By Liam Kingswell – Founding 50 Member of the School of Marketing
The current climate we find ourselves in is the biggest challenge our industry has ever faced; with 69% of UK businesses facing a decline in demand for their products or services, we need to be reactive to meet the new consumer mindset. Our peers have heard the rallying cry and 6 out of 7 marketers have adapted their previously planned activity to meet the risks of today, but what of their marketing budget?
Social media has become the platform for a select few individuals to write damning posts aimed at companies still advertising, often cited as being ‘insensitive’ and ‘inappropriate’, but is this opinion shared by all consumers? A survey of over 35,000 consumers across the globe suggests not with only 8% of consumers stating brands should cease advertising. However, the same study found that around 75% of consumers believed brands should inform people what they are doing around Coronavirus yet nearly the same amount of consumers felt companies should not exploit the situation. These high percentages show the sensitivity of the current consumer, we as marketing individuals are expected to balance the delicate line of informative but not exploitive; the important point here, however, is that we can advertise.
In times of struggle, marketing tends to be the first in the firing line and today appears to be no different, with economic uncertainty across the globe many companies are holding onto their cash to weather the storm. I have seen this first hand with some of our long-standing clients reducing their marketing retainers by up to 80% and others pausing activity altogether until the economy is more stable. Whilst ensuring survival throughout what many deem will be a recession to some degree is top priority, companies need to think long term for “as sure as the spring will follow the winter, prosperity and economic growth will follow recession” (Bo Bennett).
I can hear echoes of one of my favourite history quotes by George Santayana as I write this article thinking of the advertising approach of Kelloggs in the 1920s - “those who cannot remember the past are condemned to repeat it”. During the 1920s, ready-made cereals were a relatively new market and when the Great Depression grappled the nation, Post (a dominant producer of cereal) pulled back their ad spend. Kelloggs, another cereal manufacturer, took a completely different approach and decided to double their ad spend and focused aggressively on radio advertising… their profits rose by 30% and they became the market leader and still remain so to this day.
When the purse strings of your competitors become tighter, this presents itself an opportunity for gaining market share, in the words of Winston Churchill “never waste a good crisis”. Besides 100 year old marketing tactics and quotes from some famous (and dead) guys, there is evidence to suggest that marketing at a time such as now could be the right action to take. A legend within the marketing world, Neil Patel, shares evidence that companies can receive faster results and better ROI during economic downturn as competition decreases and there can often be a reduction in some pay-per-click advertising.
Other than immediate results, advertising during an economic decline can have longer lasting impacts. A brand that continues to spend throughout a crisis projects an image of stability which can be crucial for some industries. Moreover, when competitors reduce spends, the “noise level” of a market can also decline so increasing advertising can help ensure the spends within a market are maintained and additionally increase your market share. This is even more likely when many companies are nervous of marketing at the moment.
Taking a step back from what experts have analysed from previous periods of uncertainty, we cannot forget that we currently find ourselves in an unprecedented situation. For the first time in our lives we are being told to stay indoors, avoid all contact with those whom we do not live with, facing meme after meme of toilet roll shortages and unacceptable numbers of the over 30s swarming onto TikTok (myself embarrassingly included). Perhaps not all true, but isolation has seen media usage increased by 95%. This increase does vary significantly depending upon the demographic with 57% of Gen Z creating/uploading videos due to Coronavirus and 51% of Baby Boomers watching more broadcast TV. Interestingly, higher wage earners are more likely to report increased media consumption. It seems we have the ability more than ever to reach our audience.
Now that we’ve covered why you should be marketing, we should probably look at how. In an ideal world we would all be sitting on significant cash reserves that allow us to use this time to dominate a decline in competition to increase share of voice and explore new channels at a decreased cost, but for most of us this simply isn’t the case. On the plus side, we live in a digital world where so much of our activity can be accurately measured so whilst we may not have an unlimited budget to spend across a plethora of channels, we can track their effectiveness. Without understanding the success of a campaign, we cannot effectively manage the budget.
First things first, you need to ensure that all the tracking is set up correctly on your website with the correct analytical data pulling through. If it is Google Analytics (GA) you are using to track your website, log into your GA account and focus on the “Real Time” section, if you open another window and load your website, you should be able to test the events and goals such as lead form submissions and purchases and see them appear in the “Real Time” section, assuming your IP has not been filtered out. Once you’re happy with the website tracking, you can start to install the correct pixels and tags on the website, and integrate GA, for the different platforms to accurately track the traffic they send to your website. It can still be a worthwhile exercise to create unique tracking links (known as UTM tracking) for these channels to track last-click actions within GA, many platforms are set up to do this within the platform itself.
