The first Australian study on the impact of COVID-19 on brands and marketers

Chris Pash
By Chris Pash | 18 June 2020

Marketing experts Robert Brittain and Peter Field have launched a new study, Advertising Effectiveness Rules: Winning or Losing in a Recession, following ground-breaking work last year using the Effie Awards database in Australia. 

The report, published by The Communications Council with the Commercial Communications Council NZ and supporting partner LinkedIn Marketing Solutions, is the first to look at the impact of COVID-19 and the coming recession on brands and marketers.

The council's first study into advertising effectiveness in Australia, for the first time using a new database of confidential data submitted with entries to the Effie Awards, was released in December last year.

Key findings and recommendations of the latest report:

  • Recessions have always been times when the smart take advantage and the others are left to weaken;
  • Marketers should not abandon spending on advertising during the recession;
  • If an advertiser has a campaign in market that is working, then stick with it;
  • Advertising is a powerful lever, and whilst it does have a modest negative short-term impact on business profitability during recession, evidence shows it enables brands to emerge in a stronger state with significantly faster profit recovery;
  • Marketers in Australia and New Zealand are showing signs of panic and not viewing the recession as an opportunity to grow their brands and businesses;
  • There is plenty of learning about best practice we can draw on, but little evidence that we are doing so;
  • Previous downturns, or even just threats of downturns, have all been signals for Australian and NZ marketers to withdraw brand investment permanently;
  • Advertising investment in Australia and New Zealand has not tracked GDP and the step changes down at each crisis have taken longer than the UK and US to rebuild.

Brittain says reducing advertising investment during recessions is nothing new, but what makes Australia and New Zealand different from other advanced economies, such as the US and UK, is that the lost investment is not recovered once the economy moves back into expansion.

"This leaves our brands in a permanently weaker state," he says. 

“In this new study, we demonstrate that this is a flawed approach. Abandoning marketing and effectively ‘going dark’ is a strategy that at best will make it much harder for brands to recover post-recession.”

He says the lack of commitment to advertising spend in Australia and New Zealand has implications for the economy as a whole.

“Productivity of the economy declines during a recession and the reversal of this is a key driver in returning to growth," he says.

"The role advertising plays is in creating consumer demand for brands - as demand grows it stimulates firms to improve their individual competitiveness through innovation and investment, the result is in an increase in productivity.

“Compared to many advanced economies, Australia and New Zealand are well-placed to bounce back, having been effective in containing the virus and implementing policies that have underpinned employment and provided direct support to sectors under most pressure.

“Advertising needs to play its role in leading that return to growth across B2B and B2C sectors." 

Peter Field says savage marketing budget cuts in Australia and New Zealand showed a knee-jerk response that was easy but destructive.

“In some ways Australian and New Zealand marketers should be able to challenge these knee-jerk responses more confidently than their counterparts elsewhere, thanks to sound low-debt economies and more effective management of the coronavirus," he says.

"Yet their response so far in this recession – and in previous recessions - appears to have been considerably weaker.

“Arguing against cuts is something that takes guts for marketers but doing so will result in far stronger and more successful brands post-recession.

“The gains you can make in a recession eclipse anything you could achieve in normal times: it is a time of opportunity for businesses that can find the resources.

Tony Hale, The Communications Council CEO, says the new report should be a wake-up call for Australian and New Zealand marketers.

"The evidence is very clear that marketing has a responsibility to both their brands and business to be leaders as advertising plays such an important role in recovering from a recession," he says.

"Yet, it appears there are only a small number of marketers that are viewing the looming recession as an opportunity and employing best-practice strategies."

 

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