H2 opportunism - How the sharpest marketers are planning their investment for the rest of 2020...

Marketing has always been a full contact sport with winners and losers. For the most part we're playing a zero sum game. When you win your competitor loses and vice versa. Currently the Darwinian parts of our marketing are even more magnified. For many companies it's literally life and death.

Decision making under this pressure is hard. The stress can cause people to lose their nerve and smash up carefully crafted brand strategies and media plans.

But to bastardise the famous Kipling poem:

"If you can keep your head when all about you are losing theirs...yours is the earth and everything that’s in it."

It might sound trite to talk about opportunism given the human cost of this pandemic.

But away from the critical health issues, the reality in business is that 'opportunism' is exactly what the smartest, most resilient marketers should be thinking about right now. They'll be using this period to their advantage. They'll embrace the challenges of weathering the short term and galvanising their brand for the long term.

As the storm rages around them, they'll see this as an opportunity to extract value and pre-emptively build marketing muscle that can be flexed at a later date.

There's no recipe for a recession like this, characterised by lack of supply and demand and caused by an enormous black swan event.

But there are things that you should be keeping in mind as you plan for the second half of 2020.

1) Buy the dip and invest ahead of the curve

Judging whether to advertise right now is more than an economic decision. The advice of marketing science needs to be tempered by the wider commercial, social and ethical reality. It’s hard to justify investment in advertising when many organisations are facing low demand, cash flow problems and at worst are laying off staff or struggling to survive.

But if you have the budget the current situation is an incredible opportunity. In investment, they refer to this as 'buying the dip' - buy when the market is fearful and take advantage of the bargains on offer.

For example, an enormous Saudi sovereign wealth fund has just bought a range of blue chip European and American stocks as it spots the opportunity to invest in bargains.

That's the way marketers should be thinking (again with the caveat of 'if the budget is available'.)

In a market downturn there can be a tendency to play for immediate sales, but this should also be tempered with a broader focus on brand building over time. Recognising the benefits and limitations of measures like ROI is particularly critical.

Adidas is a great example of what not to do.

In a short-term focused immediate marketing landscape, the danger is we over-prioritise activation and de-prioritise brand building. We risk decimating brand value and price premium by over-investing in rational sales activation and under-investing in brand.

Advertising’s role is about both delivering sales today but also about priming people to buy tomorrow. If you have the budget, the move with the best long term return is to put money into brand building activity now and reap the benefits later. Think of it as pre-emptive investment ahead of the curve designed to put you in good position for a sharp rise in demand when people start to spend again.

2) Evolve your media budget to reflect accelerated trends

This pandemic is an accelerant for existing trends. The average person is being driven by circumstance to interact with, download, or buy from a digital service that they likely wouldn’t have otherwise. Research indicates that 1 in 3 of all online grocery shoppers since lockdown restrictions were introduced are new to online grocery. Household penetration for online groceries has grown by 3% points to 9.5% in April 2020 and the cocooning age group over-index for uptake of online shopping.

This will push businesses to speed up their digital transformation. Brands like Shopify, Amazon and other online retailers are seeing enormous increases in spend. So take the chance now to prepare your business for this. Analyse the weak points of your digital offering and take inspiration from recent examples of offline companies that have been forced to become creative with digital delivery services.

It’s also likely that we will see the advertising oligopoly of Amazon, Facebook and Google will harden as smaller publishers find it hard to remain viable. The trio have the cash to ride out the storm and to actually invest and grow from it. We may see consolidation as they seek to tighten their grip on overall advertising spend (where they already make up 70% of total spend and 100% of growth).

There is also a general broadening of the social media landscape with TikTok in particular becoming a breakout star. There’s been a 27% increase in TikTok engagement from Feb to March and an 18% increase in downloads. This new channel will open up the market for brand advertisers.

Other media trends include the maturation of gaming as a media vehicle, with Twitch, YouTube and Steam are all seeing upticks in viewership. Yearly like-for-like game sales have increased by 44% and while real physical sport is on hold, the virtual world is taking its place. Gaming is already bigger than cinema and music, but brands are still only starting to become aware of its potential. 

It's imperative that you're planning with the mindset that while not everything has changed, many trends have accelerated so you need to be evolving your budget to follow this consumer behaviour.

3) Seek out underpriced media opportunities 

Though it might sound trite, there’s also a huge amount of media value in the market at the moment, particularly traditional media. Those with deep pockets will deliver huge ROI by negotiating favourable rates and agreeing long term deals now.

