How brands can win in a COVID-19 recession
Old lessons and new challenges
Recessions are not new. And economic indicators were flashing for an imminent ‘traditional’ cyclical recession even before COVID-19 appeared. But given the collision of biological, psychological and economic crises, this one will be unlike any other.
Many brands have naturally reacted by pausing or reducing marketing spend until the future looks clearer. Others in sectors such as gaming and food delivery have shifted to direct response tactics to take advantage of lockdown opportunities.
The underlying business, comms, data and tech environment – the way people experience brands – has changed fundamentally since the last recession in 2008/9. To rise to the challenge, new strategic choices are needed.
The latest research from Wunderman Thompson focuses on what comes next and how to ensure that brands rebound and rebuild at the right time.
Investing is key
A review of past recessions shows much that is still relevant, not least the double benefit of maintaining brand-building investments. Commentators such as Mark Ritson have noted that brands that continue to invest don’t just avoid self-inflicted long-term brand and financial damage, they also get more for their money. They increase their ‘excess share of voice’ without increasing spend because their competitors do not or cannot invest.
This double benefit is in the DNA of companies such as P&G, whose brand foundations have been reinforced by continuing to invest through past recessions, and who are using the same playbook this time around. In an April 2020 earnings call, the company stated it needed to “double down” on marketing investment in order to “move forwards not backwards”.
Building on customer experience
To understand the rapid and fundamental changes to consumer behaviour, brands need to engage and respond. And instead of a single-minded focus on communications, they need to extend brand-building to the entirety of the customer experience.
Our analysis shows it’s worth investing more broadly in areas such as digital products and services including commerce. Brands can improve consideration and purchase intent, take advantage of new opportunities and rebuild in a way that ensures that, post-recession, they are stronger than before.
The specific context of COVID-19 puts a premium on the right tone and authentic social purpose. It presents powerful opportunities to build trust – but also to destroy it. There are already myriad examples of brands getting it right and spectacularly wrong.
Continue to invest, though this spend may look different
Now more than ever, there is a significant difference in the way the recession impacts brands. Looking at how they are positioned in terms of supply and demand allows us to plot four scenarios that brands could face during a pandemic-led recession. Each of the scenarios requires a different strategic approach and different choices to be made.
Though every brand has to respond to its own situation, our research identifies eight golden rules that we believe apply to everyone.
- Don't go dark: Maintain investment in brand building.
- Actions not words: Challenge yourself to do more than say.
- Keep your promise: Now’s the time to live your purpose.
- Demonstrate compassion: Your decisions will be remembered. Practice empathy.
- Constraint into creativity: Turn your constraints into positive experiences.
- Be responsive: Strategic dexterity is required to plan and respond to evolving scenarios.
- Take stock and refocus: Take this time to observe, learn and grow.
- Build back better: Acknowledge change and plan for it so you can come back stronger.
Rule eight provides the inspiration for future optimism. Jack Welch once famously said “Never waste the opportunity of a good recession”, but the implications of COVID-19 are more profound than that. The pandemic is highlighting what is most important – our values, our communities, our experiences – as well as what we can live without. The opportunity to ‘Build back better’ provides a North Star for all involved – for people, brands, businesses and their employees, for the environment and for society as a whole.
22 May 2020
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