Now that we can track the marketing activity within both GA and the individual platforms, we can begin to assess their effectiveness and manage the budget. Let’s be honest, you’re likely to have your marketing spend challenged by another area of the business or the board (or both) so it is more important than ever to spend the money where the business can quantify the results. Whilst right now, creating brand awareness campaigns can be an optimum way to expand your share of voice, in a world of low consumer spending and business struggles, focusing on driving leads and sales could be a great way to keep finance away from those budgets.
The vast majority of the channels we will use for our advertising collect website conversion data via the pixels, tags and integrations we setup earlier which they then convert into cost per acquisition (CPA) and return on ad spend (ROAS), although you may have to adjust the columns within the platform to make these figures visible. These figures can be crucial in ascertaining where to spend the budget to get the greatest return however there are key factors to be aware of - not all tracking was created equal. Most advertising platforms rely on an attribution window, for example Facebook Ads Manager considers a conversion as someone who converts after seeing an ad within 24 hours or within 28 days of clicking on an ad to calculate “ROAS”. Google Analytics uses last-click so only actions from that specific click will be attributed to the channel not after a certain time window.
It is important to have in mind the campaign goals when managing budgets. From experience, LinkedIn advertising is frequently more expensive than the likes of Facebook for cost per click (CPC) but it can have a cheaper CPA or produce greater qualified leads for better ROI in the long run. If brand awareness does form part of the strategy, Snapchat can have extremely effective cost per thousand impressions (CPM) and cost per swipe up (CPSU). A channel that is seeing dramatic changes due to the Coronavirus is email marketing which is seeing huge increases in open rates whilst many of us are confined to working from home with projects delayed giving us some more time. Far from being a dead channel, Email can be extremely cost effective and with improved open rates and click-through rates it would be worth exploring if not currently utilised or increasing if it already forms part of the marketing strategy.
It is important that you analyse the channel demographics and explore cost effectiveness when considering opening up other campaigns, targeting over 50 life insurance on TikTok would not be a worthwhile test when tightening budgets. That Being Said, If your demographic is under 30 then TikTok could be worth exploring however due to the beta nature of the ad platform they do come at a premium, but perhaps reduced spending will open this channel up to smaller businesses. Another example could be retargeting campaigns, many of us are using this across Google Ads or Facebook however Snapchat, whilst it may not have detailed targeting options, can produce retargeting campaigns which can workout more cost effective.
If you are using an agency to produce some or all of your marketing, ask for a detailed report that highlights the key figures by platform for the past 2 weeks, month and year to date. This would give indications as to how effective each channel has been over time and the impact of Coronavirus. Then request weekly reports if you’re not doing so already that highlights only key information, this will enable you to update your marketing plan moving forward and be more proactive with the changing times and have increased control.
An important factor to be aware of when using an agency is how they bill you. Some agencies follow a model of ‘percentage of ad spend’ whereas others work on a ‘retainer of hours’, if your agency bill in hours then when requesting reports and scheduling calls try to make them as lean as possible so as not to waste their time and your money. If you are under pressure from the powers that be to reduce your marketing spend, have an open conversation with your agency to discuss the results different budgets will achieve. You may find that some channels are not as effective for the current campaign as they have been in the past and can thus be turned off. Another example of this can be owned social management, creating a significant number of posts each month can be time consuming for little return and could be managed in-house in the interim.
If you believe there to be a negative impact of decreasing your current marketing spend levels, speak to your agency and they will provide you with the data you need to put a business case forward. Ultimately, many agencies have seen clients reduce spends, pause campaigns or be forced to leave so where possible they’ll work with you to keep the campaign alive.
The current state of affairs is one of nervousness and struggle, yet through this strain opens up new opportunities to gain market share where competitors are reducing spend, at potentially lower costs and reach our audience whilst they are spending more time than ever absorbing media. By establishing an accurate platform for measuring advertising results, analysing potential platforms for matching the target demographic and utilising the right message, we can guarantee the cost effectiveness of the marketing campaign as a whole and by channel. Working directly with your agency, we can remove any previously unsuccessful media spends and cut unnecessary hour wastage, and force the agency to drill down into the numbers to maximize the returns.
I am not going to say increase your budgets, nor will I say decrease your budgets, the data will do that for you. What I will say is do not decrease due to fear, continue whilst your competitors are choosing not to and you have the potential to stand out within your market. We have adopted new platforms and increased budgets with a small number of our clients and seen some fantastic results. Despite all of this, some of us will lose control of our budgets and be left with a significantly smaller pot forcing us to pause the campaigns we’ve worked so hard to build. Remember, this will not last forever and the learnings we take from streamlining our marketing activity and budgets now will place us in a great position when the economy bounces back.
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