The agency business faces a significant challenge as COVID-19 places client revenues, and adspend levels, under pressure. WARC’s Geoffrey Precourt outlines the perspective from the 4A’s (American Association of Advertising Agencies), the industry body, in response to the pandemic.
Marketing in the COVID-19 crisis
This article is part of a special WARC Snapshot focused on enabling brand marketers to re-strategise amid the unprecedented disruption caused by the novel coronavirus outbreak.
“Several weeks ago,” recalled Marla Kaplowitz, “both media and creative agencies were making recommendations to their clients to revisit what their overall messages had been and what was being put out there.”
At that stage, the public (and corporate) understanding of the possible impact of the coronavirus was just beginning to take shape.
Make messages appropriate and relevant
The immediate result, said the president/CEO of the 4A’s (American Association of Advertising Agencies), was to evaluate existing resources. Any TV spot that demonstrated any physical connection – a hug, a handshake, or a hand-in-hand walk – was taboo. “In this age, where we’re social distancing and staying at home, we needed to remove that kind of content,” she said.
In a matter of days, the impact of the pandemic came into sharper focus. And the terms of consumer engagement began to change. “Many consumers do want to hear from brands on what they’re doing to help support the economy and to support jobs,” Kaplowitz told a Beet.TV webinar audience. “But they also wanted to know what [these brands] were doing during the coronavirus crisis.”
The agency’s role? “To make sure that the messaging is appropriate and relevant. So, it’s challenging.”
And that understanding came with the backing of research. The 4A’s commissioned Suzy, a New York-based market research firm that bills itself as “a real-time consumer-intelligence platform”, to “understand how consumers feel about brand communication during the pandemic and learn how COVID-19 is changing people’s daily routines”.
The study showed that “consumers have positive attitudes towards brand communication during the coronavirus pandemic overall”, the Research Services arm of the 4A’s reported. And only 15% of the audience of 1,000 consumers on March 18 said they did not want to hear from brands.
Product preferences for the next 30 days, the 4A’s/Suzy study found, were largely utilitarian, with food, household supplies, beauty/personal care, and medical/healthcare products in demand. Attractive but less vital items – think entertainment, craft products, and streaming exercise classes – ranked lower.
In an Ad Age online discussion, the 4A’s chief encouraged marketers and their agencies to think beyond the immediate economic chaos and try to focus on long-term customer relationships.
For the moment, the coronavirus is having a powerful effect on consumer behavior. Only 15% of the survey sample said that their daily routines had not changed. Of the balance, 4A’s/Suzy discovered most people are staying home, and:
• 49% are not going out to eat;
• 44% are not comfortable going outside for non-essential items;
• 37% are buying items online, but not going in-store;
• 27% are ordering food delivery and/or takeout.
Kaplowitz added, “We have a lot of similar research that we did following the [last] recession that we’ve been dusting off because a lot of people have been asking for that.”
With the fresh insights from Suzy, “we want to make sure that we understand what consumers want right now and that they’re open to these messages. Right now, people are relying on those brands for support.” And that may mean “shifting the dynamic” between consumers and brands, because “we’re all thinking differently about the experiences we’re having.”
Get the tone of messages right
Noting that “there’s a lot of serious stuff going on,” Kaplowitz suggested that advertisers and their agencies may be able to ease some of the pain.
“Is it okay to be light-hearted at this time?” she asked. “I do think that consumers probably want a little bit of a break. But is it okay to be light-hearted?
“We all know that we need a little bit of levity in our lives.”
And, in the early stages of what promises to be a long, dark spell, “People are actually responding to the posts that are putting a smile on their face or [let them] take a moment away from the seriousness of what’s going on,” Kaplowitz reported.
But, on balance, “you do have to temper that with what people are experiencing and make sure you put out the right communication, [because] you understand what’s happening.”
The vehicles for such connections exist: “We know that media consumption on social media is up 20%, if not higher. News consumption – television viewing – is how can you can connect in a different way,” said Kaplowitz.
The new means to the end of consumer engagement: for one, major brands are turning over their manufacturing resources and using plants to create ventilators or hand sanitizer, and so delivering messages that are more powerful than any kind of advertising.
And, Kaplowitz emphasized, the brands that are turning their resources over to the public “are not doing so in a self-serving way”. Instead, their tone has been respectful and “acknowledges the loss that people are feeling right now, whether that's their job, their connection to live sports, or the loss of the freedom that they’re used to”.
In such extraordinary times, the 4A’s leader proposed, “Brands have the opportunity to build those relationships – to think about how … they can live their brand purpose and really see that come to life.”
For some products, the nature of their offering means that they don’t need to advertise, Kaplowitz acknowledged – among them, hand sanitizer or disinfectants. “Others recognize that, if they want to maintain their relationships with their customers, their message is going to be a little bit different.”
A case in point, she proposed, is that automotive advertisers may not want to tell people that they need to go out and buy a car. “But they may want to tell you that they’re going to work with you when it comes to financing,” said the 4A’s CEO.
While that kind of adjustment may make sense in one sector, a “pause in continuity” may be more appropriate in another. Kaplowitz’s discussions with both agency leaders and brand stewards demonstrated a consensus: “They’ve all learned the lesson from past economic slowdowns. And they know that it’s so important to maintain that brand equity.
“But it’s all about the messages: What are you communicating with people at this time? How do you make sure that they understand that you are supporting them? How is your brand relevant for people when they’re in a stay-at-home environment?”
And, in a time of consumer confusion, “How do you think about what your utility is and make sure you’re not tone deaf?”
Changing out an old message may involve a practical problem for agencies: “With everything that’s going on, it’s challenging when you can’t do any live production. Many companies have been resorting to either stock footage or just taking old photography that they’ve had. They’ve been revisiting ads, creating new ones, or even just using a blue-screen background.
“Creativity can actually flourish amidst chaos, when people are constrained in terms of what they have. And they’re making the best of it: They’re actually using this moment to communicate the right messages.”
Strengthen the agency-client relationship
Kaplowitz did acknowledge that the best creative intentions may face financial restraints as the entire world adjusts to new economic realities. She noted that Magna Global, IPG Mediabrands’ media intelligence and investment arm, already has downgraded its US forecasts for 2020 to –2.8% from an originally anticipated +6.6% (equivalent to a $6.7bn loss, per WARC’s monitoring). All media are expected to record declines with the exception of digital, which has had its anticipated growth cut to +3.9% from an original projection of +11.4%.
According to the 4A’s leader, “There’s flexibility right now in some media channels, not in others. There’s still the unknown of how long this pandemic will go on and what its true impact will be.”
China and other parts of Asia, where the first phase of COVID-19 seems to be abating, offer a vision of a possible American economic rebound, Kaplowitz said. “People are looking to Q4 – maybe even into Q3 – before we hopefully can to start to see a shift. Obviously, Q2 will be impacted.”
But, she added, there is some hope in the reports the 4A’s is hearing from such markets: “Projects have been put on hold – so, not necessarily cancelled – to wait and see what the true financial impact will be.”
In such moments of consideration and contemplation, the agency business has an opportunity to demonstrate its value. Said Kaplowitz, “If ever there was a time to bring people together – for brands to show what their true value is for their consumers – this is it. And that goes the same for agencies. This is a real opportunity. And agencies are stepping up. They are truly shining.
“They are there to be partners. They are there to offer an external perspective, that provocative voice, to make sure that they are helping clients through this really challenging time … just as agencies have done for over a century.
“What I hope comes out of this is that the strong partnership – the true reminder of what an agency does for a client – continues, and the value of what that relationship brings is really recognized.”