What you need to know:

• Brands that maintained or increased marketing spend during 2020 grew sales, market share, brand consideration and ROI.
• Brands that pulled spend last year “went backwards” according to Rob Brittain.
• Hipages maintained spend and shifted focus to 50/50 spilt of brand and performance.
• Mondelez recorded gains in market share across its brand portfolio.
• But Suzuki slashed its marketing budget by 80% and grew sales 30%.
• Mutiny data found CPG brands lifted ROI by 50% year-on-year in Q4 2020.
• Brand consideration grew with consumers adding new brands to their repertoire, according to Ipsos.
• 2021 will see companies focus on brand marketing and customer experience.

Brands that maintained or increased marketing spends during the Covid-19 pandemic experienced increases in sales, market share, brand consideration and return-on-investment while the brands which pulled back and bunkered down did not - except for the ones that did. Confused yet? 

The message from global marketing leaders for decades has been clear: brands need to keep spending through a recession to drive growth on the other side. Most agree that the brands that maintained or increased spend throughout last year have reaped the benefits. Some though cut budgets and still benefitted.

The market is divided about whether this is the result of a halo effect within strong growth categories from brand and marketing investment through Covid or the benefit of sustained brand marketing investment in the years preceding the pandemic.

One thing is clear, according to Rob Brittain, principal of Rob Brittain Consulting who's worked closely with the Advertising Council and long-term marketing investment advocates Peter Field and Les Binet (The Long and Short of It).  “Those who pulled back spend went backwards.” says Brittain, who last year co-authored the AUNZ report Advertising Effectiveness Rules – Winning or Losing in a Recession, with the Advertising Council. Brittain points to Coca-Cola, which was vocal about cutting spend as lockdowns rolled out worldwide and was subsequently hit with significant volume and revenue declines. 

“Coke has come out and said that they're going to start reinvestigating their marketing spend at the levels they were in 2018 and 2019. They had a fairly big volume drop; their net revenue got hit pretty hard,” says Brittain.

However, those who charted the opposite course have reaped the benefits, he says. Proctor & Gamble committed to "doubling down" on marketing activity globally during the pandemic with a strategy to remind consumers of its brands and benefits. The multinational giant has posted solid earnings for two quarters, beating analyst expectations and reporting growth across all segments.

IAG also seized the opportunity to connect and support consumers during 2020; increasing media spend by 65%. CMO Brent Smart told Mi-3 the increased investment bolstered digital impressions by 75% and overall reach by 10%. 

Suzuki slashes and wins

Significantly, IAG opted to shift expenditure away from performance and instead invested in “100% brand messaging” at a time when scores of brands were doing the opposite.

Brittain says brands were looking at the immediate threats and opting for "cheaper, less effective channels, like digital” rather than focusing on the long-term gains and generating future demand.

"Everyone was saying, 'we're going to trim, we're going to focus more on digital because everyone's at home'. They were making these cascades of decisions, which on the surface look quite sensible. But when you unpack it, you're spending less in terms of generating demand, and you're directing to less effective channels. Brands were moving towards fulfilment rather than creating future demand because the investment you make now is going to yield the benefits in the upswing. They were hitting themselves in the face, and then they were stamping on their own foot as well with the choices that they were making,” says Brittain. 

But for some brands, it paid off.  Suzuki slashed its marketing budget by 80% in April and funnelled all spend into digital. The move helped reduce costs for the automotive brand, and when the sector began to pick up in June, Suzuki started to see solid growth in leads, customer interactions and ultimately sales leading to a 30% sales increase in 2020.

Michael Pachota, general manager, automobiles, Suzuki Australia, says, "From June, we started seeing growth in inquiry levels versus our forecast sales expectations and the previous years as well. Our website was doing crazy things, and the key metrics that we set as KPIs outside of covid were blowing out of the water versus the previous year."

As the year progressed, Suzuki used revenues to bolster its spend and ended the year at 45% of its regular marketing budget. However, while the brand invested in performance channels, Pachota attributes some of Suzuki’s success during 2020 to the brand platform it launched in 2019, which had grown awareness and consideration for the brand.  It also benefitted from the strong growth within the automotive sector which recovered quickly mid-year. 

HiPages taps investment halo

Hipages chief customer officer Stuart Tucker believes its sustained investment in the brand, which began with its sponsorship of The Block in 2018, not only helped it double brand awareness in two years and supercharge brand consideration, it also created a strong foundation for when Covid-19 hit.   

