WARC's Marketing in the Covid-19 Recession Guide

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WARC GUIDE

Lessons from previous recessions As COVID-19 triggers a And because it is driven by a deep economic downturn, pandemic, rather than an marketers around the world economic event, the impact is are faced with some tough felt in supply as well as strategic choices. demand – in short, many Why this recession is different, brands are unable to service why the standard advice to The lessons from previous any demand their marketing ‘keep advertising’ may not apply, recessions are clear – that the might stimulate. and how brands are responding most effective approach is to maintain investment, build your This WARC Guide pulls brand and reap the reward in together the best thinking How to plan past the lockdown recovery. from across the industry on into recession navigating the post-lockdown That may be the case for some period. brands this time round. But it’s The shape of recovery so far increasingly clear that for It presents marketers with many others, the advice is relevant frameworks and academic. Maintaining spend actionable ideas based on the Emerging trends brands can is not an option. The recession position of their brand – and act on as the recession unfolds is so sharp that major budget offers examples of how major cuts are inevitable for brands marketers are already putting in a host of hard-hit sectors. plans into practice.

1: The pandemic has caused 4: The most challenged 7: The shift to e-commerce a demand and supply shock sectors might come back by is likely to be permanent. – brands in many sectors no advertising like a start-up, ‘Digital transformation’, such longer have a product to with a focus on activation as online services and advertise, and cannot meet spend in the initial stages. subscriptions, will continue the ‘classic’ recessionary apace. Brands will also need advice to keep spending. 5: Brands will need to review to reckon with more powerful what worked in the lockdown online marketplaces. 2: Media spend and costs and develop a clear have fallen sharply across playbook for future 8: Pack size is a key lever all channels as many outbreaks. to consider. Brands such categories turn off adspend. as Procter & Gamble and Companies in sectors like 6: The early signs from China Hershey are reassessing FMCG, however, are not are that the recovery will be pack size as they seek to cutting back as their sales tentative, with a significant avoid pure discounting. hold firm. ‘normalization’ period. Brands require flexibility in 9: Other brands can find 3: Brands that have to ‘go terms of media outlay, and opportunities in a ‘close-to- dark’ should use other should consider how home’ strategy, or by taking levers to maintain visibility, packaging, delivery and steps to support struggling such as first-party data, service can reassure consumers or SMEs.

— Invest in advertising, if — Ensure creative work — Look for opportunities to you can. Media costs strikes the right tone for use your channels at key are lower, and there’s each stage of the seasonal selling points – less noise from recovery – but don’t brands in many sectors competitive brands. assume your client needs will focus spend on Firms that have to ‘go specific ads in response moments like Halloween, dark’ can pull other to the crisis. and will be working out marketing levers to how to make these remain visible. — Help brands in the most moments work at a time challenged sectors stay of social distancing. — Look beyond visible to existing communications; pack customers – there is a big — Double down on size, pricing and role for creative thinking measurement and data distribution online will all in making small budgets capabilities, as proving be important in this go further. the effectiveness of a recession. channel to advertisers is — E-commerce players are going to be even more — Fast-track digital growing in power as ad important in a recession. transformation to cater platforms. Agencies to the needs of the should understand how online consumer. CMOs to build brands in these have a real opportunity ‘walled gardens’. to lead this process. © Copyright WARC 2020. All rights reserved. IMAGE

Tony Hillier and Marilyn Baxter

A significant body of research studies – drawn together over the course of almost a century – suggest that significantly reducing adspend in a recession has negative outcomes for brands.

Various studies indicate that cutting too hard has long-term impact in terms of sales, market share, growth and return on investment. Companies that maintain investment recover more quickly. WARC GUIDE

Less demand for advertising means lower costs to reach audiences, and less noise from competitive advertising.

Thus, firms that maintain advertising get more value from their investment.

Data from ECI Media Management predicts sharp falls in media costs in 2020, despite increased audiences for channels such as television.

That means brands that still want to advertise are getting good deals. WARC GUIDE

Cutting ad spend carries the risk of damaging a brand’s market share. Reducing a brand’s share of voice (its proportion of adspend within its category) below its share of market can undermine its position.

As such, if a brand cuts its advertising budget relative to its competitors, it is at higher risk of losing market share.

The level of risk has been observed to be greater in price-driven and low- interest categories. WARC GUIDE

A series of classic studies at the macro level by the Strategic Planning Institute (SPI) using the PIMS database shed light on different expenditure strategies during recession.

