Responding to COVID-19How marketers can take action and build resilience

Executive Summary

A Changed LandscapeThe financial impacts of the global pandemic are already being felt. The duration of the impact is dependent on the effectiveness of government responses worldwide to curb the spread of the virus.

The COVID-19 crisis will pass, but it has accelerated long-running trends. Consumers are turning to digital platforms for entertainment, and “contactless” socialization and purchasing.

In adapting to these changes, virtually all brands will share a common set of challenges in the coming months and quarters.

Taking Action & Building Resilience

Actions for Q2 Do more with less

Essentials: Maintain the Course

Treats, Postponables: Adjust & Monitor

Luxury / Restricted: Pause & Assess

Save time and automate

Reduce wasteful overhead

Prioritize customer insights and loyalty

Train and learn

Harness pent-up demand

Build a post-recovery playbook

Sharpen digital-first practices

Prioritize speed over perfection

Stay in communication

Prepare for a rapid recovery

Surviving a longer downturn

A changed landscapeHow the economy, media, marketers, and consumers are reacting

Economic Outlook: The World Health Organization declared COVID-19 a pandemic on March 11, 2020 and the financial impacts are already being felt

Consumer confidence has dropped to its lowest since 2012.2

TWO POSSIBILITIES

Impacts to consumer demand depend on the response of governments worldwide to curb the health and economic effects of the virus.

⅓ of US consumers are already reporting reduced income.1

1. Survey: US consumer sentiment during the coronavirus crisis, March 2020, McKinsey & Company2. U.S. consumer sentiment declines sharply due to COVID-19 pandemic, March 26, 2020, Refinitiv Ipsos3. COVID-19: Briefing Note, Global Health & Crisis Response, March 16, 2020, McKinsey & Company

“V-Shaped” RecoveryStrong public response leads to a reduction in cases. Global GDP declines, but economies return in 1-2 quarters as pent-up consumer demand returns.

“U-Shaped” Recovery The virus spreads globally without a seasonal decline. The global economic impact is severe, with a slow-moving recovery not beginning until Q2 2021.3

Industries are seeing varying levels of impact and expected speed to recovery

ESSENTIALSPositive trends due to stockpiling behavior and demand will remain resilient1

POSTPONABLESContactless / ecomm channels likely to recover faster than brick & mortar / face-to-face.

AT-HOME DISCRETIONARYPositive trends for “At home” spending2, but will slow with worsening economic outlook

LUXURIES / RESTRICTEDEarliest expected restart in Q3 / early Q43

Consumer Packaged Goods Groceries & Snacks, Cleaning Supplies, Personal Hygiene, Baby, Child, Parenthood-related

Pharma (OTC & DTC)

RetailConsumer Electronics, Furnishings / Appliances, Cosmetics / Skincare, Apparel & Footwear

Entertainment at Home - Gaming, Toys & Hobbies, Books, Magazines, Newspapers, Media

Fitness / Wellness at Home

Alcoholic Beverages & Tobacco

Luxury Goods & Accessories

Restricted Commerce In-person Media / Entertainment (theater, movies, sports), Restaurants, Brick & Mortar Retail, Travel & Tourism, Fitness / Wellness (gym, classes), Automotive, Real Estate

1. COVID-19 Impact: Consumer Spending Tracker, March 19 2020, IRI and BCG2. Survey: US consumer sentiment during the coronavirus crisis, March 2020, McKinsey & Company3. Coronavirus COVID-19: Facts and Insights, Global Health & Crisis Response, March 9, 2020, McKinsey & Company

News Content is King, But What Does That Mean for Brands?Consumers are relying on a variety of sources to stay informed

1. Coronavirus Ad Adjacency: A Consumer Study, Integral Ad Science, March 20202. Google Trends ‘youtube news’ 22 Mar - 28 Mar 2020 versus 23 Feb - 29 Feb 20203. Apptopia “The Washington Post and News Aggregation Apps Set Record Download Numbers” 18 Mar 2020

+59%of people are consuming more news1

+75%searching for ‘youtube news’2

+244%jump in CNN app installs3

With consumers glued to COVID-19 news across an array of media formats, brands should evaluate news media across multiple dimensions:

BRAND SAFETY

“Brand-safe” isn’t binary. Marketers are advised to re-examine their approach and use brand safety tools diligently. Read more on the MightyHive blog.

