Gartner Research

How to Advertise in Uncertain Times: Lessons From COVID-19

Published: 14 April 2020

Summary

COVID-19 has upended advertising around the world. Marketing leaders should use this research to inform media and messaging strategy amid a fast-changing economic, marketing and advertising landscape.

Overview

Key Challenges
  • The pandemic is profoundly disrupting economies around the globe. The duration and implications of the interruption are difficult to forecast and vary considerably among different business sectors. Digital media provides organizations’ first line of response in a crisis.

  • Many marketing leaders suddenly find their sectors between slowdown and standstill. Marketers are being directed to slash advertising budgets in many categories as near-term demand plummets, unemployment spikes and planned campaigns no longer appear viable.

  • Despite cuts, many businesses still need to get crucial messages to homebound customers.Consumers are being deluged with messages and advice that is often irrelevant, contradictory or wrong. Email messages may get lost in the feed, while advertising — particularly video — commands greater attention and authority.

Recommendations

As a marketing leader responsible for advertising, you should:

  • Prepare a crisis-scenario-specific business case for advertising. Identify whether your business is dark, shaded or spotlit by the crisis. Take a customer-centric approach based on local information about evolving consumer behaviors and attitudes. Proactively recommend cuts, deferrals and reallocation of paid media resources to direct marketing campaigns where warranted. Protect brands, not budgets.

  • Increase agility with shorter planning cycles. Move to a weekly or biweekly media planning cycle with emphasis on programmatic buying for maximum flexibility. Actively manage media agencies with frequent checkpoints and open communication channels.

  • Adjust data interpretation, testing and analytics capabilities. With respect to 1Q20 campaign tests in flight, consider 29 February 2020 to be an inflection point in collection.

  • Focus first on serving your base of current customers. Prioritize clear, consistent and useful messaging across traditional and digital channels. Buy the dips and explore first-party audience targeting as well as overlay capabilities of over-the-top (OTT) and connected TV (CTV) to maximize exposure to your customer base.

  • Subject all creative messaging to rigorous review.Apply a multistage independent review and approval process and pay close attention to preflight feedback. Avoid elaborate productions and pare down messages as much as possible. Include medical review where appropriate.

Introduction

This document was revised on 24 April 2020. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.

Advertising reflects consumer behavior — what people buy, and how they spend their media time and react to advertising. In the face of a global pandemic, purchasing power and media time spent are changing fast. How the patterns unfold is a function of:

  • Geography — from country, to region to individual market. Geography defines the scope of the virus exposure to the nature of government response. As of early March 2020, six of the world’s 10 largest advertising countries were reported to be COVID-19 hot spots.

  • Employment status and consumer confidence — Job security translates directly to changes in individual and household budgets and spending levels.

  • Household demographics — including income, number and age of adults, and presence of children.

Clients tell us the pandemic has had an immediate impact on marketing and advertising. In Gartner’s 27 March 2020 COVID Research Connections Poll, more than three-quarters (76%) of respondents reported budget reductions, the majority of which are significant (see Figure 1).

Figure 1. Impact of COVID-19 on Marketing Budgets

In an earlier 20 March 2020 survey, we polled Gartner for Marketers Research Connections clients during the webinar “Marketing in Uncertainty.” This group of marketers told us that budget cuts will hit advertising particularly hard. Nearly half (45%) said a campaign launch had already been delayed, 34% altered ad creative and 26% had already canceled a media buy. See “Gartner Poll: 65% of Marketers Brace for Budget Cuts Due to COVID-19.”

Other estimates suggest that worldwide media spending has dropped between 30% and 40% since the onset of the coronavirus crisis, and that most of the impact is expected in 2Q20. According to a recent IAB survey, a majority of advertisers (70%) expect COVID-19 to result in reduced ad spend into 2021. Meanwhile, traffic to media channels has predictably spiked, creating a surplus of available ad inventory and causing media prices to plummet as the market seeks a new equilibrium.This is especially true of programmatic channels, which can be unwound much more quickly than traditional media buys.

The current situation’s uniqueness has rendered predictive models based on historical data useless, while the fluidity of conditions undermines test-and-learn approaches that require time and scale to produce reliable results. As stay-at-home government policies, essential business designations and layoffs play out, consumer behavior patterns will continue to shift, in many cases drastically. Ordinary rhythms of both B2C and B2B awareness/consideration/purchase have been disrupted. So analysts and veterans must work together to develop strategies that can gain alignment and support with less data than they’re accustomed to. As a result, many are scrutinizing the activities of industry peers to develop some collective consensus on the path forward.

Analysis

During the initial weeks of the COVID-19 crisis, here is what marketing and advertising leaders have told us:

  • Budget cuts, profitability and reallocation are top of mind. Cross-functional executive teams are meeting often to talk about every dime. Changes to major line items, including advertising, will usually be made in conjunction with the entirety of the business. A defensible case based on ad-spend outcomes is essential.