SPI concluded that those who increase spending significantly in recession may have to absorb a drop in ROI in the short run – but gain share and improve profit in the long run. WARC GUIDE

Millward Brown (now Kantar) gives the example of a brand that came off-air in one region (B) but continued advertising in another (A). Within a year, market share fell 2% in region B while holding steady in region A.

The next year, when advertising was resumed in both regions, market share in region B continued to lag.

The ARF showed it is more challenging to regain brand equity and share lost by going dark than it is to maintain them with even modest investment. WARC GUIDE

Data from Millward Brown (now Kantar) show a strong correlation between a brand’s adspend and its level of ‘bonding’ with consumers.

Key bonding metrics – popularity, affinity, leadership, difference and price – can all suffer when brands go dark. ‘Going dark’ means reducing communications spending on television to zero for at least six months. © Copyright WARC 2020. All rights reserved. WARC GUIDE

Les Binet

The COVID-19 recession is the first pandemic-driven downturn of the modern era.

It is a healthcare crisis, leading to a severe economic slump.

That also makes the shape of the recovery hard to predict, as consequences of the lockdown become apparent and there is risk of further outbreaks.

Sir Martin Sorrell predicts a “reverse square root” recession – a sharp downturn, a partial bounceback then a plateau. WARC GUIDE

73% of brands expect to see Additional research shows this no sales growth this year due drop will be larger in the first to the pandemic. This is half of the year. according to an Ebiquity survey of global brands with Digital search in this survey over $15bn in media spend remains strong, with one-third and around $200bn in sales. (32%) of brands increasing investment and just one- The survey found four-fifths quarter (25%) cutting spend. (81%) of brands have cut their ad investment this year. Digital ‘other’, including programmatic online video and Unsurprisingly the media most display, sees a split – 40% will hit by widespread lockdowns decrease and another 40% will are: increase spend here. • Out of home (73% cuts) • © Copyright WARC 2020. All rights reserved. Cinema (72% cuts) WARC GUIDE

The COVID-19 outbreak will wipe more than £4bn from the total for the current year, according to the latest Advertising Association/WARC Expenditure Report.

The impact is felt across all digital channels as well as traditional. These channels tend to be easy to ‘switch off’. It is also the case that companies such as Facebook and Google rely on small- and medium-sized businesses for a significant chunk of revenue. These have been particularly hard hit during the pandemic. WARC GUIDE

The 2020 downturn is set to This begs the question, should be a demand and supply-side a brand maintain advertising if shock, caused first by it has little or no product lockdown and then by critical availability? Commentators value chain components such as Sir Martin Sorrell breaking down, particularly in argue this is poor practice. China, leading to disruption in product and service delivery. Gartner advises brands to be transparent about the supply This matters because a brand’s chain and product availability response may be determined to build trust with consumers, by whether it is more exposed and avoid an unsatisfactory to a drop in demand or a brand experience. problem in supply. Brandgym advises brands to explore strategies to address not just demand but supply as well.

Sir Martin Sorrell

In a survey of 17 markets at the end of April, 83% of consumers say they have delayed a purchase because of the outbreak.

Two-fifths (41%) say they plan to buy delayed purchases when the outbreak is over in their country or globally.

The most common delayed purchases are holidays (52% of all consumers) and clothes (32%) while 31% have delayed buying flights and a quarter have put off buying luxury items. WARC GUIDE

According to Edge by Ascential, the COVID-19 outbreak is a defining inflection point, driving shopper penetration and frequency into e- commerce and food delivery services out of necessity. There is now a critical need for digital transformation.

Brands are advised to leverage real time data to address demand spikes, upscale delivery capabilities and ensure strong content across e-commerce and search pages. WARC GUIDE

Brand Finance summarised the stock market’s view by assessing the impact of COVID-19 on enterprise value through an analysis of global stock markets.

The industries have been grouped into three categories, based on the severity of brand value loss observed from 1st January- 18th March 2020.

Cumulatively, the world’s most valuable brands across all sectors could lose up to $1trn in brand value. WARC GUIDE

Les Binet

While many advertisers are focus for consumers who use cutting back on adspend, our products daily, or multiple Procter & Gamble, the FMCG times each day,” said Jon giant plans to maintain its Moeller, CFO/COO, P&G. focus on consumer insight and brand-building in The company will leverage response to COVID-19, and brand strength – while many the recession that will likely consumers trade down , others follow. will focus on getting the greatest possible value – in P&G is continuing its terms of efficacy, quality and investment in response to dependability. specific trends in its core categories. P&G is also focusing on: • Advertising as a public “We will serve what will likely service become a forever-altered • Cutting back on promotions health, hygiene, and cleaning • Adapting for e-commerce © Copyright WARC 2020. All rights reserved. WARC GUIDE