If you can afford to take the long view, cold strategic logic would indicate it’s beneficial to strike now when your competitors can’t.

Many big brands like Pepsi and GM are pulling out of radio, TV and OOH deals, leaving media owners scrambling to fill their books and resulting in huge value to be had. Be very wary of anyone who tells you that digital only is the future. Hold your nerve and understand that a global pandemic doesn't change the fact that you probably need to reach a large proportion of people in broad 'traditional' media to grow your brand. Seize on underpriced media opportunities. The other danger is that when everyone piles back into the market in six months time, you'll be buying at higher CPMs. So invest now if you can.

Now is also an incredible time to invest in medium/long term partnerships with quality, trusted, diverse publishers or news brands. If you negotiate intelligently you'll be able to deliver tremendous value.

4) Take the time to sharpen your portfolio

The last decade has seen an explosion of choice and NPD across all categories. Some brands have bloated their portfolios by building sub-brands to target niche segments. Some have become bloated from buying competitors. This portfolio complexity can be a quiet thief of growth. Too many SKUs can result in ineffective media support levels or shopper confusion. So, see this as an opportunity to analyse what brands in your portfolio are performing. Then observe if the 80/20 rule applies (most of your profit comes from a small % of your brands). If it does, this could be a chance to simplify and re-focus on the profitable core.

5) Take the opportunity to cheaply steal SOV

Share of voice is the brand’s share of the total communication expenditure in the category (share of the total investment made by all the players in the category) and should be used as a guideline for how much money an advertiser or brand must place in paid media to achieve the necessary visibility. The basic tenet of SOV/SOM analysis is that share of voice (your media spend as a % of total market spend) directly correlates with your % share of market. Rigorous analysis of multiple data sets has shown that a brand’s growth over time is strongly related to its share of voice beyond the market average (Extra Share of Voice - ESOV). 

Given the current situation, overall advertising spend across markets will likely drop in 2020/2021, meaning ESOV will become slightly easier to deliver. This is an incredible opportunity if you have the cash to do so. The cost of SOV falls during a recession and yet many of the major media channels have seen huge increases in audience.

In fact there's a good argument that marketers should be begging for extra budget or taking from next years budget to build SOV now. Data from Peter Field from the last recession shows that brands who invested in ESOV derived huge gains. On the opposite side, short-term reductions to media could damage a brand in the long-term.

7) Sharpen and simplify your strategy

In ‘Good Strategy/Bad Strategy’, Rumelt describes how the essence of great strategy is choosing what not to do and then ruthlessly simplifying.

Getting to an elegant strategic plan is ridiculously time consuming. It’s far easier to over complicate, err on the side of quantity instead of editing down for quality. But here’s something to aim towards. General Montgomery’s D-Day plan for taking 160,000 troops across the channel on a single day boiled down to a single sheet of paper. If we can’t get a whole brand strategy into a 10 page deck, then there’s a problem. Take this as an opportunity to make hard, courageous choices that keep the company focused and in motion. It’s a chance to engage in the tough mental work that gets to a really clear, focused strategy with all the fat trimmed away.

When looking at your media plan, focus on the brilliant basics and foundational principles first. Take this as a chance to clean out complexity when it comes to format and channel choice. For example, we know that growth is fundamentally about speaking to more potential customers, so start by building media strategies that help you maximise your reach amongst all category buyers. In general, the more people an advertising medium reaches, the more effective it is in hard business terms. If you don’t have the budget to reach everyone in your category, you should reach as far as you can for your given budget.

Start simple and then add complexity if necessary.

8) Take the opportunity to engage in the biggest ZBB experiment of all time

This is the biggest ‘zero based budgeting’ experiment in the history of marketing. In many categories, media spend has dropped to zero. It provides excellent conditions for a high fidelity test of how your media spend is performing.

Have you a hypothesis that search is driving a large proportion of your incremental online sales? Then test it.

Have you a hunch that TV isn't performing? Test that too.

This is a clean, controlled environment for testing what happens when we start to switch media back on channel by channel. We can now track the real impact of our spend in a simple way. So use this time as an opportunity to really understand where your media budget goes. Hone in on non-working spend and try to understand what’s good ‘wastage’ and what’s merely waste.

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Some other links to follow:

Here's an excellent presentation from Peter Field with all you need to know about investing in a recession.

Here's the brilliant Jerry Daykin talking about 10 important media fundamentals.

WARC have put together some brilliant analysis on what to do and where to invest during this crisis.

Shane O'Leary

@shaneoleary1

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