  • Pausing advertising and demand generation is an obvious play. Paid media spend is on the defensive, with decision makers looking for scenario models and cost justification for ad spend. Near-term performance as well as longer-term brand and product messaging must be rationalized. In many cases, media planning strategies include a new factor: supply availability. Some contrarians lean in, citing homebound consumers’ increased time with media, and decreases in demand driving down prices.

  • Establishing message controlis a top priority. Many firms are scrambling to keep track of all media touchpoints, and have put all internal and external messaging and content under review. Outbound social media communications are being patrolled closely, and increasingly subject to centralized approval. Managing outbound communications to avoid frequency overload and tone-deafness is a frequent concern.

While the effects of coronavirus are felt globally, its business impact varies widely by industry sector. Some sectors, like travel and hospitality, have largely suspended all commercial operations. Others, like essential consumer goods, are experiencing spikes in demand due to hoarding. For many others, the effects are less clear. Automotive companies, for example, anticipate a short-term decline in demand but are less likely to experience longer-term effects and see opportunities to cautiously promote brand values in a depressed media market. In light of the COVID-19 crisis, the lack of a one-size-fits-all media strategy motivates us to examine sectors based on their visibility.

Shelter-in-place policies have caused many sectors to suspend commercial operations. These include:

  • Nonessential brick-and-mortar retail

  • Sports and live entertainment

  • Travel and hospitality

Dark-sector businesses have mostly suspended advertising and brand marketing activities, although many continue to dispatch email messages to loyalty program members and other opt-in mailing list recipients. Following initial messages of solidarity and commitment, airlines and hotels have focused on more tactical programs. They are issuing extensions for expiring membership benefits, clarifying rebooking flexibility and detailing hygiene measures in direct messaging campaigns.

  • Conserve media budgets while pandemic conditions persist. Focus on providing useful updates directly to loyal customers. Take a phased approach to planning based on scenario preparation.

  • Centralize control of media spending to avoid regional noncompliance with communication policies. Plan for local advertising reboot campaigns as recovering regions lift restrictions, but be ready to quickly pull back in the event of a relapse. Take advantage of programmatic channels that can be rapidly ramped up and down in response to changing local conditions.

  • Source medical expertise to implement a health-policy compliance review and approval process for all campaign creative. Even brands like Hershey have pulled ads featuring hugs and handshakes.

  • Beware of returning to promotional tactics that may have worked well even in the recent past. Even as shelter-in-place restrictions are lifted, consumers are likely to reject a rapid return-to-business-as-usual approach.

  • In nonessential retail, despite temporary closures at many of its retail locations, Men’s Wearhouse released a forward-looking brand spot. “You Got This” features the somewhat tone-deaf and overly broad tagline “Let’s all do our part and tomorrow can look even better.” Although branding opportunities may exist even while stores are dark, they need rigorous creative review and rapid testing — especially in the absence of an actionable message.

Many sectors remain operational but have been impacted by plummeting demand or supply chain and capacity disruptions. These include:

  • Automotive and consumer durables (e.g., furniture)

  • B2B products and services

  • Energy and utilities

  • High tech and telecom

  • Luxury and nonessential packaged goods

  • Prescription pharmaceuticals

With few exceptions (noted below), these businesses initially pulled back on advertising and brand marketing as they retooled creative executions to reflect supportive and aspirational crisis roles. Beginning in mid-March, traditionally big-budget advertisers initiated a wave of coronavirus-related video ads across linear TV, OTT and digital video channels. Largely focused on safety and stay-at-home restrictions, these campaigns aim to carefully thread the needle between excessive commercialism and contrived feel-good messaging.

  • Monitor competitor media and creative strategies. Avoid being absent from markets where competitors are running media campaigns. Be ready to counter competitive messaging that may lead consumers to infer that you trail in safety or acknowledgment of stay-at-home conditions.

  • The examples below demonstrate an overarching focus on home-related themes in recognition of consumers’ limited mobility. Seek value propositions and narratives that explicitly acknowledge this pervasive condition.

  • Assure that creative producers have access to search asset libraries for footage and imagery that won’t violate social distancing advice and can be safely repurposed with new text or vocal overlays (see the Raymour & Flanigan example below).

  • Work closely with agencies and other advisors to vet strategies. Make real-time adjustments to campaigns as conditions change and consumers respond directly on social media.