In contrast to Procter & Social distancing means Gamble, Coca-Cola is many of Coca-Cola’s big reducing its marketing brand moments such as its activity due to concerns sponsorship of major sporting about consumer events have vanished. responsiveness and ROI, but plans to “reengage when the For April to date, its global timing is right”. volume sales are down around 25%, largely due to declines in James Quincey, Coca-Cola’s out-of-home locations – like CEO, said the firm is “being restaurants, sports venues and mindful about the right level of convenience stores – which brand marketing and new yield some 50% of its business. product launches given the consumer mindset across The company will keep a close markets,” he said. watch on the channels or events that are going to open up and respond accordingly. WARC GUIDE

Domino’s, the restaurant The advertising battleground in chain, is continuing to invest the fast-food industry is shifting in advertising despite the to delivery, meaning Domino’s is challenges facing its industry trying to win in this area. The as a result of COVID-19. company is focusing its messaging on food safety and A Kantar study of food-delivery hygiene, reflecting consumer ads in the US from February 2 to concerns. April 11, showed Domino’s as the top spender overall, with a From creating contactless 9.7% year-on-year increase in delivery models and drive-up expenditure to $80.1 million. carry-out systems to implementing social-distancing Even as stores operate under protocols in restaurants and limitation and many consumers across the supply chain the are faced with lockdowns, company has transformed its Domino’s believes that ensuring ways of working. its voice is heard is vital to its © Copyright WARC 2020. All rights reserved. business prospects. IMAGE

As lockdown measures are lifted and the recession takes hold, here are the key actions to take to help brands rebound.

The actions vary depending on a company’s resources, and if operating in a boom or bust category.

All brands, regardless of the state of play should aim to help, be customer-led, understand changes in spending behaviours, monitor consumer insights and spend wisely. WARC GUIDE

The big unknown is whether So one question for brands there will further lockdowns will be how they helped, and to combat future outbreaks whether they could do the of COVID-19. same in future outbreaks. Did the company help the ‘war Marketers should prepare for effort’ through providing this eventuality by reviewing essential equipment similar to the brand response to the first how LVMH met France’s call wave of the pandemic. for hand sanitiser in 72 hours? What activities across This means an assessment of marketing’s ‘four Ps’ could a activities during the current brand apply to a fresh lockdown and the lockdown? development of an action plan should there be another. As marketing consultant Les Binet puts it, “now more than One of the big themes of this ever, all firms must be lockdown has been the ‘purpose-driven’, even if that prioritisation of acts over ads. means lower profits.” WARC GUIDE

Oliver Feldwick of The&Partnership points out that people will remember how companies respond to crisis. “The memory structures we are building now will go deeper and last longer, than much of the better-planned marketing that comes before or after”.

This framework helps brands identify the role they can play. WARC GUIDE

As shown earlier, prior evidence suggests that firms that maintain advertising spend in a recession fare better.

Marketing consultant Peter Field offers six tips for those firms that are fortunate enough to be in a position to keep advertising. WARC GUIDE

This chart outlines the winning and losing categories in the COVID-19 recession, according to marketing professor Gerard J. Tellis.

The lockdown is reducing demand by 10% or 20%. For some categories the shock has brought demand down to zero.

The advice to keep advertising won’t apply to all brands. Those hardest hit will focus on saving jobs and business continuity. WARC GUIDE

According to Tellis, winning companies in category 1A (per previous chart) should increase advertising, not only because of its lower price and the lower noise but also to catch surge in demand. Likewise those in Group 2A can fruitfully increase advertising.

Firms in Group 2B face the greatest challenge. They need to think of creative ways to redirect their resources to serve the changed needs of consumers in the short and long term. WARC GUIDE

Reducing adspend over long Owned assets, including Prioritise customer Use owned assets to periods is not advisable, but packaging, can be employed; experience and tap communicate crucial brands that have to go dark websites, maps listings and first-party data information for a period should still aim for social are becoming primary visibility using other levers. points of customer contact.

