Defending your marketing budget in times of COVID-19
The impact of the COVID-19 pandemic on advertising is multi-faceted, affecting both supply and demand across channels.
Whilst many consumer and office supply products are flying off the shelves as fast as they can be stacked, other product launches are being delayed, supply chains are disrupted, sporting events and conferences are being cancelled or postponed, news consumption is increasing and digital entertainment (streaming, gaming, apps) is set to increase.
Meanwhile, direct-to-consumer plays, subscription delivery services and frankly anything offering in-demand products by delivery, are picking up new business without having to spend extra. Whatever industry you’re in, it’s likely marketing and media budgets are being reviewed.
Many CMOs and Brand Managers are not only working out how to deal with how to shift around media investments impacted by the current environment, change creative, rethink price promotions, or push new distribution channels, they may need to defend their budget in a time of focus on short-term focus on the bottom line.
More than ever, It’s a critical time to use data to:
- Prove the financial benefit of long term brand building
- Measure the impact on baseline sales of current events, distribution, competitors, pricing, demand, and other external factors
- Work out how much you really need to spend on advertising, how to split between long term brand building and short term activities, and where to spend it, on the back of adjusted sales targets and/or marketing budgets
- Identify competitors pulling back and take the opportunity to increase share of voice
- Evaluate the effectiveness of your creative changed and do you need to re-think messaging and formats for changed media environments
- Know when and how to adjust the media plans again as the market returns to the new normal
If your budget is under threat, the CFO may not understand that although cutting brand-building investment may have a short-term impact on the bottom line, it will be detrimental for the longer term. Try to speak their language and get them onboard; it may just be a great catalyst for rethinking about the role of marketing in driving long term value for the business.
Let’s face it, you’re not going to get them to read all the tomes on marketing science and media effectiveness, so here’s some summaries and shorter-form content that can help with your persuasion campaign.
Since you’re here already, make sure you check out Mi-3’s cheat sheet on marketing science and media effectiveness.
- Advertising benefits are realised over the long term (which will vary for each category)
- Maintaining investment during a recession will drive significant benefits
- Reducing a marketing budget to 70% for one year will take two years to recover to previous sales levels; reducing to zero will take four to five years to recover.
Also check out the greatest hits of Les Binet and Peter Field, leading advocates of brand building over the long term. There’s even a handy download that brings all the charts together in one document for sharing with your executive team. Some key take-outs include:
- Each channel has different branding and activation effects. Mix your media to achieve the best results
- Go for reach and new customers over narrow targeting and existing customers
- Creative matters: campaigns that have been creatively awarded tend to perform better.
Now you are armed with external studies and reports to make your case, how does your own data look? If you haven’t done so already, now is a great time to make sure you have collected all your media and marketing data in one place.
Something like Datorama that is specifically built for the complexities of joining paid, owned and earned marketing data with business outcomes is a perfect option.
It can be hard for the CFO to take marketing seriously if reports and dashboards are all about frivolous campaign metrics disconnected from relevant business results, so try to include real commercial data in the dashboards, and create different versions of reports with just the metrics that matter for each group of stakeholders.
If your business is squeamish about sharing commercial data with agencies, there are certainly ways to share control over the data and dashboarding and who gets to see what, and how the data is stored.
It’s worth the effort - with the right data in hand, your agency partners can optimise media campaigns to drive better business outcomes that run counter to what the media results may tell, for example, a publisher that seems to be underperforming with a high cost per conversion may have the best conversion values, still making them a smart investment.
If your media plans are based on econometric or media mix modelling, you may be tempted to immediately redo your models. However, your business situation is unique and you should review how accurate your existing model predicted the current and upcoming results.
Come May or June, the full impacts can be measured and you should look at updating the model to see you through to the end of the year. At that point, it may be worth doing a whole new model, rather than an update, to deal with the new normal, including your business results along with external factors like consumer confidence and unemployment rates.
Ideally, you would also have some intermediate steps, but it will be an expensive and time-consuming exercise to keep re-forecasting, not to mention burning out the media analyst doing all the work! This is where tech platforms come into their own.