WARC recently published an overview of where brands are investing during the novel coronavirus (COVID-19) outbreak and upcoming recession.
Three-fifths (62%) of brands say they will decrease their investment in brand advertising in the coming months.
One-third (32%) report more spending on e-commerce, particularly retail brands.
At least two-thirds of brands in the travel & hospitality, automotive and FMCG verticals have cut their spending on brand advertising.
Three-fifths (62%) of brands say they will decrease their investment in brand advertising in the coming months, according to the latest survey of brands across the world from Ebiquity, conducted in May.
Just 16% of brands surveyed said they will be investing more in brand advertising, with one-fifth (22%) reporting no change. Brand-building was expected to get more attention from marketers this year but the novel coronavirus (COVID-19) outbreak and an incoming economic recession has forced brands to refocus on short-term survival.
Performance advertising has also seen a steep hit, with 41% of brands cutting investment and just 10% reporting an increase. Overall, advertising spend is now expected to drop by 8.1% – or $50bn – this year.
Instead, brands have shifted their investment to e-commerce. One-third (32%) report more spending on e-commerce, the highest share across all seven business areas. This shouldn’t be surprising given the surge in online shopping – half of all consumers plan to shop online more after COVID-19 ends.
However, one-third (36%) also say they have cut their investment in customer experience. Given the importance of CX in delivering a seamless e-commerce experience, cutting investment may hinder the attempts of some brands to improve their online offering. Cutting investment in both advertising spend and customer experience may mean some brands lose visibility altogether.
At least two-thirds of brands in the travel & hospitality (67%), automotive (75%) and FMCG (75%) verticals have cut their spending on brand advertising for the next couple of months.
However, one-third (33%) of travel & hospitality brands are spending more on brand advertising, suggesting different approaches across the sector. For example, Expedia Group is moving away from performance marketing and towards integration while others are engaging consumers now to deliver future growth.
Over half (57%) of retail brands surveyed are investing more in e-commerce, with none reporting a cut to spending. To succeed, brands should adopt a ‘test and learn’ approach and consider product bundles as consumers buy more but on fewer occasions.