It’s no secret that the writing has been on the wall for traditional media, in terms of ad spend dominance, for some time now. The general move of audience, from offline and above the line engagement, towards more personalised, digital orientated engagement has been observed over a period of years with the shift even more evident due to the coronavirus pandemic. In this post we explore the real-world metrics now available and what smart marketeers should be doing when armed with this information.
What impact has lockdown had on advertising spend?
Ad spend trends – the data
In February 2019 a study by eMarketer found that online spend had officially exceeded that of offline for the first time and now accounted for half of all global ad spend. The same study predicted that by 2023 digital ad spend will account for around two-thirds of total global media spend, a market estimated to be worth $333.25. Given that at the turn of the 21st Century digital accounted for just 3% of global spend it’s clear to see that the shift we have been observing is ramping up in pace. It is highly likely that the effects of COVID-19 on 2020 and beyond will further affect this change too.
Complementary data recently released by WARC (World Advertising Research Centre) shows the split and changes in ad spend across all media before COVID-19 struck, as well as what the picture is likely to look like in the new post-Corona environment.
“COVID has been the catalyst for digital transformation at scale,” Publicis chief operating officer, Jo Coombes.
Given that COVID-19 has arguably permanently changed the way consumers behave, data like the set seen below is a signal to marketers that the places they have traditionally sought and found their customers are changing and changing fast.
The changing audience
As would be expected, in a response to this shift in focus towards all things digital, there has also been a surge in online content consumption platforms that are constantly evolving to keep up with new competition and consumer demand. So far so expected, however 2020 has thrown some curve balls at us that the forecasters could never have predicted. The key difference in what we are seeing now, versus what was expected in the latter part of 2019 is primarily in consumer profile and demand.
It isn’t just the innovators and early adopters that are turning their backs on traditional media in favour of a range of digital platforms. The pandemic and lockdown of 2020 has strong-armed even diehard traditionalists into embracing digital, simply as a means to remain connected to the outside world. Digital has become a solution, a means to satisfy needs as basic as food, but also contact with friends and family, entertainment and acquisition of information, goods and services normally accessed physically and in person. Of course, there has always been a segment of audience who looked to do more and more online. However, the advent of lockdown has dramatically increased both the size, availability and profile of the digital audience, now bringing in those people more traditionally accessed offline. Not only that, it has also changed their behaviours, expectations, their consumption of content and the way they expect to be interacted with as customers.
In a global survey of over 35,000 consumers by Kantar during lockdown, results showed that only 8% felt brands should stop advertising during the pandemic and 74% felt brands should avoid exploitation of the situation. On the flip side, 78% felt that brands had a responsibility to help them in their daily lives while 75% wanted brands to communicate what they were doing. Perhaps surprisingly, just 30% thought brands should be offering discounts and 19% thought more should be done to manage customer queries.
Interestingly, 50% of those surveyed said that businesses should keep their brand communications carefree and light but only 41% think humour should be avoided in those communications. A little over half of the survey cohort also said that brands should talk to them in the same way they always have done.
The impact of COVID-19 on online sales
Lockdown hasn’t just seen changes in the internet used for communication though. The Retail Sales Index time series (DRSI) published a dataset showing internet sales as a percentage of total retail sales (ratio) (%) in June. The uptick in online sales shown from Spring 2020 is remarkable. The value of internet sales as a percentage of total retail sales went from 18.9% in February 2020 to 32.8% in May 2020 with no stall in sight going into the summer. Interestingly Hermes, the delivery and logistics company, specialised in delivering online purchases, has announced that they will be recruiting more than 10,000 new team members in a direct response to the increase in online shopping during lockdown. They, at least, are clearly anticipating that this change in online behaviour is not fleeting.
From reallocating ad spend to re-positioning- how your business can survive lockdown.
John F Kennedy once said, ‘When written in Chinese, the word crisis is composed of two characters. One represents danger and the other represents opportunity.’ It’s a salutary lesson that reminds marketers to look for ways to use change to their advantage.
How brands are reacting to lockdown
While much of the data available relates to the way consumer behaviour has changed in lockdown, there has also been a huge step change in the way organisations have responded, both in the B2C (business to consumer) and B2B (business to business) arenas. Businesses had to adapt quickly in March following lockdown and not only had to shift they ways they communicated with their audience but also how they serviced and delighted their customers, often while working remotely. After all successful marketing doesn’t stop at the sale anymore. Delighting customers before, during and after their purchase is the holy grail for all marketers now, after all happy customers come back and very happy customers talk about your products and business to their networks.
This is a particularly tough challenge for B2B businesses. After all, B2C businesses have always accessed their customers at home to some degree but for B2B this is a new challenge entirely. Businesses wanting to target in the B2B sphere are going to have focus online now, because their audience simply won’t be in the office in the same way anymore, many will have made the switch to permanent home working. Google, Twitter and FreshWorks are all big tech companies that have told employees they won’t be back in their offices in 2020. Nor will those B2B prospects expect to attend physical meetings, seminars or exhibitions in the same ways they did before; at least for the foreseeable future. For many companies this change in audience behaviour means a complete review of their marketing strategy and shifting the focus to digital. Digital marketing is not simply the company website anymore. It addresses the entire funnel, from top to bottom and back again.
