ON THE CMO AGENDA: MAXIMISING PERFORMANCE AMID AN ECONOMIC DOWNTURN
Published on April 30, 2020
Across the globe, the impact of the ongoing COVID-19 pandemic has not been lost on the digital marketing industry. With almost a third of marketing firms now expecting job losses and over 50 percent of CMO’s anticipating that they will be making moderate to significant decreases to their budgets, the industry has seen overall marketing spend plunge at a rate not seen since the 2008 global financial crisis.
Meanwhile, as the world transitions to an increasingly virtual state of operations, we’ve had to contend with new ways of working. As a decision maker, you’ve likely adapted how you communicate with your teams, streamline your operations, and rely solely on in-house teams as cost reductions are made.
It goes without saying that the digital marketing sector is undergoing a period of adaptation—one that will largely determine who is primed to weather the current turbulence with success. However, while it seems that the industry is bracing itself for the very worst, it’s important to not lose sight of what’s most important: your customers. Brands still need awareness at this time and more than ever, the battle for relevance is especially hard-fought, as companies struggle to balance empathy and authenticity against profit and performance.
In the past three months, we’ve seen that crisis is a great equaliser and rather than operating in opaque siloes, we would all benefit from coming together, imparting lessons and best practices from the first quarter of 2020 thus far.
Business agility is essential to any high-growth organisation. Amid unprecedented events, regulatory shifts, and changing consumer preferences, the ability to quickly adapt especially in an ever-evolving space such as digital marketing is crucial. While COVID-19 may have been the most recent catalyst to prompt a transition to in-house, the number of brands making the change has only climbed in recent years. Procter & Gamble most notably announced plans to reduce its agency roster by 50 percent in as early as 2018, leading to an expected US$400 million in cost savings in the next few years.
However, during times of crisis, an increased emphasis on control and flexibility is certainly a source of comfort. A Digiday survey found that 38 percent of surveyed marketers believed that having increased control was the “greatest benefit” of an in-house agency while other high-ranking benefits included shortened timelines, better aligned brand positioning, and cost savings. Indeed, rather than being burdened by costs to external agencies, in-house agencies allow for more flexibility in turning the proverbial tap on or off which allows greater control when it comes to marketing output during periods of uncertainty.
A survey conducted by Unruly found that 52 percent of consumers want brands to be more informative in their ad campaigns, with 25 percent looking for advertisers to share how they’re supporting staff and customers during the pandemic and 23 percent expecting them to provide messages around COVID-19. Now, more than ever, consumers are clearly demanding more authenticity and acknowledgment from beloved brands.
To excel, brands must remember that they must tap into the humanity of their products and their messaging by looking for a common ground. After all, beyond the clicks and purchases, the true sign of effective creative is one that resonates—the kind that gets people talking and makes them feel acknowledged. Less reliant on the glitz and glamour of production-extensive ad campaigns, brands are certainly finding ways to work with what they have amid nationwide lockdowns—from social campaigns filmed entirely via Zoom to found footage campaigns showcasing the possibilities of a product.
Other brands are a bit more practical—household cleaning brand Clorox avoided traditional marketing tactics and offered an educational approach instead. As early as late January, the brand added a dedicated landing page to its website to offer disinfecting guidelines based on recommendations from the CDC and WHO.
While it may be tempting to avoid any direct marketing activity that explicitly addresses COVID-19, brands must remember that even amid challenging times, it’s important to retain some semblance of visibility. Though uncertainty may prevail surrounding how long we’ll continue to weather economic turbulence, consumers will still look to their brands to fulfil a commercial need. Irrespective of those needs, the best way to connect with them at this time is to simply be genuine. Whether that’s acknowledging the shared disappointment that people can’t be together or imparting practical advice, you remain true to your brand and true to the values that your consumers associate with your organisation.
During times of economic uncertainty, it may be tempting to halt all marketing activities altogether—certainly a reality for certain sectors deemed as “inessential”. However, MediaMath argues that past health crises and global recessions have shown that brands “should not go dark” during this period. Rather than pressing pause, the programmatic technology solutions provider found that 48 percent of advertisers had instead adjusted their media type usage or shifted their budget allocations accordingly.
With advancements in automation, CMOs will be well-acquainted with the benefits of programmatic which allow advertisements to be seamlessly and efficiently placed in front of target audiences. While one would assume that the technology would aid in increased cost-efficiencies at this time, the results seemingly reflect a mixed bag. According to Integral Ad Science, “coronavirus” became the second-most common word on keyword block lists as of this past February. As ad space inventory on COVID-19-related stories proves underpriced, advertisers can certainly leverage this to their advantage (where appropriate), but how to do so efficiently?
There is no easy answer here, as teams have been tasked with manually weeding out stories and publications to ensure that environments are indeed brand-safe. After all, no brand wants to see their product displayed next to negative news and with publishers leveraging on backlinks to gather domain authority and consistency across their editorial content, it’s difficult to discern sentiment across even the most objective stories.
Despite well-meaning efforts at consumer engagement, it’s essential that CMOs have the tools to ensure that their ads are only displayed in brand safe, fraud-free environments. Crises aside, it’s clear that irrespective of the situation, technological investments must be sufficiently agile to allow for increased cost-efficiencies and productivity.
For one, while balancing the need for some degree of manual vetting, some solutions are built to further streamline the programmatic supply chain. The use of blockchain allows for greater transparency across the digital media supply chain, allowing all campaign stakeholders to have a full view of campaign performance, enabling them to make real-time optimisations and allowing them to improve their targeting efforts. In addition, smart contracts can be used at the reconciliation level—ensuring that only impressions that are deemed verifiably brand-safe and fraud-free according to predefined metrics are paid for.
In fact, according to Deloitte’s February 2020 CMO Survey responses showed that investments in technological enhancements such as AI and machine learning remained paltry, rated 2.1 on a 7-point scale with 7 equivalent to “very highly”. During a period of reduced, albeit critical operations, strategic investments in your marketing toolkits will be important, allowing your teams to adapt amid a changing commercial landscape to ensure that your business is future fit.
Anticipating the next normal
While the digital marketing space certainly came aboard the digital transformation bandwagon a lot sooner than other legacy industries, the facts remain the same: we are now entering a new normal. While policies may differ across the globe, the digital marketing space is one that transcends geographical boundaries—while we may be located in disparate countries, our customers are situated somewhere across the broad, infinite online landscape. Despite the disruption, CMOs and other executives must remember that much like the last recession we lived through, this is but another crisis and there will be others to follow. Though unprecedented in its global impact as a health crisis, COVID-19 is a mere dress rehearsal for what’s to come as we continue to grapple with complex universal challenges.
As businesses, we need to invest smarter and more strategically in our people as much as in our solutions. No longer reliant on a crowded, tangled business model of intermediaries and third-parties, we need to re-evaluate what value means and how it’s measured. KPIs cannot solely be based on clicks and purchases as much as they’re measured by supply chain efficiency and increased productivity across an organisation. Now, more than ever, we need to work fast as much as we work smart.
The ongoing pandemic will be a litmus test for the businesses who began the year strong and if they can sustain that market leadership. For others, it will be a challenge to uncover the strength of their relationships across industries and among their consumers. However, from one business to another, it goes without saying that these coming months will demonstrate a unique opportunity for each of us to capitalise upon as we reflect on our ways of working and our operations to ensure that our firms are truly fit for purpose and primed to adapt to the challenges that may lay ahead.