Marketers have cut budgets drastically and taken clear action as a result of the coronavirus pandemic. Now it’s time to start looking beyond survival tactics.
Part of the Marketing News COVID-19 Special Issue
The widespread impact of the coronavirus raises the question of what actions marketers have taken to deal with this unusual, disruptive and rapidly changing global situation. The AMA and Kantar surveyed almost 600 marketers from April 2-13 to understand how they and their organizations are responding.
The following Kantar framework provides a starting point for understanding what marketing organizations are currently doing and what they are planning, based on how organizations should be acting in this time of crisis:
- Ensure the health, safety and productivity of employees.
- Put a rapid response team in place.
- Take stock of the commercial situation across retail, marketing, sales and digital.
- Minimize business exposure.
- Capture immediate business opportunities.
- Monitor and update in real time.
- Plan now for the recovery.
1. Ensure the Health, Safety and Productivity of Employees
Undoubtedly the current situation has had a huge impact on marketers. Seventy-nine percent indicate they are concerned and 82% say it is impacting their day-to-day life. Nonetheless, they are overwhelmingly satisfied with their organizations’ decisions (82% are somewhat/very satisfied). However, there appears to be room for further improving internal communications;
- 60% provide regular updates to everyone on how the organization is being affected.
- 54% provide regular updates to everyone internally on how the organization’s customers are feeling and behaving.
Organizations may be more diligent in keeping their customers up-to-date. A clear majority (72%) of all marketers indicate their organization has communicated with customers about the steps the organization is taking to deal with the situation (exhibit 1, above). It appears that productivity might be suffering: 58% of all marketers indicate that the current coronavirus situation and their organization’s reactions have made things more difficult (exhibit 2, below). For some organizations it would be worthwhile to assess whether additional support or training is needed, and to focus on challenges they may be able to address.
2. Put a Rapid Response Team in Place
A rapid response team creates a mechanism for fast, agile decision-making and responsiveness. This should be cross-functional, with unambiguous lines of authority. Half of all marketers indicate that this has been done in their organization (see exhibit 1).
The findings of this study suggest that organizations with a dedicated response team have taken more decisive actions on several fronts so far, despite not having sufficient data at hand. There’s definitely an opportunity for organizations to improve the way they make decisions in the current situation, providing focus and decisiveness in a time of uncertainty.
3. Take Stock of the Commercial Situation Across Retail, Marketing, Sales and Digital
Understanding what is going on in with your brand, category, channel, customers and different aspects of your business is critical, especially given the declines many organizations are experiencing. Marketers appear to be in a good place for assessing where they currently stand. Three out of four marketers indicate that the data their organization has access to on how the current coronavirus situation is affecting customers and their business is at least somewhat sufficient (see exhibit 3, below).
Once an organization has this basic understanding in place, it will be in a much better position to start thinking about how it can capture immediate and future business opportunities. It also forms the foundation for scenario planning, as you need to understand the current state of all organizational levers to determine the impact of potential shifts.
4. Minimize Business Exposure
Cash is king during disruptions. Every aspect of the business must be managed within the overarching need to conserve cash. Unsurprisingly, this has impacted marketing budgets (see exhibits 4 and 5).
- 48% all marketers indicate they’ve frozen hiring. (exhibit 1)
- 56% of marketers indicate they have already reduced marketing budgets.
- Additional reductions are expected.
- Average budget reduction is more than 30%.
- Budget reductions have mostly been made in creative and media spend.
- The digital channel has seen the greatest cuts.
Although digital may seem like a perfect channel to leverage for creative tailored to the current situation, as people are mostly at home and have time to be connected, it’s also one of the channels where it’s easiest to quickly reduce budgets due to fewer long-term contractual obligations.
Additionally, a majority of marketers has postponed or cancelled major initiatives (see exhibit 6), with new campaigns and sponsorships or collaborations the most common victims.
Marketing budget cuts are unavoidable in the short term for many organizations, but experience has shown that it’s not advisable to stop advertising and cease other activities completely during a disruption. Such drastic cuts will hurt brand equity in the long term and compound business recovery challenges. It’s advisable to keep a keen eye on what your competitors are doing, as success is relative. If demand for your industry recovers, so, too, will your sales—the question is whether your sales rise faster or slower than the competition. Therefore, it might be advisable to change the focus of marketing activities to more longer-term brand building than trying to maximize short-term sales.
During times of uncertainty, people often turn to the comfort of familiar brands. Whether done through innovation, action or advertising, brands need to continue reassuring their customers they have made the right choice and make it as easy as possible for them to stick with the brand.
5. Capture Immediate Business Opportunities
Many marketers are actively looking at ways to grow their brand right now, potentially being forced to be more creative due to reduced budgets (see exhibit 1):
- 16% indicate they’ve increased their corporate social responsibility activity.
- 34% provide offers and promotions to engage customers during the situation.
- 40% have developed coronavirus-specific advertising creative.
There are many opportunities for brands and marketers willing to step outside of their comfort zones of business-as-usual and capitalize on behavior changes among their customers. Great examples include Anheuser-Busch donating hand sanitizing gel and Shake Shack offering do-it-yourself burger kits. But brands beware: Any marketing and business decisions should be authentic to the brand and positive for people impacted by the pandemic.
6. Monitor and Update in Real Time
Following the initial assessment outlined in step No. 3, it is critical to continue to monitor the situation, as things can change very quickly. This involves looking at your own organization and your customers. As time goes on, check in with customers to determine:
- How their mindsets are changing.
- How their behaviors are changing.
- What they want and need from brands.
There is a huge amount of data available to make timely decisions about your marketing activity and what might need to be adjusted in terms of what to talk about, what channels you focus on, promotion strategies and more. It can help to track the progression of the coronavirus outbreak in other markets both in and outside of the U.S. to grasp how commercial evolution is progressing and what early opportunities for recovery will be available.
7. Plan Now for the Recovery
In a business disruption, companies are focused primarily on immediate needs and priorities. But they must keep an eye on the future as well. The recovery will arrive with as much speed as the coronavirus, so planning is critical. Unfortunately, not all marketers have started to do this yet, as 58% indicate their organization has begun planning for what to do once the situation returns to normal.
Although it might feel that the current situation will last for a very long time, it is essential to be prepared for the various forms it could take. Scenario planning is a valuable and underleveraged tool to help think through the implications for an organization and be proactive. Twenty-six percent of all marketers indicate they do scenario planning to test the organization’s readiness for the future.
There are numerous examples of organizations leveraging some of their capabilities to help communities and people. The expectation is that this will be longer lasting; half of all marketers believe the current situation will result in at least some changes to the way the business sees its role in the broader society.
Marketing organizations have overwhelmingly taken clear steps in response to the coronavirus situation to protect their business and their people; budgets have been reduced, and activities have been cancelled or postponed. Although some organizations have already started this, a lot of businesses still need to move from defensive measures to offensive ones, find creative ways to make the most of the current situation and start planning for potential futures. It’s important to be proactive, knowing a recovery will come and that customers rely on and value brands.
A lot will undoubtedly go back to normal eventually, but right now it is unclear how long the coronavirus will continue to heavily impact our lives. Further, it is difficult to anticipate exactly what changes will be permanent. Regardless, given the lead time to a vaccine, it’s a situation that will repeat and not suddenly disappear. Now is the time to start preparing for potential outcomes so that your organization not only survives the pandemic, but is well positioned for the future that comes after it.
Illustration by Bill Murphy.