What Happens to Advertising When Times are Bad?

April 3, 2020
SCMP Insights
When a company faces a financial crunch in a time of crisis, the first instinct is to cut non-essential spending. Too often, marketing campaigns are the first to go, significantly undermining brand positioning, which should instead be at the forefront during tough times.

American ad-man-turned-politician Bruce Barton is known for his adage, “In good times people want to advertise, in bad times they have to.”  This is a classic opening line used in every marketing essay written during a time of crisis.

Home to our loyal print subscribers and almost 10 per cent of our global digital monthly active users, Hong Kong is one of SCMP’s major sources of advertising revenue. But after nine months of ongoing anti-government protests compounded by three months of what now is a global pandemic, Hong Kong’s economy is not in the best shape.

Last year, the city recorded its first annual decline in its gross domestic product since 2009 — tellingly just after the 2008 subprime mortgage crisis hobbled markets around the world. In tandem with this, consumer spending on non-essential goods and services has continued to drop over the past few months, all but crippling Hong Kong’s vibrant tourism and hospitality businesses.

SCMP and those in the advertising industry traditionally rely on healthy economies, when companies invest more marketing dollars to spur further growth. Conversely, when business forecasts are bad, a lot of companies switch to cost containment, and marketing budgets tend to be the first ones on the chopping block.

In 2008, publisher and researcher Marketing Sherpa released its Marketing During a Downturn report, which found that more than 60 per cent of marketers at large companies were cutting or expecting to cut their marketing budgets following the financial crisis.

Chart: Downturn-related Changes to Marketing Budget by Company Size

The reason the words of Bruce Barton are repeated, time and time again, is because companies willfully ignore them when the going gets tough

Reacting to a global health crisis

Beyond long-term effects on marketing budgets, moments of crisis also provide new windows of opportunity for some brands to test how creatively (and quickly) they can respond to the situation.

Advertising for government announcements, healthcare and fast-moving consumer goods has been on the rise following the initial outbreak, and so too has advertising for mobile gaming and streaming platforms.

For instance, insurance provider AIA Singapore and its agency Ogilvy launched a campaign announcing the insurer’s free Covid-19 protection plan for customers and employees. Similarly, AXA Hong Kong announced free Covid-19 benefits to frontline workers at the Hong Kong Hospital Authority.

There has also been an increase in health and wellness content marketing campaigns by companies outside the healthcare or insurance spaces. Hong Kong Broadband Network partnered with Microsoft to offer its remote office solutions free to its customers, a strategically-timed message given that many Hong Kongers have been working remotely since the start of the outbreak.

Winning with correct messaging​

Brands that are able to effectively react in a crisis with correct messaging will ultimately emerge as winners. Personal healthcare brand and drugstore chain Watsons responded to the mask-hoarding situation by putting a quota system in place, while simultaneously reassuring customers that more masks will be made available and donating masks to the elderly. Marketing research agency YouGov revealed that these series of actions saw Watsons’ brand score jump a massive 16.8 points in YouGov’s Buzz Index.

Publishers brace for impact

Rather than acting conservatively in times of crisis, publishers should take this opportunity to be more courageous and experimental. In the last few months, SCMP has experienced a surge in new audiences — a rare combination of domestic, regional and global readers with a distinct appetite for content.

We at SCMP are already processing these unique sets of audience data that no other premium publisher has access to, paving the way for a future when we will be selling audiences in place of advertising formats.

Our Digital and Morning Studio teams have pooled their resources together, merging data and insights on audience behaviour in the midst of a global pandemic with Morning Studio’s award-winning ability to tell engaging stories.

Last but not least, we are upholding our obligation to the industry by supporting our advertisers during this tough time while keeping our advertising platforms and solutions flexible to ensure the long-term sustainability of our industry.