It is probably unsurprising to say so, but the marketing industry in Europe has been rocked by the pandemic causing changes in budgets and working practices that are shifting the sands the marketing industry is built on.
As the crisis emerged in March, brands had to contend with out-of-date messaging (for example, ads that show gatherings that are no longer recommended) in addition to shifting demand for their products (if there is demand at all). Brands and their agencies had to consider costs.
However, the impact is not evenly spread across all sectors. As brands emerge from cost-cutting and recognize restrictions are likely to be with us for some time, they can look at opportunities to survive the downturn and emerge stronger.
Travel has been the hardest hit industry, with Europe largely under lockdown with effectively zero demand since early March. Direct response budgets are zero, and there is an unprecedented sight of flight keywords not being competed for on Google search pages.
Many travel firms, particularly airlines, are looking to their governments for assistance. However, travel marketing is not completely dead, with tourist boards still looking to promote their destinations for a future beyond the pandemic. As restrictions start to lift, long-haul travel faces an uncertain future and local travel options have an opportunity to make up for lost time.
Automotive sales dropped 52% in March, according to industry body ACEA, making it the worst month in decades at what is usually peak season, with April looking to be similar. While the Asian automotive market looks to be slowly recovering, that is not the case yet in Europe, which looks to be the hardest hit region for auto sales. Customers are not able to visit dealerships or take test drives, which has led to a huge reduction in marketing budget as most campaigns are put on hold.
Yet the market is expecting a slight resurgence over the coming months even before social distancing is fully removed, as customers on finance deals will still want to change their cars. Consequently, dealerships are looking for innovation to allow customers to view and choose their cars and even purchase online.
Food and grocery sales have seen a sales spike due to panic buying. Yet these marketing budgets have still been badly hit as brands have put campaigns on pause while they update their messaging. The high level of sales also meant that marketing was not always needed at all.
We can expect spends to return and in some cases grow as FMCG brands, in particular, look to capitalize on their opportunities. Unilever has announced that it is looking to maintain spending levels, but with some cost savings due to market conditions. P&G, on the other hand, is looking to increase spend and respond to increased demand.
Any retail considered nonessential has seen sales in bricks and mortar stopped in Europe. Online sales are up overall but have come with big changes in consumer behavior and buying power. Canton’s research with many leading retailers has seen fashion sales decline up to 50% in many lines focused on going out. Loungewear and clothes that are usually worn at home or for comfort have seen big increases in popularity. Most other retail categories such as furniture, homeware and electronics have all seen modest falls in online demand.
This has put pressure on marketing teams to shift attention to ecommerce and adjust to product lines with demand. Progressive retailers are looking to use this period as an opportunity to move their sales online and gain market share. Consequently, in Europe, offline budgets have been hit much harder than digital budgets, and retailers are looking at how they can accelerate a move to digital. This process has improved as retailers hired more digitally confident talent in the last 12 months.
Financial companies have experienced huge demand to provide loans to businesses and individuals. With the housing market largely on pause as estate agents shut down, there is little demand for new mortgages. There has been a contraction in credit supply with more restrictive criteria being applied to credit applications, limiting demand for new cards and other products.
This sector needed marketing to adapt, which has led to short-run drops in advertising spend. As the phase moves to a new stage, finance brands are having to carefully consider their message to the market and what they are looking to achieve from marketing.
Marketing has seen unprecedented disruption in March and April. While activity looks to be picking up in May and beyond, it is still way below what would normally be expected. Changes in budgets and messaging along with staff reductions and remote working have put huge pressure on the marketing sector. Yet the pandemic is driving innovation. Despite restrictions remaining in place, there are signs that after two months of dramatic reductions, activity during the pandemic is showing signs of recovery.