Media investments during the crisis: can intuition backfire?

No matter how novel the current outbreak may seem to the masses, a closer look at the analysis reveals historical repetitions. Market leaders are shrinking, while competitors are gaining market share.

Call it a recession, bubble or crisis, whether in the early 1990s, 2000 or 2008, it's common knowledge that revenues fall first and media budgets follow. But according to a recent survey, a surprisingly high percentage of companies (14%) are able to increase both revenue and profits despite the obstacles.

Pizza Hut and Taco Bell drastically outperformed McDonald's after the 1990-91 bankruptcy. After maintaining or increasing their advertising spend, a year later their sales increased (61% and 40% respectively), while the giant lost 28%. Using a similar approach, Amazon's sales increased by 28% in 2009.

If you pay attention, you will realize that understanding the strategic decisions these companies have made in previous crises is crucial.

There are fundamental demand and supply conditions at work here: there is currently plenty of advertising space available and advertisers are reluctant to buy. So it's easy for anyone to understand why costs are falling. For those who are only superficially concerned with what is happening, it is less obvious: it is a dream return-on-investment scenario.

The Internet as a whole is growing. Online business is now at the center of daily life. The impact of the epidemic is clear to see: fluctuations coincide with lockdown announcements, e-commerce traffic is up 20% compared to 2006-16, and growth in Western markets is steady. Multimedia consumption is exploding as people spend more time at home. Device usage is increasing (70% state that their use of cell phones has increased as a direct result of Covid-19 in March 2020). This also applies to website and video views, both on TV and online. With the increase in content, advertising space is also increasing.

At the same time, advertising expenditure is declining worldwide: it is 2.85% less than last year (as at March). Revenue from programmatic ads in the US is above average (15% to 28%). All EMEA Artefact campaigns between January 6 and April 20 show a decline in prices for online advertising.

Fewer buyers and a larger supply: As a result, for those who act first, the impact of their campaign will multiply due to a lack of competition at a fraction of the normal price.

You can focus on one of two aspects for smart advertising campaigns in times of Covid-19: either awareness or conversions. Since there are differences between the sectors, it is crucial to know how the individual product categories are performing when setting a course:

Boost through awareness 

When sales are low in times of crisis, maintaining a strong presence can keep consumers coming back once the overall situation improves (as in the case of Pizza Hut). In the current pandemic, "connecting" means recognizing changing habits and views and looking ahead to the future. Two factors need to be considered. One is the link between optimism and expected spending: The countries most affected by the virus are particularly hard hit, with the majority planning for months of a difficult financial environment and very few anticipating rising incomes.

It is extremely important to address optimists and pessimists in a differentiated way. Secondly, there are dos and don'ts: although consumers do not expect brands to stop advertising, attention depends on the choice of advertising tone and theme. Companies should "talk about how the brand is helpful in the new everyday life" and "not take advantage of the coronavirus to promote [themselves]". Messages need to be adapted accordingly.

Gaining market share through conversions

As traffic to retail websites has risen to +219%, businesses operating in the top performing product categories should take advantage of the fact that conversion rates are not increasing rapidly for everyone. Now is the ideal time to put pressure on competitors while increasing sales through conversion optimization campaigns.

History clearly shows that companies that pursue appropriate media strategies in times of crisis can definitely be successful. But timing is of the essence, as only the first movers benefit fully from the small window of opportunity. At the moment, advertising costs are low and there is plenty of advertising space available. Companies that are currently doing well should focus on conversions to further increase sales and grow their market share. Those who are struggling more can secure a boost by focusing on awareness: success can be achieved here if the advertising message and tone are chosen wisely.