MESSAGING TONE

Proceed mindfully. This isn’t the time to over-reach. However, retreating completely may be counter-productive as awareness and Share of Voice erode.

MEDIA & CREATIVE FORMAT

“News” isn’t one-size-fits-all. Brands should consider an array of digital media and creative formats when considering campaigns adjacent to news content.

People are finding and consuming more news in more ways:

Digital Inventory Demand Has SunkMarketers should consider their options in a buyer’s market

-13% -21% -22%-52%

Email Portals Medical News

Digital inventory rates have sunk as housebound consumers, brand safety concerns, and economic uncertainty cause advertisers to pull back. Publishers have bemoaned this collapse in demand and MightyHive has observed falling prices. In a buyer’s market for digital inventory, brands can consider:

MightyHive analysis has shown YoY decreases (Mar 2020 versus Mar 2019) in clearing price across key inventory categories.

● Maintaining or even increasing awareness and Share of Voice● The balance between a smart media buy and seeming overly opportunistic● Negotiating advantageous inventory deals and locking in low rates

Will Shifts in Consumer Habits Become Permanent?The COVID-19 crisis will pass, but it has accelerated long-running trends

1. GWI Coronavirus Research, March 20202. GWI Coronavirus Research, March 2020—US respondents only3. Advertiser Perceptions “Coronavirus Effect on Advertising Report” March 20204. FT.com “How the viral app Houseparty is entertaining a generation in lockdown”5. Loup Ventures “COVID-19 Restrictions Are Accelerating Online Grocery Shopping”6. Forbes.com “The Impact Of COVID-19 On US Brands And Retailers”

+40%are spending more time on smartphones2

2xmore likely to increase streaming ‘a lot’ vs live TV3

+32%are spending more time on social media2

MEDIA CONSUMPTION95% of consumers say they’re spending more time on in-home media1. With out-of-home life on pause, digital media trends have suddenly accelerated. Marketers can’t assume that last year’s media habits still apply.

2 milliondownloads of Houseparty video chat app in a single week4

+47%of consumers expect to continue buying more online post-crisis5

+210%increase in online grocery ordering6

PURCHASES & DAILY LIFEConsumers have adapted rapidly to “remote life.” However, the wholesale retreat from out-of-home life will end when COVID-19 is controlled. Brands are advised to keep a close eye on which short-term adaptations become long-term habits.

Taking action & building resilienceHow to act decisively in a time of uncertainty and emerge stronger on the other side

Surviving a longer downturn

With high levels of uncertainty, create a rational basis for making important marketing decisions.

Corrective Actions for Q2

Marketers will have 1 of 3 options dependent on the risk of sales

downturn for their industry:

Responding to change in the months ahead requires weighing several variables

Maintain the Course

Adjust & Monitor

Pause & Assess

Do More with Less

Implement cost-saving and performance-boosting measures

to get leaner and meaner.

Prepare for a rapid recoveryBe ready for a best-case

“V-shaped” recovery.

Luxury / Restricted:Pause & Assess

Refocus brand marketing towards loyal customers, who are the primary, enduring source of cash flow. Use customer data to validate that your target audiences are still valuable given recent consumer behavior changes.

A media and messaging audit of active channels will ensure everyone has up-to-date information on what is active and what is working (and what isn’t).

Focus efforts on performance and/or outcome-based tactics that can provide tangible business value.

Perform a quick audit of data capture practices and business insights reporting to check the right data is available to trim low-performing tactics.