Using first-party data to stay in Other levers include PR and touch with existing customers partnerships – for example, with and prospects is one way. influencers or organisations where there is a good value MarketScience conducted an exchange. economic analysis of the last five major recessions and the Prioritising key seasons is also Consider PR and Focus limited evidence suggests companies another way to focus limited partnerships to resources on key that focus on customer resources. Brands in survival generate earned media selling seasons experience win during, and mode are advised to make cuts after, downturns. The advice is in off-peak periods. to prioritise satisfaction. WARC GUIDE

American Express, the shopping in stores, we've financial services firm, has adjusted our Membership halted customer-acquisition Rewards program to include efforts and is reinvesting discounts at Amazon when you resources to assist its pay with points, and the ability consumer and B2B customers. to earn double points with orders from Grubhub and Amex is halting advertising and Seamless through the end of sponsorship and focusing on the year,” said Stephen Squeri, customer service, including a Amex’s CEO. range of financial assistance options to help customers Amex’s long-running ‘Small through difficult times Business Saturday’ initiative has championed the importance of This includes updating rewards SMEs – and this remains a and loyalty programmes. “Since priority for the brand, evident in people are not currently its ‘Stay Home and Shop Small’ © Copyright WARC 2020. All rights reserved. traveling, eating out, or campaign. WARC GUIDE

Stephen Squeri

Levi’s, the clothing firm, Chip Bergh, CEO, believes the has reduced its adspend, crisis presents opportunities but is still making strategic to transform its business. investments to retain its connection with consumers As COVID-19 will cause many under lockdown. retail stores to shut down permanently, Levi’s also Case in point: it launched the believes it could soon have 5:01 concert series – a slate of access to new, attractive live music shows held at venues for its physical outlets. 5:01pm PST on Instagram. The timing links back to Levi’s 501 Building engagement during jeans – and the concert the pandemic could have includes famous artists. enduring payoffs for companies once the Levi’s rolled out a branded recovery begins. mobile app in early 2020, which it is using to build its loyalty

COVID-19 caused many Some COVID-19 tactical ads are advertisers to pause their performing much better, some advertising and many are much worse, than pre-existing asking whether they can work – on emotional response continue to use their pre- and brand recognition. existing creative. If creating new work, it is System1 retested 100 ads (50 in advisable to make use of your the UK and the US) that it first existing assets or characters. tested in January or February And consider revisiting 2020, when they first aired. It successful work from the past, tested for emotional response as Budweiser has done with its and brand recognition, that can ‘Wassup’ campaign. predict effectiveness in driving market share gain. Human connection, spontaneity and humour connect better It found pre-existing brand work today than ever. As will a focus will most likely still connect on people, place and community. today as well as it did. © Copyright WARC 2020. All rights reserved. WARC GUIDE

Is it still OK to be funny? Affectiva and Kantar examined consumer expectations of brands in a crisis, and how people are responding to advertising.

Brands should be sensitive to the new reality, but they don’t have to strike a serious tone. It’s still okay to be funny, and some normality is appreciated.

Funny ads are just as engaging and positively received now during the crisis as they were beforehand, and are still an effective means of engaging consumers. WARC GUIDE

As per Peter Field’s advice, Marketing researcher Les Binet brands in less affected explains how new firms and sectors should maintain their products tend to have an balance between brand- activation-heavy mix – the aim building and sales activation. being to tell people that the But for brands in the most product exists. challenged sectors, it may make sense to think more like As lockdown eases, the main a start-up. task may be functional – to inform people about opening Start-ups have to build supply hours, limits on numbers of and demand in tandem. customers allowed in and so on.

Analysis of the IPA Databank As life returns to normal, people shows new products and firms will need less information, are unusually responsive to habits will become more advertising – it may only take a instinctive again, and emotional little nudge to get people priming from brand ads will © Copyright WARC 2020. All rights reserved. rushing back to buy your brand. become more important. WARC GUIDE

A brand’s core business is During the 2008 recession both the most profitable, and Samsung divested and the one where the brand has streamlined non-core the most authority. businesses whilst placing a new strategic focus on its core Brandgym suggest a culling of – fast-growing digital products ‘dwarf’ products – cute but and devices. small new products that can distract from a brand’s core It invested heavily in R&D – business. Many large brands while competitors cut R&D have cluttered portfolios from costs. This eventually helped years of acquisition or NPD, Samsung position itself as a and may have such ‘dwarf leading innovation company brands’. and led to the Samsung Galaxy smartphone. Growing the core is an effective technique to survive and thrive during tough times. © Copyright WARC 2020. All rights reserved. WARC GUIDE

The pandemic and subsequent A strong initial experience with lockdown orders are driving a brand can help cement these new behaviours and new habits. consumption habits. This could range from free One such area is the rise of older delivery for goods ordered consumers adopting online online, unexpected bonuses for shopping for the first time. new customers, or information about how you are helping COVID-19 has the potential to frontline workers during the disrupt purchases broadly, and crisis. Anything that creates a drive the uptake of new brands surprising peak positive memory across all categories long term. for new customers to recall as That is because it mirrors a they enter the recovery. psychological trait where people are much more likely to try new brands when they go through a life event – such as marriage, a

A Kantar survey of Chinese consumers showed 84% tried at least one new service for the first time during the COVID-19 epidemic.

