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With Budgets Stretched in Lockdown, Brands Are Focussing More on Advertising Outcomes

Tim Cross  13 May, 2020

With Budgets Stretched in Lockdown, Brands Are Focussing More on Advertising Outcomes

With many brands seeing revenues drop during the pandemic and being forced to make tough decisions around furloughing and laying off staff, CMOs are having a harder time convincing their boards to free up marketing budgets.

And even some of the brands which are thriving at the moment have been less keen to spend on advertising, concerned that they may not be able to meet heightened demand for their products.

As a result, many are becoming more focussed than ever on outcome-driven advertising. It’s easier to ask your board to release funds if you can give them solid figures around the outcomes it will drive, be that sales, customer acquisition, or return-on-investment (ROI).

Coca-Cola’s CEO and chairman James Quincey said in an earnings call last month that the brand’s decision to pause most of its marketing activity came down to analysis of ROI. “We’ve developed and determined that in this initial phase, there is limited effectiveness to broad-based brand marketing,” he said. “With this in mind, we’ve reduced our direct consumer communications.”

FMCG giant Unilever meanwhile is still spending, but Graeme Pitkethly, the company’s chief financial officer, says they’re being more conscious of which channels provide the most value.

“We’re reviewing all discretionary marketing spend to ensure it’s both effective and appropriate, and above all we’re dynamically allocating our BMI [brand and marketing investment] in response to the crisis,” said Pitkethly. “For example, we’re shifting BMI that might have been spent on outdoor advertising and supporting out-of-home campaigns, and dialling up investment behind areas of the highest return-on-investment.”

John Wittesaele, CEO EMEA at Xaxis, a GroupM-owned programmatic media and technology platform, said he’s seen increased interest in outcome-based marketing during the lockdown.

“The pandemic has sped up advertisers’ demand for outcome-driven, measurable solutions to extract the maximum value from available budgets,” said Wittesaele. “It’s paramount that, in this very moment, brands are being extra selective in picking the channels, the campaign types, and the KPIs they want to prioritise. What seems to be driving advertisers is the motivation to save, which doesn’t always mean getting the same for less, it means extracting maximum value.”

But it’s not simply a case of brands looking at short-term outcomes generated by campaigns. Wittesaele said he’s seen brands focus on a wide range of KPIs, some of which are more brand-building oriented. “For example, the automotive industry is focused on branding metrics such as view-through-rate (VTR) and cost-per-completed-view (CPCV), while consumer goods are focused on branding and sales including VTR, CPCV, and cost-per-sales (CPSales),” he said.

Mihir Haria-Shah, head of broadcast at independent media agency Total Media, agreed that brands are particularly keen to find value in their media buys at the moment. A lot of the conversations he’s had with clients have focused on how TV can provide value during a recession, using studies from the last recession to show how advertising during a downturn can pay dividends once conditions improve.

He’s also seen a number of clients become particularly keen to spend on TV, since its inflated audiences and low prices mean there’s a lot of value on offer.

“Some of the more TV savvy clients have understood that TV offers amazing value at the moment,” he said. “And they’ve just backed their own products, understanding that campaigns will provide fantastic ROI because people will be more exposed to the ad as they’re spending more time at home. So it’s been an easy conversation for us to have with a lot of brands.”

Meeting Brands’ Demand for Outcomes

Some agencies are adapting how they work with clients to fit this renewed focus on outcomes. Publicis Groupe for example recently launched an initiative called “The Pact”, whereby it guarantees specific outcomes from its marketing campaigns. These outcomes can include sales, new customer acquisitions, or ROI. If these outcomes are not met, the advertiser receives a full refund.

“While [brands] may be focussed on cutting costs to weather the current storm, they are also well aware that driving sales is critical both now and when recovery returns,” said Publicis CEO Arthur Sadoun. “They need to move immediately and create measurable business impact with scarce resources. Every dollar invested will have to deliver.”

Total Media’s Haria-Shah said that these kinds of guarantees are only realistic for the large holding companies which can afford them. But he said he’s had success in showing clients resources and case studies to demonstrate the value available via their media buys.

And where brands are having difficulty securing marketing budgets from their boards, Total Media is finding ways to make the process smoother. In cases where brands might want to advertise, but aren’t sure they’ll be able to get their products on shelves fast enough to get full value out of the investment, Total Media is working with barter partners who can help with distribution of stock.

Xaxis meanwhile has always positioned itself as an outcomes-focused agency. But Wittesaele said the agency is nonetheless adapting to clients’ changed needs during the lockdown.

“We are finding that video formats are in demand, as well as advertisers wanting to maximise creative assets,” he said. So Xaxis is offering a video package to its clients which gives access to YouTube, premium publishers, and exchange video formats through one platform. And Xaxis is also helping customers adapt their existing creative assets to deliver outcome-driven campaigns.

And where these new and adapted offerings prove popular with brands, there’s a good chance they’ll remain once the crisis is over. “I think all clients were already becoming a bit more savvy with the way things are traded,” said Total Media’s Haria-Shah. “And if they find solutions that work really well for them in this period, what’s to say they won’t want the same going forward?”

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