Q1 of 2020 has taken a turn we never expected. Companies around the world are cancelling and postponing concerts, festivals, and conferences and implementing mandatory work from home days, while universities are closing schools and moving in-person classes online. Traditional retail marketers are seeing declining revenues and categories from travel to restaurants and education are seeing unexpected contraction. As we wait for the dust to settle, what can marketers do in these uncertain times to keep business running in a semi-normal capacity and offset losses within their existing revenue models?
The cancellation of big events and conferences such as SXSW, March Madness, and the up-fronts is putting companies across many verticals at a disadvantage. For B2B marketers, for example, who rely heavily on in-person interactions to connect with clients and drive lead generation, these cancellations will mean a loss of financial investments they’ve made for conferences and tradeshows, as well as longer-lasting loss of potential leads they had hoped to generate via in-person engagements. For the sports and entertainment industries, there will be a loss in revenue as games are cancelled and entertainment venues close their doors, while physical retailers see steep declines in revenue from reduced foot traffic and in-store visits.
Connecting with Your Audience Digitally
For marketers not currently in e-commerce, and who typically rely upon physical activations, experiential marketing, in-person meetings, and trade show booths, there is an opportunity to reach these same audiences with powerful and measurable digital tactics. The good news is that there are many highly targetable digital channels that will enable marketers to engage with an audience, whether they are at home, in the office, or somewhere in between, and to optimize these interactions toward lower funnel conversion events that can lift or off-set declining revenues.
In today’s uncertain economic climate, the question does not need to be if advertisers can still reach their target audiences, but rather how they can reach them by leveraging different tactics. To do so, marketers must now shift their advertising efforts away from big events, in-person activations, and out of home ads to multi-channel digital campaigns, including digital display ads on channels like CTV, websites, email, social media, and in-app. In addition, there is a unique opportunity for proactive brands to drive greater awareness, and even great market share, amidst reduced competition for consumer attention from competitors forced to confront the reality of lower marketing budgets.
Measuring the Long-Term Impacts of Marketing
Gain Theory, a data, analytics and tech company focused on driving sustainable growth, spent over a decade analyzing 29 brands across seven key metrics to better quantify the long-term revenue impact of marketing. The aim was two-fold: to show how marketing impacts business revenue and profit in the long term; and to show how marketers can make the right decisions to drive long-term growth. Brand marketing may not drive the highest ROAS, but it does slowly build up the base. Gain Theory’s analysis is built around the concept of using a Long Term Multiplier (LTM), which uses base to account for changing preferences in the market over time.
What did they find? Video-based channels had the highest LTM. Traditional TV (2.35) and Video on Demand (1.82) showed the greatest ability to impact revenue and return in the long-run. This trend held true across Retail, CPG, and Financial Services. At the same time, they noticed that when a brand stops investing in marketing, things can go wrong very quickly.
Gain Theory’s analysis highlights the importance of finding balance between short-term, performance-based efforts and long-term brand initiatives. For example, a US-based travel brand took $3.4M out of their TV budget to save money. They lost 41,200 transactions in the short-term, equivalent to $3M profit.
This brand did not account for the long-term impact. Taking base deterioration into account, the total long-term transaction loss was 81,600, equating to a $4.5M loss in profit. The net loss from going off TV was $1.1M.
In another example, a financial service company stopped its marketing efforts for two years after being disappointed in the returns from TV and VOD. When they reinvested in marketing later on, they saw similar performance numbers. In that two-year period, their base shrunk to half its original size and it took 3 years to rebuild the brand’s original base.
Move Budget Up the Funnel
Increasing spending on brand awareness tactics and investing deeper in retargeting strategies allows marketers to continue to reach their target market audience, and this is especially true during an economic downturn. As some brands slow their advertising, competition may decrease, making it a great time to try out higher cost ad units, like pre-roll video or high-impact mobile. Testing these new channels during a time with less competition could provide valuable data that can then be utilized when strategizing for more competitive times of the year.
This also opens up an opportunity to use ad dollars toward more personalized placements available in the digital space—targeting consumers based on their recents searches, interests, geolocation, etc. Depending on the channel, advertisers can add gated forms to help build leads while driving traffic to their websites.
Looking for strategic help with your marketing and customer acquisition during this period of uncertainty? Do you need a proactive partner that can work with you to unlock new revenues with more expansive deployment of digital? Our team of campaign experts are available to help our partners strategize about how you can reach your audience digitally and successfully retain and even grow your customer base. Contact us to schedule a free media consultation with someone from our team.