As business models and new ways of engaging customers changed overnight, it was clear that the pandemic would accelerate brands’ already in process transformations. To help navigate this changing landscape, Dentsu Aegis Network took a look at how COVID-19 is impacting our clients’ business plans and how they are responding to these remarkable times.
Of the 700+ clients across 36 markets surveyed, it is clear that marketers are very aware of the evolving consumer behaviours, and they are determined to go through this challenging period by accelerating their transformation to build foundations that will thrive beyond the crisis. For some, this means finally dropping legacy practices that have stubbornly remained since the advent of the digital era at the turn of the century.
Balancing short-term business continuity and long-term recovery planning
Almost all (95%) of respondents have been reviewing their 2020 marketing plan, seeking the right balance between short-term actions to mitigate revenue impact and longer-term planning to create a sustained recovery. Six respondents out of ten (59%) have already changed their plan for the full year, a third of respondents (31%) seem to favour a short-term focus for driving their marketing response, reporting they only changed the plans for the first half of 2020 so far.
Although most industries make do with reduced marketing budgets, interestingly, some brands report increasing marketing investment. For example, Technology & Telecommunications respondents report budget increases twice as much as their Finance & Insurance counterparts.
20% of marketers who planned to communicate around a major event postponed to 2021 (e.g., Summer Olympic Games, UEFA European Championship) will move 100% of the designated budget to next year. One half (47%) declare they are reallocating that budget to other activities in 2020 and one third (31%) report opting for a mixed 2020-21 approach.
In parallel, recovery planning is keeping marketers busy. Three quarters of marketers (73%) have already started planning for recovery.
What this means for brands: It is important for marketers to collect relevant and timely consumer intelligence to identify unaddressed and under-served needs. In an environment where all investment decisions are examined even more thoroughly, relevant data prove critical for marketers to secure advertising budgets internally, and, as a result, to maintain or increase their relative share of voice.
As audiences move, the supply and demand dynamics follow, and new trading opportunities open. Marketers can make the most of these media opportunities to maximise their share of voice or redirect advertising spend to promote their most effective sales channels.
While budget fluidity is essential to make the most of these immediate opportunities, it is important for marketers to keep an eye on longer-term ambitions and to work on a clear recovery plan. Yet, recovery plans must be flexible, not be set in stone. As epidemiologists warn the virus is here to stay and several waves are likely expected, the odds of a V-shaped recovery scenario appear to be getting smaller. Recovery will look more like a marathon than a sprint. An effective recovery plan should be a living document, exploring several scenarios and regularly reassessed in light of the evolving economic outlook, fluctuating regulations and consumer demand. Recovery plans must be realistic. Recovery planning should not simply aim at restoring the pre COVID-19 situation for the company. It should recognise the new operating realities (e.g., reduced workforce) and as such, include the areas where the company will need to invest to transform (e.g., automation), with documented actions and concrete ways to measure progress and optimize.
Creating value through content and experiences
When the crisis amplified and lockdown measures spread, many brands adopted a ‘First, do no harm’ mantra, quickly adapting their content to not appear out of touch with the current events. More than half (55%) of respondents have adapted their creative and content to respond to the consequences of the pandemic. It is by far the action most frequently taken by marketers (it ranks #1 across all regions), and 50% declare they will need to invest more in content over the long term.
What this means for brands: To generate a consistent consumer response, brands must have a clear understanding of the content created across the organisation, even when it is not under the direct responsibility of the marketing department. The buck doesn’t stop with rolling out an emotional hero TV commercial, and brands should not neglect the other types of content that serve consumers be it emotional, informational or transactional. A successful content strategy encompasses many facets, such as delivering accurate information about logistics (e.g., up-to-date store hours in maps), temporary customer practices (e.g., clear return policies), product information (e.g., stock levels in search ads), etc. Making sure the content is consistent from the first interaction to the product page is fundamental to a quality experience. Yet many still struggle with this.
In the midst of the pandemic, brands should consider the following when reviewing their content strategy:
- Culture and process: How resilient is the creative process in the new ways of working?
- Content optimisation: How is the existing content optimised for performance?
- Technology: Is the business equipped to update content quickly while minimising the risk of mistakes?
The acceleration of personalization and e-commerce
With media budgets under pressure, many marketers have paid particular attention to their existing customers: 32% of respondents increased their CRM activity, and 45% believe they will need to invest in CRM long term. We can see clear differences between categories with stronger CRM programs and the ones that don’t have access to a lot of customer data due to intermediation. By shutting down many points of sale, the COVID-19 crisis has exposed remaining disparities in CRM maturity. The deficit in direct access to customers is not news for categories depending on retailers, and many have started Direct-To-Consumer initiatives have piloted new models (e.g., subscriptions) over the last few years to regain control over customer relationships (and data). It is fair to say, however, much of this is still a work in progress for some and the resulting patchwork experience is less than ideal.
This moment has accelerated the adoption of e-commerce, both in terms of consumer usage and in terms of investment from brands. A third of respondents (33%) have already expanded their e-commerce presence amid the crisis. The push for e-commerce has been particularly strong for offline-driven businesses (37% vs. 17% for online-driven businesses) and for industries relying heavily on retailers (49% of FMCG and 53% of F&B respondents expanded their e-commerce presence) in an attempt to partially offset their lost offline sales. As many people still feel somewhat uncomfortable leaving home (e.g., 48% in the US according to the Dentsu Crisis Navigator) and are still relying on online channels for their daily purchases, this e-commerce arms race shows no signs of slowing down. We predict it will continue beyond the pandemic, with six respondents out of ten (59%) declaring they must invest in their e-commerce capabilities on the long term.
What this means for brands: Upgrading CRM capabilities is not an investment that proves useful only in times of crisis, it is a winning strategy in the long term. New depth of customer data can help the product development team adapt the product portfolio to address emerging consumer needs. It can help marketing and creative teams tap into new insights to build messages more aligned with customer priorities, and be leveraged to build new services (e.g., customer frequent questions can help build a simple support chatbot in a few hours). First-party data can also power media targeting and help customer acquisition (e.g., modelling of similar audiences), and becomes all the more important as browsers eliminate third-party cookies and regulators globally are promoting more restrictive policies around data practices. It is particularly important for brands to have a clear strategy according to the engagement levels of their customers, and to avoid alienating them.
Growing online sales to be both profitable in the short term and viable in the long term is no easy feat. What worked for traditional retail isn’t guaranteed to work online, and the volume of parameters to consider, from logistics and technical infrastructure to advertising and customer support, can be overwhelming for brands, especially for the ones playing catch up.
Read the full report- The Reality of Recovery: A post Covid- 19 World.