COVID-19 has been one of the worst economic factors affecting business that we have seen in a long time. As we emerge from the worst of the COVID-19 shutdown, businesses have temporarily boosted their marketing spending. But, a special edition of The CMO Survey, conducted in May by Dr. Christine Moorman at Duke University’s Fuqua School of Business (sponsored by Deloitte LLP and the AMA), shows that marketer optimism about the economic outlook has dropped to levels last seen during the Great Recession in the early 2000s. As your clients plot their strategy to optimize revenue in the coming months, they should pay attention to the observed changes in consumer behavior since the pandemic started.
Economic Factors Affecting Business: COVID-19
For your clients that have been in business since before the Great Recession took place, some of the survey findings will feel familiar. After all, the economic factors affecting business now are slightly similar to those in the 2008 economic crash. With significant percentages of consumers being either unemployed or worried about being laid off, the focus on price may become laser sharp. About 39% of business-to-consumer product marketers expect consumers to show a low-price attitude. In general, your clients have likely noticed the consumer behaviors reported by the participants in this survey:
- More value on digital experience (84.8%)
- See marketers are trying to “do good” 79.1%
- Don’t want to pay full price (43.3%)
Boosted Marketing Spending
In the past four months, with economic factors affecting business, the average marketing budget, as a percentage of total revenue, has increased from 8.6% to 11.4%, The jump was most notable in the business-to-consumer product sectors as these businesses worked hard to retain customers.
However, this jump in marketing spending will not last. Within the next six to 12 months, 29.3% of businesses will bring marketing expenditures back in line with what they’d planned to allocate for 2020. On the digital advertising front, 26.5% will pull back expenditures in the next month. For traditional advertising, 26.6% of businesses will make the same change in the next six to 12 months.
The average business cut their marketing by 9% in the past couple of months. However, nearly 60% did not make any changes to their outsourced marketing activities. Given the current uncertainty, businesses may hesitate to increase their payrolls. But they may listen if you can sell them on recommendations about how to retain customers and increase brand value in the marketplace.
A solid review of their digital presence may be the best place to start. To get those details, run a Digital Audit on AdMall from SalesFuel.