Monday, April 6, 2020

Report: Marketers Who Keep Spending During Downturns Fare Better

Research shows that brands cutting spending now will have a harder time when recovery comes.

And AdAge reports despite an unprecedented disruption in people’s lives amid a pandemic that could kill hundreds of thousands of people, the current crisis is also creating new opportunities for brands old and new—as uncomfortable as that may be to think about.

As bad as things have been in recent weeks, they’re about to get much worse for consumers.

The downturn fueled by coronavirus will make the onset of the Great Recession in 2008 look mild–at least in the early going. The latest second-quarter U.S. gross domestic product forecast from Goldman Sachs is for a 34 percent decline, more than three times worse than he previous quarterly record of 10 percent set in 1958 (amid a flu pandemic).

A tracking survey of more than 2,700 people conducted March 23-25 by CivicScience found that 14 percent of respondents had lost their jobs and weren't getting paid, while another 10 percent were working fewer hours for less pay. Another 6 percent were not working but still getting paid, though it’s unclear for how long.

Amid all that, it’s tempting for marketers to stop spending on one thing they can control, which is advertising. A survey by agency lead generation firm RSW/US conducted last week found 9 percent of marketers have cut all spending, another 29 percent have “greatly reduced it” and another 31 percent have “somewhat reduced it.”

Research by Ebiquity shows brands that increase spending during a recession achieve market share gains averaging 1.6 percentage points during the first two years of a recovery, said Christian Polman, chief strategy officer, speaking at an Advertising Research Foundation webinar on recession impacts late last month. Brands that maintain their spending average a one-point share gain, while brands that cut spending during a recession average a 0.7-point share gain during the subsequent recovery, he said.

A Kantar survey found large percentages of people now want companies to focus on employee health, remote working, making sure they can still provide needed goods and increasing donations to help ease the crisis. But only 5 percent of people said companies should stop advertising.

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