This creates an opportunity for many new sectors to convert first-time category users into loyal customers.

The chart shows predicted increase in demand among Chinese consumers, including in troubled and dining out. WARC GUIDE

Jon Moeller

E-commerce may double its share of total retail, making this a priority area for brands in most categories.

According to Publicis Sapient’s David Carr, trust is vital in e-commerce, not just in the brand but in the end- to-end experience.

Build trust by reassuring people on product availability and the safety of manufacturing capabilities.

Enable product availability checks online/offline via online shopping tools through partnerships with retail partners. WARC GUIDE

To survive and thrive brands need to find new ways to quickly upgrade their e- commerce capabilities.

This could entail “shifting communications to promote online ordering, or by adapting the products they sell in order to fulfil consumers’ changing needs” says OMG Transact’s Saradha Sethuraman. She offers these five tips to get started.

Meanwhile, physical retailers will need to fast-track e- commerce plans to serve lockdown customers. WARC GUIDE

Consultancy Eatbigfish you to think differently. advises brands to take a For example, how do we grow more resourceful approach our business when we are to execution during unable to serve customers recession. face to face? We develop new experiences like DIY Sushi kits Constrained budgets can force marketers to think differently. How do we make a compelling For example, consider new ad without the ability to partnering with those that have shoot any new footage? We a mutual interest in solving a create a ‘Hand Wash particular problem, with each Challenge’ on TikTok (leading bringing their own expertise or to 48 billion impressions for capital to the collaboration. Dettol in India).

Set propelling questions – they combine your boldest ambition and your most significant

Discounting is tempting during recessions but it creates downward pressure on margins. Be creative about pricing – it can be about more than money off.

Consultant Fiona McAnena advises marketers to ask a whole series of questions around pricing. Rethink what creates value for consumers. Even a discretionary purchase can be reframed. WARC GUIDE

Marks & Spencer, the UK a fiver a day’. The strategy retailer, found that although resonated with budget- people were dining out less, conscious consumers. they still wanted special- occasion meals. This led to Over 50 family meal ideas were the successful Dine in for £10 shared in TV, press, free tip promotion. The offer was an cards and online, instantly integral part of the company’s lodging in people’s minds, strong food performance forming a strong brand during the last recession. association.

UK supermarket Sainsbury’s Over two years, the idea addressed the perception that delivered £540m in direct sales it was more expensive than its with a payback of £5.55 profit rivals, by taking simple food for every £1 spent and overall ideas and building an everyday helped improve Sainsbury’s low price component price perception. into them: ‘Feed your family for WARC GUIDE

Les Binet

In China, the Ministry of consumers are wary of going Commerce reports that around back to business as usual, 80% of restaurants and more concerned that their safety than 90% of commercial is still at risk. It reports the facilities have reopened across electronics retailer Suning.com China. saying some of its stores are only getting around half its usual Even in Wuhan, the city worst footfall. affected, shopping centres are reopening. The government had hoped that state-issued vouchers However, early evidence from would encourage a spending China, shows that cautious spree to aid economic recovery. consumers are staying away. That seems not to have materialised, at least not yet, The Financial Times notes as people have lost their jobs although shops are open, or fear being laid off so remain

Nike, the sportswear company, has outlined four stages to the crisis in China that can help other brands plan, particularly those with retail outlets.

It is significant because, like Coca-Cola’s plan on the next slide, it anticipates a significant period of ‘normalization’ before a period of economic stability returns. WARC GUIDE

For Coca-Cola the next phase In March, the Chinese revenue of the COVID-19 response situation was “volatile” on a focuses on “graduated re- week-to-week basis. “We're openings of society” and a kind of getting close towards focus on flexibility and neutral in China now, still below seasonality in marketing. where we were last year, and where we were in January,” he CEO James Quincey said the added. company is “planning key actions with bottlers to regain The company is assessing momentum, including our pre- which channels are now best summer sales promotion and placed to reach consumers in increased cooler placement”. China’s ‘new normal’.