    Sectors on the front line of pandemic response are repurposing advertising channels to convey vital information to customers who are directly impacted. These include:

    • Essential consumer goods and OTC pharma

    • Healthcare and life sciences

    • Insurance and financial services

    • Local grocery and restaurant chains

    • News media and other streaming media services

    • Online retail and delivery services

    • Public-sector services

    The spotlight shines especially bright on news media, both digital and traditional, which have become vital sources of information while enduring twin challenges of advertising cutbacks and marketers’ instinctive reluctance to advertise against disturbing news. This impulse is amplified by software that blocks placement based on keyword lists. In March, ad verification company Integral Ad Science reported that it had automatically blocked nearly 2.2 million ads from appearing on major news sites based on keyword analysis of content (specifically flagging keywords such as “coronavirus” and “pandemic”).

    On 31 March, a consortium of British newspaper publishersissued an urgent pleato advertisers to support them by unblocking their content. Recent Kantar research suggests that only 8% of consumers expect brands to cut advertising, so there’s little risk that spotlit brands advertising in news reports will be read as insensitive as long as the tone is appropriate. Ad tech companies have responded with methods to curtail keyword blocking of coronavirus-related terms while preserving brand safety in programmatic markets. Marketers in spotlit sectors must adopt these tools to ensure their messages get through to homebound consumers attuned to news reports. They should also work with media agencies to assure that legacy brand safety policies are not interfering with critical buying opportunities.

    • Use local media buys to promote safe, contactless home delivery and service options where available.

    • Insurance and healthcare companies can use ad media to contribute to the amplification of authoritative guidelines and combat misinformation.

    • Spotlit sectors with vital messages should prioritize reputablemedia sources such as national news media and use extreme care with social media to avoid proximity to misinformation. Consider how messaging will appear in contexts dominated by coronavirus coverage.

      Many are also emphasizing free delivery (such as Denny’s and Chili’s) as well as contactless pickup and payment (such as Popeye’s and Chick-fil-A). CVS Health is also advertisingfree prescription delivery.

      • On the local level, auto dealers are using radio to offer local gift card match programs (no obligation or test drive required) to build long-term brand awareness and goodwill. Independent local restaurants are using employee testimonials and messaging to communicate that they remain open (like the national chains), with new contactless curbside delivery options.

      • Prepare a crisis-scenario-specific business case for advertising. Identify whether your business is dark, shaded or spotlit by the crisis. Take a customer-centric approach based on local information about evolving consumer behaviors and attitudes. Proactively recommend cuts, deferrals and reallocation of paid media resources to direct marketing campaigns where warranted. Protect brands, not budgets.

      • Increase agility with shorter planning cycles. Move to a weekly or biweekly media planning cycle with emphasis on programmatic and local spot buying for maximum flexibility. Actively manage media agencies with frequent checkpoints and open communication channels. Seek retainer arrangements that remove agency incentives to promote nonessential media buying.

      • Start to look past the crisis. Begin to frame out media planning budgets and scenarios for the next four calendar quarters based on guidance from finance and your CEO. Where possible, lock in advantageous media pricing, especially for network TV. Without upfronts or regular sports programming, national TV (including OTT) is a buyer’s market.

      • Adjust data interpretation, testing and analytics capabilities. With respect to 1Q20 campaign tests in flight, consider 29 February 2020 to be an inflection point in collection. Adjust reporting to isolate these two time frames. The crisis presents conditions that will render many campaign testing plans irrelevant. Focus advertising analytics capabilities on tuning budget cuts to reflect overall business goals and enhancing geo-based planning, executions and measurement (recognizing that different markets have different hot-spot scores). Simple, rapid tests to gauge reach and response may be appropriate for well-resourced teams, but execute judiciously.

      • Focus first on serving your base of current customers. Prioritize clear, consistent and useful messaging across traditional and digital channels. Buy the dips and use geotargeting to adapt to local market conditions and audience targeting to reach known households. Explore first-party audience targeting and overlay capabilities of OTT and CTV to maximize exposure to your customer base.

      • Subject all creative messaging to rigorous review.Apply a multistage independent review and approval process and pay close attention to preflight feedback. Avoid elaborate productions and pare down messages as much as possible. Implement rapid testing to determine if campaigns are producing desired effects. Tune in to the media stream and immerse yourself in what competitors and consumers are saying — and what they’re not saying.

      Gartner Recommended Reading

      Evidence

      Disclaimer: Results of this study do not represent global findings or the market as a whole but reflect sentiment of the respondents and companies surveyed.

      Digiday reports web traffic is up as much as 30% while programmatic pricing is down an average of 10% to 20% globally, according to Justin Taylor, managing director at ad tech vendor Teads. “‘Everyone Wants Control’: Traffic Soars, but Programmatic Ad Prices Drop.”

      For example, MediaMath is working with Peer39 on an initiative called Project Purpose-Driven Advertising intended to replace keyword blocking with more sophisticated brand safety analytics.

      Note 1: iSpot.tv

      Most ad creatives were sourced from iSpot.tv’s “COVID-19 Impact on TV Advertising.”

      Note 2: Edelman Trust Barometer

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