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Navigating an uncertain world – marketing during crises

Navigating an uncertain world – marketing during crises

How marketing effectiveness can hold the key to the survival of your business.

Author : Matt Andrew

Date : May 26th 2020

Category : Thought Leadership

The COVID-19 pandemic has presented the ultimate test for brands and businesses. Marketers, in particular, have been presented with myriad fundamental and challenging questions. Where should your budget be spent, if at all? Should all marketing activity be put on hold while we wait for the crisis to pass. Or do you come out fighting with a revised strategy?

Based on a comprehensive assessment of the market opportunities, we have devised the following guide outlining the critical ways in which marketers can ensure their business successfully navigates the current uncertainty.

 

The state of play

Bellweather’s most recent IPA report has found that UK advertising spend has hit its lowest since the 2008/9 economic crash, with an average of 25% decline in marketing spend during the COVID pandemic. Meanwhile, a survey of UK marketers conducted by Marketing Week and Econsultancy recently found that 55% of brands have postponed or are reviewing ad campaigns, while 60% have cut or are reviewing budgets.

At Ekimetrics, we have observed that in the insurance industry, going dark for one year led to a short-term decline of six per cent in new business, and an additional long-term decline in the baseline of 14 per cent. The cost of media to recover from this was then 3x higher than would have been needed if investments were maintained.

However, Procter & Gamble have bucked the trend as it is experiencing strong growth in categories such as beauty, healthcare, cleaning and CPGs during the COVID outbreak. As a result, the business has increased its marketing ad spend to ‘remind’ consumers of its brands as they spend more time online and watching the media. This demonstrates that while in times of crisis, businesses should be looking at how their budgets can be effectively optimised, rather than withdrawn, to maintain a presence and ensure their brand can weather the storm.

Traditionally, marketing plans have been sculpted by a retrospective understanding of impact and performance, analysing return on investment or the percentage change versus the previous year. The current COVID-19 pandemic has plunged industries worldwide into uncertainty, meaning marketers can no longer work in this way. There is a real need to adjust the way to understand performance with a deeper vision on market drivers.

This uncertainty has had detrimental impacts on many sectors, including brick and mortar retail, whilst comparatively has led to huge waves in demand for ecommerce and grocery services. Over the past month, we have seen iconic UK high street brands such as Warehouse and Oasis fall into administration and popular US clothing brands Neiman Marcus and J Crew declare bankruptcy due to the inability of consumers to visit brick and mortar stores.

In sheer contrast, major supermarkets have expanded their online grocery capabilities, with brands such as Morrison’s responding to consumer concerns by launching food delivery boxes to cater for those during Ramadan and those with dietary requirements. Likewise, Gousto, the online meal box delivery service, has secured an extra £33m in funding to grow its business after having to suspend taking on new customers, and Hello Fresh’s share price jumped 76.7% in April alone.

These developments pose huge challenges to marketers in both situations, as they must pivot to cope with the influx of new customers and growing demand or figure out how to keep their business going until pressures ease or ‘normal’ resumes. To do this, it is essential that businesses adapt in a sustainable way to ensure success both during and following the crisis, whether by optimising marketing budgets or upscaling business capabilities.

By forming the right links between previous marketing models and the current state of the markets, it is possible for businesses to create robust and forward-looking scenario plans that can chart their path for recovery and sustain business growth long-term once the crisis abates.

 

Why you’re looking at the wrong models

Everyone right now is obsessing over outcome models (for example, those focusing on infections, economic output, or footfall). In times of crisis, these models are designed to influence thinking and to implement changes, often to avoid the outcome happening as the model predicts; we focus on reducing infections, increasing economic output, etc. However, for brand and business owners, understanding the drivers of outcomes in more detail to simulate a range of model outcomes is much more effective to ensure that your business is prepared to weather the storm.

