Advertising Effectiveness During the Coronavirus Downturn: The Argument for Staying “On”
May 6th, 2020 | thinktv,
Peter Field, marketing and advertising effectiveness expert, recently joined thinktv for an insightful webinar, during which he made a compelling argument for continuing to advertise during the current crisis.
As part of his ongoing research into advertising effectiveness, Field analyzed the effectiveness of various advertising approaches during the global financial crisis of 2008-09 and shared critical lessons for marketers in the seminal work, Advertising in a Downturn. His most recent paper, Advertising in Recession, Long, Short or Dark? builds on that work to conclude that, although the current crisis is unique, the lessons for marketers from previous downturns still apply. The first lesson: Keep advertising (if you can).
Significant long-term profit gains preferable to short-term cost savings
There are issues with putting too much weight into short-term tactics at any time – as well documented in Field & Binet’s widely cited paper Effectiveness in Context – but Field says those issues are even more relevant during a recession.
Field stated that the evidence is overwhelming – those brands that took advantage of the opportunity to maintain, and in some cases, boost their share of voice during the global financial crisis, achieved impressive business gains. Those brands that invested in ESOV (excess share of voice – the difference between a brand’s share of voice (SOV) and its share of the market (SOM)) achieved 5 times as many very large business effects (such as profit, pricing, share, penetration etc.) and 4.5 times the annual market share growth.
Field also highlighted the unusual impacts of this pandemic, from panic buying in some categories to complete market shutdowns in others, such that demand is either overwhelming or doesn’t exist. Field argued that in either case, short term activations make little sense and the better approach is to invest available advertising budgets into brand-building activities that will generate more robust growth and profitability at the end of the crisis.
Reiterating his message that “it is brand-building that’s going to see [marketers] through the recovery”, Field also warned against the temptation of short-term cost savings. Brands that go dark on advertising during a downturn carry a “high risk of share loss and greater price sensitivity” that exposes a brand to a recovery period that can stretch to five years.
Field’s Advice to Marketers
Field outlined four pieces of advice for today’s marketers:
- Focus on the long-term (if you can)
The IPA data analyzed by Field suggests that in a recession, “short-term activation makes much less sense when either demand cannot be met or simply doesn’t exist.” Focus on long-term brand building to accelerate recovery.
- Defend your share of voice
Field highlighted the strong relationship between share of voice and share of market. The penalties of allowing SOV to fall below SOM are greater during a recession – and the benefits of maintaining (or raising) SOV above SOM can be substantial. This may not require extra spend now but rebuilding lost SOM in recovery will be expensive.
- Seize your market opportunity
The cost of SOV can be lower if your competitors go quiet, presenting an opportunity for lower-cost growth than during normal times. “It is sensible to debate the tone and nature of brand advertising to recession-hit customers, but not the importance of it,” Field concluded.
- Demonstrate humanity and generosity
Demonstrate humanity in your advertising creative, but also your behaviour. The mood of society at the moment is solidarity, and ads that reflect this will strike a chord. Market research company System1, which measures consumer response to new ads daily in the US and the UK, found that advertisements about humanity and community perform better than those focused on self, self-image and performance.
To learn more, watch the full video presentation. Peter referenced several research papers in his presentation – Harvard Business Review and Orlando Wood’s research with System1 among them – and links to those references are included in his slide deck.
For more insights on advertising during the current crisis, check out thinktv.ca, where we have curated the best of COVID-19 related research and insights for marketers.
thinktv is a marketing and research association dedicated to the advancement of commercial television.