Despite all this information, the outcomes of a survey by Marketing Week and Econsultancy suggest that of 900 brands surveyed, 55% have delayed or put on hold planned campaigns while 60% are delaying or reviewing budget commitments. With budgets becoming tighter, moving to channels such as SEO over paid advertising may be a better strategic move for smart CMOs wanting to get lasting value from shrinking budgets.
How Mar-tech has evolved in response to COVID-19
There has been a pleasing synchronicity in the requirement for the technology to manage this shift and the evolution of the tech to meet the need. While highly integrated CRM platforms, chatbots to support conversational marketing and intuitive email nurture functionality to help maintain buy-in and engagement are not new to the marketing toolbox, they have all come into their own in recent months. Tech is helping marketers establish and maintain their customer relationships even during this unprecedented time. The challenge to the marketer is to choose the tools they need, to integrate them effectively and to make the most of functionality and opportunity they offer.
One of the more interesting tools to come into its own recently is Google Trends. Google Trends is a search trends feature that shows how frequently a term is searched for in Google. Although backward looking it has been an important tool in the analysis of the effect of the global pandemic on digital activity, helping marketers understand changes in lifestyle, behaviour and attitudes since lockdown. Search terms and how they have changed are offering marketers invaluable insight into the evolution of customer focus. For example, earlier in the lockdown period Google trends recorded spikes in search terms for recipes, comfort foods and cocktail ideas as people found they had time on their hands at home. Later on though, as the lockdown progressed, it seems perhaps people had overdone the home cooking when terms such as ‘how to lose belly fat’ were seen to be on the rise! We have used spikes in specific searches to help clients stay relevant in lockdown and get a greater share of voice to their consumers. Using this data to create content around the right subjects and what people search for is vital to engage with your audience especially now and moving into the future. Now, more than ever, content is king and organic search is the kingdom.
Looking forward – how your brand can grow in lockdown
COVID-19 is the first major global crisis since digital marketing became mainstream, never before have we faced a situation like this with such access to information about how customer behaviour is changing and evolving. There is a huge amount of data, emerging almost daily from various sources, that is helping marketers reshape and reassess their activity and budget allocation. Being informed will help you make better decisions for your business.
One of the most interesting outcomes of the various studies is that there have been big shifts in what people care about since lockdown. If you can pivot your brand to meet these changing needs, you have the opportunity to wrest market share from competitors that don’t respond as agilely as you. For example, data from Global Web Index’s Coronavirus multi-market study shows that in the 16-24 age group consumers are now far less interested in free delivery than they are in reliable same, or next day delivery. In the same study, data also shows that online consumers feel less loyal to brands they have purchased from before and price is no longer the driver it has formerly been. Consumers are willing to shop around online to find businesses that can meet their needs. In understanding shifts like this, marketers can satisfy changing demands from their customers and attract new customers away from competitors by offering a service that better meets their customer’s changing requirements. It’s worth noting that Amazon grew its sales by 28% during the Great Recession of 2009.
Adapting styles of communication is another means to keep pace with your audience. It’s easy to see how many brands have changed how they speak to their customers during lock down. It’s now common to see comms that feature zoom calls with pets and children in evidence, less formal dress and more relaxed language. We are all becoming used to seeing brands as people and the more human tone only works to further help brands build those human relationships with their customers. The trend is very much shifting from ‘What can I sell you?’ to ‘How can I help you?’ and speaking to people’s passions enables brands to tap into some very personal priorities in their customers. Going back to the Global Web Index study mentioned earlier, it also found that people have changed their opinions on environmentalism. The study shows that 51% versus 32% pre-COVID think that reducing personal environmental impact is a lot more important to them. They also want to see the same commitment from the brands they interact with, so those businesses that prioritise their environmental commitments will align themselves with this growing demand from consumers.
Making the most of the data available to you isn’t enough, you should not be afraid to invest in order to leverage what you know. Data from previous recessions shows that those brands that didn’t cut marketing spend during down turns went on to enjoy significant growth in the subsequent years while brands that did limit spend. Research by McGraw Hill (shown in the graph below) on the recession of the early 1980s in the UK, demonstrates how investment in advertising during that period paid off, to the tune of around 256% sales growth, for those businesses that continued to invest.
In support of that viewpoint, the graphic below, originally developed by Data2Decisions, shows the impact that cutting budget can have on sales long term. The graph indicates that following a budget cut a brand will continue to benefit from investment made in the proceeding months but that long term effects can be considerable.
Using data to inform decisions will help marketers refine and target their online campaigns ever more; be it in their content marketing, digital advertising and social media strategy, or search marketing. Knowing how consumer behaviour is changing, investing in making change to meet those evolving demands as well as maintaining momentum behind your adapted communication will give you the head start you need to prosper in these unprecedented times.
The mantra is, now more than ever, UNDERSTAND, PIVOT, INVEST, MEASURE.