New research states that brands that cut media spending risk losing 6X sales revenue
Analytic Partners, an analytics and consulting firm, released its latest research on marketing success. ROI GenomeOpens a new window , a new solution targeted at marketing leaders looking the maximize the ROI of their marketing initiatives, uncovers new insights behind the drivers of business performance.
Current Forces in Play
The current marketing landscape has been dominated by certain external factors that have caused a significant shift in the brand-consumer dynamic. The COVID-19 pandemic has transformed how businesses and consumers interact. With more than one billion people on earth under some form of stay at home order at the time of this report’s publication, modern life is not what it was even two short months ago. When brands consider operating in this new normal, there are a number of connected factors to take into account: consumer mobility and purchase habits, media supply and demand, economic downturn, and the public health crisis are all contributing to changes in the way society is behaving.
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The report identifies three key stages – Crisis, Stabilization, and Revitalization that brands must focus on to emerge successfully from the pandemic.
Marketing Through an Economic Downturn
Analytic Partners’ report finds that during an economic downturn, media cuts carry large financial implications. It strongly recommends that marketers not stop media spending in the face of recession as 60% of brands that advertised during the last recession witnessed a 60% ROI improvement. The report also stated that brands that increased media investment realized a 17% growth in incremental sales.
Reducing media spending, on the other hand, causes sales to shrink. On average, brands that reduced media investment suffered an 18% loss in incremental sales during the last recession.
In the current context, ROI Genome predicts that brands that reduce their media spend in 2020 by $50MM will, on average, stand to lose $130MM in revenue in 2020 alone. When factoring in the long-term implications of this reduction, the number increases to well over $300MM.
How Can Marketers Plan Through the Crisis and Beyond?
The importance of maintaining a marketing budget during an economic downturn is clear. So, what key considerations should leaders keep on top-of-mind to make the most of that budget and guide their brand through the crisis stage and beyond? ROI Genome recommends the following steps:
Reset the media mix
The situation is changing daily, which means that monitoring costs is critical. The crisis has had a major impact on media, and brands need to be agile to effectively redistribute marketing dollars.
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It’s critical to shift media mix to drive relevant products and purchase channels. As ROI Genome data from the past has consistently demonstrated, all media has an omnichannel impact, but the mix varies based on goals and consideration of consumer behavior.
When shifting the marketing mix to drive online sales, it’s important to note that online sales are driven by both online and offline tactics. As consumer behavior shifts lead to even more online shopping, brands need to keep in mind that online advertising is not the only tactic that drives online shopping. In fact, our research has shown that in some recent cases, over half of the website traffic was actually driven by TV.
Invest in brand equity messaging
Based on data, ROI Genome found that brand equity and messaging that focuses on the values of a brand outperform product, promotion, or functionality messaging 80% of the time. Advertising that focuses on what the brand stands for and has to offer has many benefits. In the case of large brands, focusing on the overarching “mega brand†can generate a halo onto all product lines within the franchise. During challenging times, a focus on brand equity messaging can be the smartest move.
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Craft contextually appropriate messages
Equity messaging has proven to be highly effective, and in times like this, the context of that messaging is critical. Brands should ensure that all messaging and visuals are contextually relevant and shift to brand messaging with an authentic, genuine tone. Now is not the time to go silent, but to have a voice and maintain/grow share of voice by thoughtfully considering the intersection and importance of the right timing, message, and audience:
- Make sure messaging, and visuals are contextually relevant
- Genuine, emotional ads generally work better than functional ads
- Focus on your brand’s purpose and how it can help customers and employees
- Shift focus to more relevant products, business segments, or purchase channels
Focus on regional planning
In this particular moment, no two regions or even two individuals are sharing the exact same experience. They may differ in major ways, such as if restaurants, retail stores, and gyms are open or closed or if warehouses and store shelves are empty or full. With regions entering, exiting, and potentially re-entering crisis stage at different points in time, it’s critical for companies to adopt strategies, whether it be by city, state, or country.
Conclusion
It comes down to planning simultaneously across all three stages of major market disruption: crisis, stabilization, and revitalization. According to the report, leaders should consider planning regionally, managing the message, resetting their marketing mix, and focusing on brand equity messaging to weather the current storm.