The lockdown implemented in While China is entering a post- February led to “much deeper pandemic stage, Quincey [decline] than the –25% we’re asserted that “it's important to currently seeing globally,” said emphasize that doesn't mean

James Quincey

Considerations for brands looking at China’s ‘new normal’

• Understand shifts • Purchase decisions in demand and the will be carefully Totem Media has outlined • The crisis showed • Customer support habits driving considered; building several important factors to some brands do not initiatives are critical change, particularly trust and confidence consider for brand success have a strong enough to winning sales in the for brands that are with consumers is in China in the recovery. online presence. months ahead. Many non-essential. key. Digital video will Some were unable to brands have moved be important here. Access to digital channels is meet demand – due entire retail teams • Category-leading important, particularly with to a lack of stock (or online to engage with products should • Brand comms are future lockdowns in mind. misallocated stock to customers. take an even larger important in the wrong channel). place in signaling staying Live-streaming and social • E-commerce, social, communications power, trust and commerce (including • Perform digital search, video and plans – as they signal values. Big, bold private traﬃc) is now audits to ensure that online customer trust and quality. messages remind expected to become an the channels in place support functions audiences that the even larger part of the are performing must all work in brand plays a big marketing playbook in effectively. concert. role in their lives China. Customer service and marketing will become closer through these digital Source: “Reframing 2020 as China springs back from COVID-19”, Chris Baker, Research on WARC, April 2020 initiatives. © Copyright WARC 2020. All rights reserved. WARC GUIDE

Post-lockdown, media habits Online video, social, and news are changing again, meaning content will be key during marketers should retain a normalization. For outdoor ads, degree of flexibility in their the rebound will be primarily in media plans commuting routes, residential areas, and elevator areas. The largest increases in the share of time spent online Brands are also starting to during lockdown were in reconfigure digital initiatives gaming and short video. around e-commerce. For example, Friso China Havas China advises that registered new customers into digital will remain central. But its CRM program through e- less time will be devoted to commerce incentives entertainment than in the (discount coupons), and beginning as more consumers Lenovo started advertising return to work. directly on relevant JD.com

Restoring consumer Meituan, an O2O service confidence is proving a key platform acted quickly to challenge in China – and launch contactless shields that many brands are finding that protect customers from packaging innovations can infection when eating. help resolve this. The cardboard shields – per In the face of the pandemic the image – can be expanded Starbucks partnered with to provide a 20-inch Ele.me, an online-to-offline 'independent space' in front (O2O) catering and food and at the sides of a diner. delivery platform in China. It used specially-designed packages, unique containers, dedicated delivery drivers, and an intelligent fulfilment system.

The travel sector, one of the • Advance purchase hardest hit by the first wave vouchers are proving of the pandemic, should popular as consumers are prioritise domestic demand spending time at home based on the experience in researching future trips. China and North Asia. Asian travel operator KK Day ran a sale with • Companies should think discounted rates off cash about how domestic and gift vouchers that demand differs from customers can buy and use inbound demand and adapt for trips in the rest of 2020. their offerings. • Hygiene is becoming a key • Flexibility in bookings will factor for hotels – for continue to be a top example, consumers now customer priority post- expect hand sanitiser to be pandemic. supplied in rooms.

JD, the Chinese retail giant, is Ensuring price stability was an an example of how COVID-19 important factor in addressing is benefiting the major online public fear. JD addressed players, and broadening their price gouging by launching an role in consumers’ lives. early-warning model, which identified suspect price hikes. JD mitigated supply chain risks through an SEIR (susceptible, It partnered with four other exposed, infectious, platforms to fight price hikes, recovered) model to forecast false ads, and fake goods. demand for products. Those who violated the rules on one platform would be In addition, JD's omnichannel forbidden by the others. fulfilment platform calculated which bricks-and-mortar store JD Health also began nearest to a customer had the providing free consultations items in stock, then sourced from qualified medical doctors

China’s wide-ranging apps But as the market in China and digital services played matures, Forrester sees early an important role in the signs that trust in certain lockdown and now in the technologies and their uses is normalization period. eroding, especially around data privacy. Alipay, UnionPay, and WeChat Pay launched e-payments Tech giants deployed a colour- based on facial recognition, coded health rating system to which have been adopted in help government officials track thousands of stores in over and record people’s 300 cities. quarantine statuses.

Facial-recognition solutions This application of technology with temperature sensors also “gives tremendous power to found favour during the those who control data,” wrote COVID-19 outbreak to help Meng Liu, the main author of

Jodi Harris

As noted earlier, American Meanwhile, Shopify, the e- Express is continuing its commerce logistics platform support for small businesses has launched a new app which – a strategy initially adopted aims to support local following the 2008/9 businesses by connecting recession. them with nearby customers.

