate resilience, identified a trait 17 years ago he said was shared by high-functioning companies in a crisis – the ability to be nimble, improvise and learn.
“I advise leaders to leap in order to look,” Wieck wrote for HBR, and the idea is important again today.
Now is a time to test new ideas without harming the brand. McDonald’s displayed a spirit of adventure when it separated its ‘Golden Arches’ logo to illustrate social distancing in Brazil. Burger King lit up social media with a stunt that saw unsuspecting influencers – “not brain surgeons or rocket scientists” in the words of one – hijacked into the relaunch of its funnel fries. Procter & Gamble succeeded on a larger scale with a campaign featuring TikTok influencer Charli D’Amelio, also promoting social distancing, that had 10 billion views.
Test and learn is a culture rather than a tactic. It requires a structured approach. For example, the food company McCormick analysed Pinterest search results to discover consumer trends. It identified a strong interest in bread making – not surprising to those of us who find ourselves overloading on carbs. It fielded recipe ads using its products and adjusted based on consumer response.
Finnish retailer HOK-Elanto combined nimble messaging about welcoming customers back in-store with social responsibility in a campaign that ran an optical-illusion ad in newspapers. The catch: the message was only clearly visible from six feet away.
It is almost always a mistake for advertisers to neglect the long-term view in a crisis. While short-term tactics can yield short-term results, it is more effective for long-term health to invest in upper-funnel campaigns and brand building. This is particularly true when competitors are cutting back and ad rates are lower than usual.
Analysing data from 56 studies between 1960 and 2008, one academic study concluded: “Firms that increased advertising during a recession experienced higher sales, market share, or earnings during or after the recession”.
Why? Researchers cited less ‘noise’ in the market, lower ad rates and that simply maintaining a presence in tough times sends a signal of strength to potential customers.
This contributes to significant increases in spending on ‘brand image’ advertising, particularly on TV and radio, much of it displacing more promotional campaigns. And spending on public service announcements (PSAs), some brand-sponsored, has more than doubled.
For example, Toyota swapped a campaign promoting a sale event for an optimistic brand-centric one featuring families at home with the tagline ‘We are here for you’.
Procter & Gamble in particular is known for increasing strategic investments in downturns, having launched new products and embraced new marketing channels in the Great Depression, and brought pet project the Swiffer WetJet to market in the GFC.
“Smart companies know that downturns will lead to upturns,” writes Steve McKee in When growth stalls: How it happens, why you're stuck, and what to do about it. “The better use they’ve made of their marketing and research and development budgets, the bigger the jump they’ll get on their competitors when things pick up again.”
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