Simulating these alternative scenarios, driven by trackable leading indicators, allows marketers to narrow the field of play, meaning less potential to take the wrong route during a crisis. By building options for your business that stem from the leading market indicators, this will enable you to prepare marketing plans for the various outcome scenarios. This strategy will allow you to activate the relevant plan based on the developing scenario to achieve the greatest possible outcome.

 

Think local to capture the opportunities

Crises affect localities differently. For example, we can expect high-density urban areas to be slower to exit our current lockdown situation than rural areas, meaning local markets are likely to see a growth in activity much sooner. We are already seeing stronger recovery in Atlanta vs. New York, for example, leading to focused opportunities if you look in the right places. Therefore, it is essential to think local when formulating marketing plans during a crisis.

When planning your national marketing activity, its crucial not to overspend during the crisis, as the majority of your budget will be needed for when the majority of sales opportunities have become available. Factoring in local markets to your marketing strategy during crisis planning will enable you to take full advantage of early recoveries and market shifts across different locations.

In the US, planning for local variations is engrained through designated market areas (DMAs) and is a case of simply ensuring that market modelling (both recovery forecasting and marketing effectiveness) is taking place at this local level. In the UK, this is more complex as media regions are broad and overspend can be a risk for marketers. But, focusing on region-targeted social, video on demand, digital channels, and region-specific broadcast media, like Sky AdSmart, can provide businesses with early returns for a lower spend.

 

Focus on the funnel

When marketing spend is limited and effectiveness is paramount, knowing which stages in the funnel each marketing lever (price, promotions, brand media, digital channels, etc.) is affecting is critical. This will ensure a speedy recovery and ultimately the long-term success of your business.

For marketers, acquisition drivers are important to close the deal, but you need to factor whether a driver is truly incremental, especially during a crisis when every £ or $ is more precious. For example, search engine advertising (SEA) on brand terms can have high ROI for businesses through measurement approaches but isn’t necessarily truly incremental. When using SEA, you are meeting consumers who are already on the purchase journey and where search is a given step to purchase rather than a differentiating channel that drives an incremental result.

Potentially lower ROI, but higher true incremental upper funnel levers such as TV, video, generic search, display and sponsored ads, could drive greater business returns when they are most needed. In order to identify these levers and achieve greater business success, it is important to ensure your analytics are capturing dynamics such as true incremental value and that your marketing teams are positioned to make the best decisions from them.

 

Adapt to your new customer behaviours

Customer behaviours undoubtedly change during a crisis, but what is unknown is whether those changes are fixed for the long-term. For example, in the UK, we have seen a rise of over 10% in consumers using online grocery delivery services during the COVID crisis. It is yet to be seen whether these habits will continue post-crisis, or whether the new online customers will return to physical stores when safe to do so.

By modelling marketing actions that have retained similar customers in the past (those you know live close to physical stores, but still choose to shop online), you can increase your retention power for those perpetuating new actions. Through tracking behavioural changes from crisis to recovery, your business will be ready to shift marketing activities to reflect these developments.

As you identify where the bulk of behaviour change is taking place, you can ensure the right marketing strategy is in place to maximise customer retention, whilst also operating at a personalised level to react to individual customer attitudes.

 

What next?

Prepare your business for recovery in the right way and be ready to act on opportunities before they’re visible at the market level:

  1. Use market models that focus on understanding the drivers of outcomes and track these leading indicators to narrow the field of possible scenarios.
  2. Ensure you’re modelling and planning at a local market level to capture the incremental gains as different regions recover at different times.
  3. Focus investment on the aspects within the marketing funnel that are truly incremental, whilst securing the sale through right-sized acquisition investment.
  4. Track customer behaviour changes and adapt marketing and retention strategies to account for these shifts.

Those businesses that look beyond their outcome-based marketing models and onto the drivers of these outcomes will be able to react quickest and capture the incremental gains available as markets begin to recover. Whilst times can be tough during crises, ensuring your marketing plans remain close to these leading indicators – and having your team ready to push investment into the right locales and right channels, will determine the speed of recovery and establish the platform for future success.

 

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