The brand is one of a coalition The Shop app allows users in of big brands – including North America to browse and Amazon, retailers Sam’s Club purchase products from over 1 and Staples, ride-sharing app million merchants. Uber, and tech brands Dell and Cisco – that launched “Stand Implication: SMEs will be for Small” in April. among the hardest hit. Consumers may support They are providing advice, initiatives that help rebuild local offers, and a range of services business and communities. to small businesses. © Copyright WARC 2020. All rights reserved. WARC GUIDE

According to Google, online Atkins advises finance brands searches for “financial help” to conduct an end-to-end recently grew 203% in just experience audit – in which the one week, as unemployment key junctures of the customer jumps. experience are reviewed for digital efficiency and efficacy. Finance brands have an opportunity to build consumer And now more than ever trust by supporting clients financial firms need to do the through hard times, according boring stuff really well; to Wunderman Thompson’s approving loans, refinancing David Atkins. debt, extending credit.

Brands that act quickly will gain Implication: Lots of finance first mover advantage. For brands will be communicating example, some credit card about how they are supporting companies have waived people; the best ones will be interest charges to ease the looking for ways to act on it. © Copyright WARC 2020. All rights reserved. pressure on their customers. WARC GUIDE

For brands seeking to defend In the 2008 recession, market share from private- Brandgym state that Nestlé label, adding value through created an entire category formats, innovation or value- called Popularly Positioned on pack is going to be critical. Products (PPP) allowing its products to become more Coca-Cola is rolling out new accessible through smaller pack sizes and product packs which carried a lower unit offerings that meet differing price. consumer needs. Implication: Review pack size Procter & Gamble is serving and pricing in light of changing consumers with relevant pack consumer circumstances. Use sizes designed to hit key cash ‘special-edition’ packs around outlay thresholds for consumers key selling moments. who need to make week-to- week purchase decisions.

US households: three types of financial position

The idea that all consumers trade down during recessions is simplistic. 26% of US households 40% of US households 34% of US households According to J Walker Smith of Kantar, the Cash Flow households live Income Statement Balance Sheet households decisions consumers make paycheck to paycheck. households have a steady, are able to fund spending during a recession are reliable source of income, because of greater asset- driven by household When finances are under plus some reserves. based security. budgets. pressure, Cash Flow households do not trade In recession they will give up In a recession, marketers Pre-recession, he identified down. They trade out, and go experiential luxuries, such as should consider a shift from three broad groups among without. This means giving up expensive dining or annual self-indulgent luxury to US consumers. personal services or small vacations. something more grounded in luxuries. It also means things like performance, Implication: Marketers lengthening purchase cycles. They would rather trade down well-being, or superior need to understand the than go without and will shift decision-making. budgeting decisions of Products that fulfil multiple more towards private-label. their customers to guide needs are prioritised. Smaller Emotional bonds will be a decisions like pricing and pack sizes can also help them Value and reliability are key powerful way to sustain pack size. cope. messages for this group. connections with Balance Sheet households WARC GUIDE

Even after a degree of Accenture advises companies normality returns, Procter to “upscale the importance of & Gamble believes that local… coming out of the crisis, consumers may spend local will be more important than increased time at home. ever”. It predicts a rise in the proportion of home spending. WGSN, WARC’s sister brand, predicts home health and Implication: People will be hygiene will be a key category eager to leave their homes, as consumers focus on but the potential of a further cleanliness in all aspects of the outbreak – combined with home, from laundry to air economic hardship – means quality. many will prepare their homes as a safe place of sanctuary and Before the outbreak safety. Euromonitor identified ‘cocooning’ as a trend. Binge watching, home fitness and diet-focused setups in the kitchen, were already popular. © Copyright WARC 2020. All rights reserved. WARC GUIDE

Conagra, the CPG company, Similarly, Nestlé revealed that says increased trial of frozen consumers are returning to the food during the lockdown once unfashionable frozen offers a long-term food sector. Mark Schneider, opportunity for the category. Nestlé’s CEO, thinks budget- conscious millennials “will show The frozen category has a renewed interest in the transformed its image in recent healthier side of frozen food”. years. “The quality of the food is in a completely different IRI data shows shoppers are place,” said CEO, Sean not only stocking up on frozen Connolly. products but are replacing those stocks. The company has seen how consumers that tried frozen Implication: Food companies goods during lockdown may benefit from range “respond extremely favourably extension and NPD in frozen

Accenture notes that a Research undertaken in April ”health economy” will emerge 2020 found that immunity was that will create “white space” now the number one health opportunities for brands. concern in China and South Africa, and only beaten by heart From telehealth to fitness, health in the UK and US. people in countries across the world have experienced new Implication: The pandemic may ways to prioritise their health, be the catalyst for radical and and receive treatment. lasting transformation of how health and wellness is Health is also set to penetrate experienced and delivered. categories not typically Brands in categories outside associated with wellbeing. A health and wellness may be recent Ipsos survey found that affected too, and should review a healthy configuration is now opportunities to form the top consideration for partnerships that can reassure customers looking to buy a new or help health-focused

Unsurprisingly, Amazon has seen record growth. Total net sales reached $75.5bn in Q1 2020.

