The COVID-19 pandemic has significantly transformed the way people do business. Although some essential industries saw a surge in demand, most fields were negatively impacted — and marketing was pushed to the back of the line as advertisers rushed to rebuild their strategies for a strange new world.
It’s safe to assume marketing budgets in a post-COVID environment will remain different compared to 2019 forecasts. As many consumers remain indoors and online, marketers are motivated like never before to come up with new ways to engage with the public — while combating dreaded digital fatigue.
It’s not all bad, though. Advertisers have learned to adapt their messaging. And now, a swift push for nationwide vaccination breeds hope for traditional in-person programming, while the successful leveraging of digital services may lead to new channels and revenue streams.
Though it’s impossible to predict the future, uncovering the impact on marketing budgets post-COVID relies heavily on polling the employees and executives who have lived through the pandemic firsthand. Taking lessons from how the industry reacted during the pandemic will play a large role in informing marketing success in a COVID-free future.
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All You Need Is Love… and Messaging
In a climate of sky-high consumer uncertainty, advertisers adopted a more empathetic approach to messaging, attaching their products to sensations of relief and control. Organic and personal social media content became primary drivers of messaging — and it’s safe to assume they will play a major role in post-COVID marketing.
Overall, the changes spurred on by the virus led to more human, approachable content from advertisers, emphasizing the message of “we’re all in this together.”
Investing in brand advertising, as opposed to pushing for short-term sales with product-based campaigns, grew during the pandemic too. Data from the Great Recession in 2008 suggested brand awareness investments provided the most value, according to a LinkedIn report. The same report found that the more advertising reflected a helpful, community-based mindset from a brand, the more consumers were drawn to it.
Marketing budgets after COVID will continue to reflect this sympathetic approach, with more resources directed towards charity, public health, and community service.
Now for Some Good News
In Gartner’s periodic survey, 73% expect the pandemic’s negative impact to be short-lived. As anyone who has lived through times of uncertainty can tell you, the best antidote is having a solid plan moving forward.
Some of the chief marketing officers (CMOs) surveyed recommend prioritizing flexibility and adaptability in post-COVID marketing budgets, stocking up on the right tools and tricks to optimize targeting in the advent of cuts.
Plus, focus growth by adopting value segmentation and investing in the most profitable consumers using a system like AdRoll’s brand awareness platform. Approximately 66% of marketers in the LinkedIn report said making changes to their target audience, if necessary, would not be a challenge when using the right tools.
With advancements in marketing technology, such as cross-channel tracking, AI-driven product recommendations, and retargeting algorithms, marketing during a recession has never been easier.
The top three global ad agencies reflected this bullish attitude in their predictions for global ad spend growth in 2021. Magna, Zenith, and GroupM each told Forbes to expect at least 5% growth in global marketing dollars by the end of the year. GroupM took that prediction one step further, suggesting that advertising could grow by as much as 10.2% worldwide compared to 2020.
Making Smart Post-COVID Investments
Of the marketing tools that saw the most growth during the pandemic, webinars came out on top. According to the LinkedIn report, 67% of marketers reported webinar investment during the pandemic, followed by organic social content at 56% and online video at 44%. Search marketing also grew by 34%, proving that some traditional channels were already well-suited to pandemic life.
Account-based marketing is also on the rise, thanks to its high-touch, company-based approach, logging investment growth of 29% during the pandemic.
But COVID-19 was not kind to older forms of advertising — TV advertising fell by 33% and out-of-home ad investment dropped by 39%. Unsurprisingly, marketers ran from experiential messaging, with investment in that arena dropping by 80%.
The pandemic’s impact on marketing varies widely by industry, with those in luxury or service-based arenas taking the brunt of the damage.
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Warning: Danger Ahead
Despite the positive outlook found in Gartner’s survey, 44% of that same group said they faced mid-year marketing budget cuts in 2020. While they rejected the idea of a long-lived downturn, Gartner found that marketer optimism fell sharply during lockdown. Using a 0-100 scale, the survey scored optimism in the overall marketing industry at 50.9, falling from a mark of 62.7 before COVID-19.
LinkedIn’s survey also found that most marketers are challenged by the current marketing environment, and budget cuts are mostly to blame. Of those surveyed, 42% said budget cuts are a “significant challenge” going forward, more than any other factor. A larger swath, 74%, said cuts would at least be a challenge of some magnitude.
This could be good news for some, especially those expecting significant cuts of their own. After all, if the entire industry is affected, competition as a whole may dwindle. It’s worth noting that some segments of the industry expect more impact than others. Marketing agencies (52%) and performance marketers (45%) reported the highest rate of impact from budget cuts.
The Long and Winding Road Back to Normalcy
Although it’s too soon to tell exactly how marketing budgets will be impacted after the pandemic, looking to the past can be informative. Research has found that marketing spend could be in decline for the next two to three years, depending on overall gross domestic product (GDP) decline. If the decline is less than 5%, you can expect marketing budget impact to be about twice that amount. Provided that the overall GDP declines by more than 10%, it could be up to three times the impact for marketers.
If past recessions are any indication, marketing budgets after COVID-19 will lag behind the larger economic recovery. Marketing spend caught up with recovery between two to four years after the Great Recession in 2008, depending on the industry and country of origin. However, some growth in ad spend is still expected for 2021, according to the Dentsu marketing agency.
The good news is marketers in the U.S. can take a sigh of relief too. That’s because, according to the top three ad agencies mentioned above (Magna, Zenith, and GroupM), the U.S. was relatively resistant to ad spend decline throughout the pandemic — robust digital media and political advertising kept the money rolling in throughout an election year. All three agencies see stateside growth between 3-6% in terms of ad dollars.
Worldwide, Dentsu predicts advertising spending will grow by 5.8% on a comparable basis in 2021 after declining 8.8% in the previous year. As digital advertising is predicted to grow much faster than traditional forms of advertising, it’s never too late to see how AdRoll can make each marketing dollar work harder for you.
Angie is the Content Marketing Manager at AdRoll. Prior to AdRoll, she was a Content Writer at various digital marketing agencies. A writer by day and a reader by night, Angie’s other hobbies include cooking and learning useless movie trivia.