New report into Ad spending in Aus and NZ

by | Business Growth, Marketing

Don’t slash your marketing budget during the pandemic: Effectiveness study

In an online seminar for advertisers and marketers, two of the world’s leading authorities on advertising effectiveness, Rob Brittain and Peter Field explained the findings of their major new report AUNZ Advertising Effectiveness Rules – Winning or Losing in a Recession.

The seminar was presented by The Communications Councils of Australia and New Zealand, with support from LinkedIn. It is the first study to examine the implications of COVID-19 and the impending recession for the advertising industry on both sides of the Tasman.

Peter Field talked about the 3 big mistakes being made in the pandemic and the recession that has followed it. The mistakes are to:

  1. Slash the budget
  2. Put what’s left of the budget into performance marketing
  3. Turn away from existing campaigns in favour of tactical Covid19 campaigns which are not in line with their brand messages.

“In Australia and NZ you are panicking unnecessarily. Don’t go dark. You can and must fight back,” he said

The report is “not a naive way to ask for more dollars,” it is about “staying healthy for the recovery,” according to Field.

“Marketers have a duty to fight for their brand. You are the only ones who will understand this. Others in your company won’t get it.”

Rob Brittain discussed the details of the study.

“It’s what firms do relative to their competitors that counts. Cutting ad investment in recessions is normal, but it leaves brands in a weakened state. Advertising stimulates demand in the economy and will help in recovery,” he said.

Cuts in ad spend in April are about 35-38%, “a clear sign of panic” according to Brittain. “It is likely it will cause greater long term damage to brands in Australia and New Zealand.”

He says marketers should be “open to the possibility of a fast recovery,” because recessions caused by pandemics are not the result of structural weaknesses in the economy, they are caused by an external factor, the virus.

“People need to feel confident to spend. Confidence took a hit in the lockdown period but confidence has recovered quickly in Aust/NZ. Economies are beginning to function again. You should be open to the possibility of a fast recovery.
“In this context there will be winners and losers. What is your plan to maximise bounce back and take advantage of the recession/pandemic?”

He reviewed two of advertising’s core concepts: Share of Voice and Brand Building Advertising.

“Brands need an excess share of voice which is larger than its market share. This is easier to achieve when competitors spend less on their marketing… Brand Building Advertising takes time. At least 60% of your budget should go into brand building. Brand building will be experienced during the recovery phase.”

Winning companies will be “those who master the balance between offence and defence. If you are in siege mode and are too defensive, you won’t recognise the opportunity. But overconfidence also needs to be avoided, make sure you look for warning signs from your customers about how they are spending. Of course, cost-cutting is necessary, but the investment is also necessary to spur future growth.”

Evidence in the study suggests that much of the tactical COVID19 messaging has “no connection back to the memory structure of the brand,” and that sales focussed advertising will only work if there is continuing category demand.

“Doing COVID messaging is ok, but think carefully about how you are doing it. Often it is no different from everyone else…. so go back to your brand messaging as quickly as possible. Brand building is performing better than short term messaging… brand building is significantly better over the long term.
“The most powerful effects of brand building, if done now, will give best results in the recovery phase…
“People want positive encouragement. It happened in the GFC and is happening now. Avoid self-focussed hard-sell advertising and reinforce your brand message,” said Brittain.

Communications Council 2020 - truth about advertising

The report is available here.