Many companies around the world are no doubt grappling with this question everyday: “How do we weather this storm?”
A storm like no other, quite frankly.
And with much uncertainty still on the horizon, businesses have been forced to make many difficult decisions. One of these is cutting ad spend.
According to the latest WARC Global Advertising Trends report, advertising spend is expected to drop by $50 billion globally this year across almost all categories. UK ad spend is also expected to decline across the board this year, the first time this has happened since the advent of digital.
And in a survey from the Interactive Advertising Bureau, around 3 in 4 media buyers, planners, and brands believe coronavirus will have a bigger impact on advertising than the 2008 financial crisis.
For heavily affected sectors, like travel or hospitality, and those who can’t sell online, cutting ad-spend is either a necessary means of survival or they have little choice.
Meanwhile for other brands, they might worry how they’re perceived by consumers; can they really carry on as normal given everything? What do consumers expect from brands right now?
We’ve got answers to these critical questions.
A return to normal is front-of-mind.
In our recent coronavirus research across 20 countries run between May 19-26, there’s clear demand for some kind of normalcy.
Globally, 76% of consumers say that brands or businesses getting back to normal is extremely, very, or quite important to them.
“Normal” refers to activities like opening shops or running regular advertising. But there are some key market nuances worth highlighting.
This sentiment reaches a staggering high of 96% in Italy – which back in March was one of the worst affected countries in Europe – followed by 89% of consumers in Romania and 87% in India.
Across every country, the vast majority of consumers share this belief, only reaching a “low” of 66% in France. After months of lockdown and gloominess, many consumers are clearly ready to start the transition back to a more normal day-to-day life.
Of course, it’s not always so clear cut for some markets.
For example, 80% of consumers in the Philippines say it’s important for brands and businesses to get back to normal. Yet, when it comes down to how quickly they’d visit shops again after they reopen, 65% say they’d prefer to wait for some or a long time. We see a similar story in Italy as well.
So while many consumers might want businesses and shops to reopen, this doesn’t necessarily always translate to immediate action.
A feeling of safety is likely a key factor here. And consumers want a variety of measures in public places; most notably regular cleaning of spaces (68%), social distancing measures (58%), provision of hand sanitizer (57%), and mandatory usage of face masks (53%).
The fact that the importance of brands and businesses getting back to normal doesn’t drop below 66% in any country speaks volumes to consumers’ desires, it just means that some people might need more support in getting there – likely in the form of safety measures.
It’s not a case of simply opening up shops again.
Now is not the time to shy away from advertising.
Many brands are worried about consumer sentiment toward carrying on as normal – will consumers be receptive to advertising? Or worse, will it come off as opportunistic?
Despite worries about consumers’ perceptions, our research shows that in reality consumers are very receptive to advertising at this time.
In fact, positive sentiment around running “normal” advertising campaigns has been growing since the end of March, reaching 56% by May.
And if we take into account those who neither approve or disapprove, so are essentially neutral, this figure jumps up to 87%. At the same time, disapproval with brands advertising as normal is decreasing, reaching a low of just 13% in May.
Countries who have managed to either overcome the virus or contain it have experienced the biggest growth in approval since wave 2 of our research. New Zealand is a key example of this, managing a 24-day streak of no new infections in the country from around mid-May to mid-June.
In this market, approval for brands advertising as normal jumped up from 35% in March to 58% in May – a 66% growth. Japan, who also managed to contain the virus, saw approval of advertising increase by 56%, followed by Canada with 31% growth.
Across the 20 countries we tracked in our latest research, no country showed approval dip below 49%.
Not only do consumers approve but they’re also more turned in than ever, spending longer consuming different forms of online media, including online TV services and social media.
Now is not the time to sit back or stand still. Brands just need to meet consumers where they’re at, and that means pivoting more toward online channels where possible.
As our CEO, Tom Smith, summed it up in his previous blog where he spoke about brands pulling advertising based on concerns for the negative perception it could create with consumers: “If you’ve spent decades building a brand, switching it off now, with arguably the most engaged audience in history, is a short-sighted decision that could erode decades of hard-won brand equity.”
Financially-driven brand responses are in demand.
Consumers still want to feel connected and supported by brands, that much is clear. Their approval for brand activities goes beyond advertising: many also want brands to take very tangible, practical measures that help to ease the burden.
When looking at the top brand responses that consumers most approve of, it’s financially-driven responses that they want the most.
Globally, 86% of consumers approve of brands running promotions/offers and 85% approve of brands offering flexible payment terms. Support for brands offering promotions/offers grew from 75% in late March to 86% in May across 17 markets.
And it’s middle-income economies like Brazil, India, China and the Philippines that post the highest figures for these demands. For example, 94% of consumers in Brazil want brands to run promotions and offer flexible payment options.
A further half of Brazilian consumers are extremely concerned about the epidemic in their country and 58% expect it to have a big or dramatic impact on their finances.
The growing challenge in emerging markets
This also points to a wider problem of emerging and developing economies being disproportionately affected by the outbreak.
While developed countries are mostly past the worst, many emerging markets are now at the center of the outbreak.
In early June, the World Bank revealed the pandemic is expected to plunge most countries into a recession this year. The baseline forecast expects a 5.2% contraction in global GDP, the deepest recession in decades.
Latin America and the Caribbean – who now report more consistent daily cases than Europe or the U.S., and growing rapidly – will be the hardest hit economically with a 7.2% drop in GDP.
In Brazil alone, there’s over 1.1 million reported cases to date and unlike many developed countries, is yet to reach a peak.
The World Bank expects the effects of coronavirus to reverse years of developmental progress in many emerging markets and increase mass poverty. Mounting pressure on underdeveloped health systems, loss of trade and tourism, and tight financial conditions magnify the challenges that emerging countries face.
This highlights the urgent need to buffer the pandemic’s health and economic consequences and protect vulnerable nations. Crucially, brands can play their part.
Many brands and businesses have already risen to the challenge, from donating products to those who need it, switching production to essential items, to supporting healthcare initiatives.
But it’s not always the big initiatives that speak volumes. From our data, we know consumers welcome all the support they can get – whether that’s offering flexible payment terms, or providing practical tips to help people deal with the situation, to providing funny/light-hearted content.
Brands will be remembered for the positive efforts they took to combat the problem, and how they supported and continued to build relationships with their consumers.
Standing still just isn’t an option.