Corrective Actions for Q2The path ahead depends on the risk of sales downturn

Treats, Postponables:Adjust & Monitor

Continue to maintain brand presence with customers, but assess if messaging and publisher mix are brand and situation-appropriate. Audit media mix and day parting to ensure plans reflect consumer time shifts to streaming video and social.

Review bid strategies and selectively test varied bids to capture efficiencies in the lower-demand environment.

Ensure your performance reporting provides the right insights to help course-correct strategy and execution.

Essentials: Maintain the Course

Companies in the Luxury / Restricted category have mostly paused media spend. However, reminding loyal customers of your brand presence will ensure your brand stays top of mind when demand returns.

Maintaining a pulse on consumer behavior is essential for creating effective recovery plans. Use surveys and gather data on consumer preference / sentiment to create data-driven action plans.

Reduce wasteful overhead

Simply put: people are going to be more valuable than technology. Marketers can adapt; technology often can’t. Now is the time to question which tools and partners will maximize value in brands’ go-forward arsenal of digital marketing resources.

Save time and automate

While pre-crisis processes may have been “good enough,” teams have a choice to make up-front investments in automation that will pay dividends in coming quarters as teams are able to maintain (or expand) capabilities with fewer resources.

Doing more with less

Prioritize customer insights and loyalty

It costs vastly more to acquire a new customer than it does to keep an existing one happy. Brands can apply a mix of technology (CRM, CDP), business strategies (customer loyalty), and basic empathy to ensure that precious budgets aren’t cannibalized by a neglect of existing customers.

With limited resources in an adverse consumer market, digital marketing teams will be forced to “do more with less.” Many teams’ marketing budgets will be reduced amid fierce competition for fewer consumer dollars. Teams will have to work smarter in order to keep up.

Harness pent-up demand

Consumer demand has collapsed suddenly. However, once COVID-19 passes, demand for “suppressed” categories such as travel and entertainment will bounce back suddenly. Marketers should use loyalty programs and other tactics to “bottle up” demand that is currently suppressed.

Train andlearn

Training is more than a way to fill idle time. This crisis will push brands in new directions in terms of process, tech, and expertise. Also, less budget for outsourcing key functions will likely put more burden of expertise on in-house teams. Training will help teams keep up with changes, build new skills, and maintain morale.

Preparing for a rapid recoveryMarketers should be ready for a best-case “V-shaped” recovery

Build a post-recovery playbook

The COVID-19 crisis has caused sudden tectonic shifts in consumer behavior. It is reasonable to assume that brands’ pre-recession playbooks might have to be thrown out. Don’t wait until the recovery starts to discover the ways your old playbook no longer works.

The world will recover. We all hope the current crisis is brought under control and the health of the global population and economy can be quickly repaired. Marketers must prepare for when consumer activity and demand (and competition) bounce back. Below are three things brands can do to be ready.

Prioritize speed over perfection

Firms that survive disruptive shifts innovate. Discovering lower-cost solutions and testing new ways to reach customers in a quickly evolving media landscape will be essential for longevity. Prioritize action over planning to enable your firm to pivot successfully in a downturn.

Sharpen digital-first practices

Economic crises accelerate existing trends. In a scenario of extended “stay at home” directives, surviving firms will be those with strong digital practices. Develop fast feedback loops using signals from digital behavior. This will require both change in process and an examination of your technology setup.

Surviving a longer downturnWe don’t know what a “U-shaped” recovery might look like, but marketers can be ready for it

Stay in communication

Worried consumers turn to trusted brands in trying times. Even cash-poor firms would be wise to invest in reinforcing brand propositions and reminding customers why the brand matters. For example, post-2008, strong brands recovered 9x faster1.

It’s too early to tell how long this economic downturn will last. A slow recovery leaves too many unknown variables to plan around with any real level of confidence. How long will it last? How bad will it get? Who will be affected most? However, brands can put measures in place to ensure that they have a rational basis for making important marketing decisions.

1. Kantar “Covid-19 Barometer” March 2020

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