Building a great brand is tough in good times.
Right now, it seems near impossible.
But what if it wasn’t?
By changing certain aspects of our everyday lives, COVID-19 has created opportunities for marketers to grow their brands.
Compiling decades of recession data spanning from 1928 to the present day, we identified three questions to examine what makes brands grow during economic downturns:
We then turned it into a webinar and presented our findings to a select group of leading fortune 500 companies.
There are three COVID-19 influenced trends that will shape how brands can grow.
Disney Plus doubled their subscriber base between February and April 2020, with 25m+ new subscribers. Netflix saw a 16million increase in it’s subscriber base during the first quarter of 2020. Web browsing has grown 70% while usage of social media is up 61% — channels where brands can advertise.
Consumption of marketing-related content is up 58%. Viewability is up 11%, meaning people are more likely to notice ads, especially those closest to coronavirus content. Just 8% of consumers expect brands to cut advertising. The rest expect helpful solutions to the everyday problems they face without being sold too.
There is a natural demand for ecommerce and the need to abandon existing consumer behaviour patterns to try new things. Permanent behavior shifts towards online purchasing are happening in industries like alcohol, where online sales are up 243% (US).
Companies are now walking a tight line between cash preservation and growth. Do you abandon the marketing goals that you had?
For many brands, cash preservation has been the choice. Budgets have been cut nearly 60% and more than 50% of brands paused or are reviewing their spend due to COVID-19. This means ad supply has increased while demand has decreased.
As a result, It’s now cheaper to advertise and advertising is more effective. Yet, only 7% of UK marketers say their brands are planning for growth and will invest more in marketing during the pandemic. These brands can now grab online attention much cheaper. For brands across 18 industries, global CPMs are down 67% over a 6 month period while CPCs down 19% since January 2020. Return on advertising spend peaked near 30%.
The 7% of marketers whose brands are increasing ad spend will find their advertising is more effective due to the rule of ESOV (excess share of voice). This is a general marketing principle that dictates that for every 10 points of ESOV, you will achieve 0.5% points of market share gain. A spend increase of 48% during a recession will win virtually double the share gains of those who increase their expenditures more modestly.
Brands that increase advertising during a recession experience higher sales during or after the recession. Companies that advertised aggressively during the 1980 recession had sales 256% higher than those that went dark.
Going dark (cutting ad spend altogether), as Coca Cola have done in response to COVID-19, has damaging consequences for brands. On average, when brands ‘went dark’ for a period of six months or more, two key constituent brand relationship metrics — brand usage and brand image — suffered considerably (13% and 6% declines respectively). More broadly, 60% of brands ‘going dark’ see decline in at least one key relationship metric after just six months.
A key lesson we can learn from brands who’ve thrived post-recession is that investing in brand building drives short term ROI and long-term profitability. You can build strong brands by focusing on three brand-building communication pillars.
Brand building amplifies other marketing tactics. Brands are not a weapon to defend against a recession, but they have huge benefits when it comes to recovery. Once economic activity began to increase and the effects of the great financial crisis began to decrease, BrandZ’s Top 10 Powerful Brands (which excelled in the three areas listed above) recovered nine times faster than the S&P 500 standard following the 2008 economic crisis.
The language around the pandemic is more commonly found in wartime. WWII offered brands an opportunity to undo the negative image they had accrued during the great depression and many advertisers took the “opportunity to once again be seen as the patriotic engine of the American economy — rather than the greedy bastards who caused the Great Depression.”
With 64% of people who believe their country will not make it through the crisis without brands playing a critical role, brands and marketers are in a unique position.
Economic downturns offer a unique opportunity to gain market share and build brand equity. HBR’s study of 4,700 public companies over three recessions found that 85% of market leaders are not leaders after a recession.
When Sam Walton was asked about the recession of 1991 he said, “I’ve thought about it, and decided not to take part”. That year, Wal-Mart became the world’s largest retailer with net sales of $43.9 billion.
Brands have an opportunity to play a significant role in creating positive and helpful communications at a time when people are afraid. What we do now will echo louder when the pandemic and economic downturn ends.