The fastest-growing segment was ad revenue, rising 43.8% ($1.2bn) to $3.9bn. Amazon is becoming a stronger advertising player.

Implication: Clearly brands need to have online retail options sorted. As well as Amazon, brands like Walmart and Target that have invested in ad sales around e-commerce could benefit as ad investment is optimised for online sales outcomes. WARC GUIDE

UK and US, subscriptions during COVID-19 May pay for service they didn’t have before outbreak, % consumers

Two-fifths (43%) of consumers in the UK and US say they may now pay for a subscription service that they didn't have before the COVID-19 outbreak, according to research from GlobalWebIndex

Netflix said it gained16 million subscribers in the first three months of 2020.

Implication: even as lockdown measures are lifted, consumers are likely to enjoy the safety of home and appreciate a direct-to- consumer offer. WARC GUIDE

Lululemon’s US and European The company saw online sales teams have “followed the spike during the lockdown, and lead” of its Chinese business, is continuing its product launch and introduced online ways plans. for people to work out communally while at home. “We do not believe the current The company saw nearly situation will change the trend 170,000 guests join its live toward people wanting to live fitness classes on Instagram. an active and healthy lifestyle,” said McDonald. The brand is pursuing a long- term goal of building an “omni- social community,” with members served by real-life and online events, explained CEO Calvin McDonald. “This has just pushed our innovation into the digital space.” © Copyright WARC 2020. All rights reserved. WARC GUIDE

The Hershey Co. is adopting a That means working with flexible approach to occasions retailers now on marketing such as Halloween, monitoring timings and pack options in activation and timing as new case Halloween is homebound. spending habits emerge. The company wants to avoid Lockdowns could restrict pure discounting, so will focus opportunities for trick-or- on a range of packs at different treating, depending on the price points. situation in October – usually one of Hershey’s biggest sales “We’re making sure we have the periods of the year. right array of pricepoints… so that consumers have options. The company has seen the If they want to buy multiple or growth rate of e-commerce bigger packs, they can, and also sales double during lockdown. if they're going to buy less,” said Its Easter sales offer hope for Michele Buck, Chairman/

Many of the trends caused or CEOs are more likely to invest in accelerated by COVID-19 these areas in recession as require the rewiring of investors push for radical steps. companies around data and digital services – in other This is a major topic for senior words, ‘digital transformation’. marketers interviewed by the CMO Growth Council – a joint A framework by PwC highlights venture from the ANA and ﬁve important functions that are Cannes Lions – to identify best interacting in the current practices in response to COVID- environment: 19.

1. Product innovation Implication: At a time of 2. Supply chain significant consumer change, 3. Sourcing and production there is an opportunity for CMOs 4. Sales channels to play a leading role in 5. Marketing interpreting those changes and acting as ‘superconnectors’

Fiona McAnena Les Binet Oliver Feldwick Clearhound adam&eveDDB The &Partnership

Gerard J Tellis Orlando Wood Nick Geoghegan Professor of American System1 eatbigfish Enterprise at USC Marshall School of Business

Graham Page Sir Martin Sorrell David Carr Affectiva S4 Capital Publicis Sapient

Laura Hurst Remona Duquesne The Foundation Brandgym Brian Wieser GroupM WARC GUIDE

David Haigh Danielle Bailey Brand Finance J Walker Smith Gartner Kantar Futures

Sami Wong Martin Reeves Group M Research BCG Henderson Institute

Chris Reitermann Ogilvy Asia and Greater China David Dixon, Sebastian Shapiro, Nicole Wolf Nicolas Jarvis Marketscience Jarvis PR

Joan Driggs IRI WARC GUIDE

WARC best practice WARC Evidence WARC Data March, 2020 March, 2020 March, 2020

WARC special series Gerard J Tellis & Kethan Tellis WARC Evidence Journal of Advertising March, 2020 Research, Vol. 49, No 3, September 2009

Tim Broadbent et al WPP Atticus Awards, Winner, 2008 WARC GUIDE

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