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As organisations make brutal and necessary cuts to ‘right size’ during this pandemic, brand spend cuts should be treated with particular caution, with unintended consequences but also foregone opportunities needing to be key considerations.

In economic and market shocks such as they current one we now face, organisations need to make difficult decisions around spend, and brand is typically one area reviewed early. However, whilst overall brand spend is down, it appears we are seeing shifts in how organisations are spending on brand. A shift to digital advertising in favour of traditional is to be somewhat expected, however according to IAB’s ‘Coronavirus Ad Spend Impact: Buy-side’ analysis, mission-based marketing and cause-related marketing is up 42% and 41% respectively.

This response is encouraging to see, in particular because it serves as an example of organisations are innovating and adopting a far more surgical and nuanced approach to adjusting brand spend than a simple binary ‘on/off’ decision. Make no mistake, there is (still) demand for brand.

Continuing with this example, the current pandemic is an ideal scenario for mission and caused based marketing. Consumers are seeking to know how organisations they favour are reacting to the pandemic and how they will support their communities as we move deeper into the crisis. They seek general reassurance, and some sense of normality. They resonate with signs of resilience and are galvanised by a sense of the organisations they favour ‘fighting back’ in the face of adversity. An ‘across the board’ cut to brand and ad spend will impact heavily on an organisations ability to satisfy these demands.

The laws of unintended consequences writ large

Organsiations which cut spend ‘across the board’ do face significant risks:

  • The erosion of hard-won brand equity – The cumulative investment in (and ROI of) brand spend over years and even decades is significant. A wholesale reduction of brand spend may limit the ability of the organisation to articulate key messaging, both traditional messaging and event-triggered. This may result in lack of relevance for the brand and a general brand atrophy which will unwind years of perceived value and customer purchase behaviours which the spend has been designed to influence.
  • The loss of brand momentum – Brand equity and awareness is difficult to build and requires long investment horizons. It needs to be maintained as once stopped that momentum is very difficult to recover.
  • An erosion of consumer trust – If consumers do not see how organisations are navigating the crisis, then trust, as a bedrock for future purchase intent, is put at risk with direct revenue implications.
  • Adverse assumptions – The information vacuum created by pausing spend across the board will be filled by assumptions about your brand which, in addition to likely being incorrect, may also be extremely costly to overturn. Without brands being visible with any frequency, in an extreme case even that organisations continued operation may be questioned by customers.

Opportunities in adversity

In addition to the risks organisations face however, there are also opportunities for brands to be more relevant, powerful and enduring. What opportunities do organisations which cut brand spend stand to lose?

  • Opportunities to build on brand equity via articulating and underlining the steps they are taking for sustainability, resilience, community and social responsilibility
  • To achieve better-than-usual market contrast, with many advertisers out of the market
  • To ‘win over’ skeptics within the customer or prospect bases with demonstration of their actions
  • To activate or reactivate market influencers and opinion leaders and have them focus their attention on your brand
  • To strengthen marketing partnerships with third parties
  • To reinforce brand values with staff

A moment of truth for brands and leadership

In summary, Covid-19, is a major ‘moment of truth’ for brands, brand managers and senior leadership. The brands and associated good will which have thus far helped them withstand initial challenges need to be nurtured to provide the necessary resilience to face future challenges. Cutting brand spend should be looked at critically, with decisions made strategically and surgically to ensure organisations are in a better position to emerges strongly from the pandemic.

Key Takeaways:

  • Question impulses to cut brand across the board. Make strategic and surgical cuts, understanding what your customers want from and value in their brand.
  • There are often (if not always) opportunities in times of crisis. Spend time identifying and acting upon them.
  • Times of challenge can be used strengthen your brand association with desired characteristics e.g. caring, strong, enduring, professional, committed
  • People want to hear from brands but you cannot continue failing to acknowledge covid. Misread and tone deaf.
  • Can gain more cut through whilst other advertiser’s are out of the game.

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