COVID-19 - Brand Budget Reallocation and Messaging

Goals

To understand the extent to which tech companies have changed their budget allocation and messaging as a result of COVID-19, and the impact on their brand elasticity. This information will be used to understand whether, and to what extent, a brand needs to change their messaging and budget allocations as a result of COVID-19, to advise clients on their own marketing and budget decisions.

Early Findings

Brand Elasticity

  • Brand elasticity is defined as the range of products and services that can be covered by one brand (i.e., can a brand name 'stretch' into a wider range of new categories or subcategories).

Budget Allocations and COVID-19

  • A Gartner survey of 317 CFO and Finance Leaders revealed that 62% are expecting reductions to Selling, General, and Administration (SGA) budgets as a result of coronavirus disruptions. Eighteen percent are expecting to cut at least 10% from budgets across the board.
  • In this same survey, 31% said marketing budgets would be reduced and 18% said sales would be reduced, the top two categories in terms of budget reductions. Social responsibility (2%), government relations (2%), risk (1%) and strategy (7%) were mentioned by the fewest respondents as areas for budget reductions. IT functions (16%) and R&D (15%) were also identified as areas for budget reductions.
  • As of April 2020, WARC reports that marketers plan to spend 39% less for television advertising, 50% less on out-of-home advertising, 33% less on social advertising, and 30% less on paid search.
  • In an Advertiser Perceptions survey between March 17-20, 48% indicated they would increase Facebook spending, while 31% would increase spending on Google.
  • WARC recommends brands maintain advertising spend to increase growth and share of voice.
  • Ratnesh Singh, who leads global business events at Buzznation, a technology agency, suggests digital channels will receive some budget formerly allocated to in-person events, including 3-D virtual events, and the use of live social platforms.

Brand Messaging Evolution and COVID-19

  • Marketers are shifting their messaging away from brand performance to more action-focused messaging, which is what consumers are currently seeking.
  • Nike launched a campaign to encourage consumers to 'stay inside', congruent with social-distancing recommendations. The specific messaging was "Play Inside. Play for the World. Coupled with a $15MM donation to COVID-19 efforts, the social campaign was supported by brand ambassadors, including Michael Jordan, LeBron James, and Christian Ronaldo.
  • Google has pivoted their messaging to information dissemination and donations. They launched a COVID-19 educational site, donated $25MM of ad credits to the World Health Organization, and offered free access to Hangout Meets video for current G Suite customers.
  • WhatsApp developed a coronavirus fact-checking hub, in partnership with WHO, Unicef, and UN Development Program.
  • On April 8, 2020, Coca-Cola turned their social media channels (Facebook, Instagram, and Twitter) over to a number of philanthropic organizations, including Feeding America, The Boys and Girls Club, the Salvation Army, and the American Red Cross. The concept is to reduce promotion and humor at the time of COVID-19, and let these organizations offer community support through Coca-Cola's channels.
  • Lowe's most recent campaign urges consumers to support health-care workers. Using the #BuildThanks hashtag, the company's recent advertisement encourages customers to "Join us and DIY a thank you message of your own."
  • While outside the US, one tech brand embodied a messaging change that was not well-received. Circles.Life launched an advertisement which changed the wording of "Dettol" on a hand sanitizer to "Data", which was considered both 'distasteful and opportunistic'.

Brand Messaging and COVID-19

  • In a survey of 1000 consumers on March 18, The American Association of Advertising Agencies (4A's) , found that 43% of consumers found it reassuring to hear from brands during the coronvirus crisis. Forty percent of consumers were interested in hearing about how brands are responding to the COVID-19 crisis.
  • To build brand trust in COVID-19, one-third of 1,001 consumers in a Qualtrics survey in mid-March stated they expected their brands 'not to take advantage of a crisis to maximize profits.' Twelve percent wanted their brands to 'convey a message of hope and trust.'
  • Leveraging social media channels, an evolution of influencer marketing (with sensitivity to the stay-at-home culture), and tone-conscious and 'human-centric' messaging is key for brand marketing during Covid-19.

Summary of Early Findings Relevant To The Goals

  • In this first hour of research, we were able to find numerous insights and statistics surrounding how budgets have changed, or are expected to change as a result of COVID-19. We did not find specific case studies demonstrating budget allocation changes as a result of COVID-19, possibly because it is early in the crisis, and brands have not had the opportunity to discern exactly how these reduced marketing budgets have impacted their business.
  • We found an extensive number of case studies surrounding brand messaging changes as a result of COVID-19, which impllies many companies are working toward some sort of communication and messaging response in light of the crisis. We would not necessarily characterize these campaigns, messaging or ad strategy changes as a permanent reorientation of the brand strategy. Instead, companies and brands are seeking ways to communicate with their target consumers with sensitivity to the COVID-19 crisis, in the most relevant channels (such as Facebook or other social media platforms).
  • Given that most of these campaigns and communications are relatively new, hard statistics on their success is not readily available. However, when a campaign during COVID-19 does not work well, the negative expert and consumer reaction appears to be swift.
  • We did not find case studies of brands who are carrying on as normal, as our early research indicated that many brands are trying to navigate the COVID-19 crisis and adjusting their marketing budgets and communication accordingly.
  • We also did not find any examples of brand messaging that impacted brand elasticity, which we defined as the ability of a brand to 'stretch' into new areas. Given that consumers primarily are concerned with appropriate tone and sensitivity during the COVID-19 crisis, we are unlikely to find examples of brands who were able to extend their messaging to achieve this result (at least at this point in the crisis).
  • While we found some case studies for tech companies, we recommend expanding further research beyond tech companies to case studies associated with any brand, in any geography, though US, tech, will be the initial focus.

Proposed next steps:

You need to be the project owner to select a next step.
We recommend providing 3-5 additional case studies (beyond those discussed in early research) showcasing brand campaigns, messaging, or communications during COVID-19. For each case study, we will 1) Describe the brand messaging with a visual or link to the campaign, communication, or messaging 2) describe the intent of the brand message and 3) describe any reaction to the messaging, positive or negative (which may include, but is not limited to, consumer reaction, retweets by celebrities, a positive or negative reaction by an industry expert in a publication, or a citing of the messaging in an expert publication). Case studies will focus on the United States but may be expanded to other geographies if needed. Tech companies will be prioritized, but the search may be expanded beyond tech if needed.
We propose providing 5-7 insights surrounding COVID-19 messaging and budgeting. These insights may include, but are not limited to, best practices for COVID-19 brand messaging and marketing (e.g., messaging, advertising, website communication, public philanthropic efforts, or distribution channels), statistics surrounding current or anticipated marketing spending or budget allocation as a result of COVID-19, or statistics or insights surrounding consumer reaction to brand messaging during COVID-19. Insights will focus on the United States but may be expanded to other geographies if needed. Tech companies will be prioritized, but the search may be expanded beyond tech if needed.