“We didn't adjust our spend immediately because we were keeping an eye on the market,” says Tucker. “We invested in brand advertising in the April/May/June quarter, and from then onwards, we went back to normal and maintained our brand investment at the same levels it would have been beforehand and moderated our performance spend.”

“At first, we had to move fast and adapt our messaging to be relevant, and then we just maintained our momentum and kept telling our story to an audience that was open to it.  It would have been easy to shut it all down and just shut up shop, but we didn't do that, and we've benefited strongly from it.”

Tucker says the brand also benefited from the strong category as people locked down in their homes began to invest in improving their surroundings. It’s also felt the impact of sustained brand investment which has enabled a significant shift in the media investment spilt to land at nearly 50/50 brand versus performance (56% performance and 44% brand).

“One of the consequences of investing in brand and maintaining our investment over time and through Covid is that we are now seeing the benefit that comes with building your brand, where people are coming back to us actively or repeating with us or coming looking for us with a high degree of intent, rather than us having to go to market and almost buy those leads,” says Tucker.  

Mondelez holds spend and grows 

Paul Chatfield, senior marketing director, ANZ at Mondelez, says its brands directly benefitted from its commitment to maintaining spend through 2020 with stronger sales and market share gains.

The company, which includes the Cadbury and Oreo brands, opted to continue spending, albeit with adjustments to accommodate sales channels that were no longer relevant.

“We initially maintained our core brand through a two-month period. Then where we saw areas that were likely to be impacted, we pressed pause with the view of reinvesting as we saw the circumstances unfold in terms of consumer behaviour and channel behaviour through the year. 

“We were constantly replanning our media. Ultimately, we did actually invest more as we ended up reinvesting everything that we put on pause, plus more, in order to drive our business.”

Chatfield says the growth the brand achieved in both sales and market share is the result of ongoing marketing investment.

"We gained share versus our competitors last year, and we gained a significant amount of share across the year. [Mondelez's success in 2020] was certainly contributed to by that investment, there is no doubt, but it's also the result of sustained long-term investment."

Consumer goods ROI rockets

Data from econometrics SaaS (Software as a Service) firm Mutiny, with an advertiser pool of circa $300m in spending, shows brands that maintained or increased spend in the December 2020 quarter experienced strong lifts in return-on-investment. Mutiny found consumer packaged goods (CPG) brands lifted ROI by 50% year-on-year in Q4 2020 to 123.20% versus an ROI of  88.11% in 2019. Meanwhile, the brands that shut-off spend recorded ROI declines to 74.15% for the same period.

"The ones that maintained spend tended to do better and came out lifting quite a bit," says Henry Innis, managing partner at Mutiny.

"50% is a big jump, and while it's important to note that some of those brands may have been pummelled in previous months and may have had some negative ROIs in previous quarters. It does show that if you were spending money in Q4 last year, then you were probably making money too."

Mutiny’s data, which comes from its Media Investment Analytics platform, WarChest, also revealed good gains for financial services brands, with those maintaining spend increasing ROI to 74.23% in 2020, up from 67.14% in 2019 versus those brands in the category which cut investment and dropped to 58.24%.

"There's quite a bit of divergence, and that's because in the financial services sector people tend to know the brand and they are a lot more established, so it takes more time for the reactions on advertising to filter through whereas you tend to get activation sales and advertising responses more quickly for CPG,” says Innis.  

At the height of the pandemic, brand consideration was on the rise as consumers sought out more options and were more inclined to trial brands, according to research from Ipsos.  While this increase has reverted to normal levels for the majority of brands, some have registered ongoing increases.

"It shows that those brands that managed to penetrate the mindset of people and drive that salience have a real opportunity for growth because people are adding an additional brand into their repertoire," says Jemma Lightfoot, country service line lead – brand health tracking and creative excellence at Ipsos.

Brand and customer experience in 2021

However, the challenge now for brands is to maintain the gains of 2020 throughout the next year.

“Certainly, what we have seen is absolutely the people that invested last year are the ones that benefitted,” says Peter Vogel, chief executive officer of Wavemaker.

"The big question now is how do those clients either maintain that uplift in sales or retain the shares from last year? And I think we are about to enter another fascinating quarter in terms of marketing and media spend. I think if there isn't a consistent strategy, and an evolution of the strategy, and also maintenance of that investment, I certainly can see a lot of those clients that did invest and grow will very quickly lose that momentum in both sales and shares."

Vogel predicts we will see more companies investing more in brand marketing and creating better customer experiences as they aim to retain consumers.

“I think we will potentially see a bit of a shift to brand building. And then obviously, customer experience as opposed to the hardcore bottom of the funnel acquisition,” says Vogel.