How FMCG marketers should make advertising decisions post COVID-19

July 3, 2020 Dominic Lill

The economic impact of COVID-19 means that all companies are reassessing how they operate in order to survive. Expenditure is under increased scrutiny and FMCG marketers have a tough job to defend their advertising strategy in conditions that no one has ever seen before.

However, there are opportunities as well as challenges and making the right choices now could be a chance to get ahead of the competition. But how can FMCG marketers know what right looks like? In this article Carl Carter, head of media strategy and effectiveness at IRI, explains the key considerations brands must address before making any changes.

Although there are tough economic times ahead, we know from past experience that the FMCG sector is likely to be better placed than many to withstand the pressure. A WARC study into the 2009 recession found that in the UK, the food sector reduced advertising investment by 1.3% to £860m and the drinks sector by 2.3% to £321m. This compares to a 5.6% fall for total FMCG (to £1.98bn) in the UK and an 11.7% dip for the total display market, suggesting the sector was insulated somewhat compared to the wider economy.

Many marketers are uncertain about how to adapt advertising plans or whether to even advertise at all. Only 7% of UK FMCG marketers are taking a strategic approach to invest more in marketing during the COVID-19 pandemic, with the vast majority feeling forced to maintain or cut spend in the face of business disruption.

At IRI we have the benefit of working with multiple data sources across Europe. This gives us a strong sense of perspective about what questions brands should be asking themselves when evaluating future advertising spending.

The following are the key areas to consider:

Timing

The ability to adapt is key in these unknown times. When considering your current position, work out the factors that could change in the future and what that change might look like.

Demand

What is the demand is for your products? Has this increased, stayed the same or declined? Are these changes likely to be due to panic buying, or could they possibly become a longer-term change in behaviour. This will inform whether the time is right to change your advertising and media mix, and in what way.

Purchase cycles

Have these changed? Are they longer or shorter? This will have a huge impact on the timings of when you advertise. It may also have longer-term implications for pack size and the NPD cycle in order to capture all opportunities on offer.

Supply

Can you satisfy demand? Supply chain issues which mean you cannot meet demand can be problematic, but there is long-term damage to brand equity by reducing advertising. A careful messaging approach will be needed to strike the right balance.

Retail channels

As shoppers seek to comply with guidelines and avoid crowds there have been changes to where they shop. Shopping locally has become more popular online and click & collect services have seen double, sometimes triple, digit increases in sales across Europe. These factors could impact how you advertise or you might change your digital, mobile, and OOH (Out of Home) balance to take advantage of specific circumstances.

Readiness

Are creatives, channels and stakeholders primed and ready to go? Can you take advantage if you see an opportunity in the market?

It’s very likely that a number of the new behaviours that have been adopted during the pandemic will stick. If working at home becomes regular for more people, that will change media consumption. As people find cheaper, healthier make-at-home options to eating out their purchasing behaviour might change. Others who have switched to online or frequented more local shops might find that they like the change and stick with it.

As lockdown begins to ease, there are already concerns about how the virus might return in the winter months and possibly the restrictions too. So, it seems likely that some of these short-term changes are likely to become medium-term at the very least.

Taking a full evaluation of the landscape now and all the factors that influence it means that marketers will be better prepared for the possible twists and turns ahead as everyone gets to grip with their new normal. Much of what we used to take for granted in the past seems unlikely to return. Using data and experience to create new scenarios and prepare for what might change is the only way to plan ahead for now.