2020 has been a turbulent year for all advertisers and their agency partners, in every market around the world. The Covid-19 pandemic was a once-in-a-lifetime event which has presented marketers responsible for brands in the toughest, most complicated, least predictable environment in which to operate. This truly has been a year characterised by flux and flex.
Uncertainty up, spend down
As soon as countries started to lock down during Q1 2020, most brands stalled, paused, or pulled marketing budgets entirely. This trend continued into H2, with many investments slashed or slowed down. Some categories – including grocery retail, FMCG, gaming, and pharmacy – have been buoyed by bumper sales. They’ve mirrored their strong sales performance with confident ad spend, and the world’s two biggest consumer goods companies – P&G and Unilever – have both actively increased marketing investment this year. Other categories – most notably travel and tourism, leisure and entertainment – have cancelled all marketing activity until conditions enable them to trade again. Provided, of course, their businesses will have been able to ride out the storm.
According to analysis by Zenith Media, global media spend is down by more than 9% for the whole of 2020, falling to just over £371bn. The rapid development, trial, and roll-out of several different coronavirus vaccines promises a glimmer of optimism and to accelerate the return to growth for many brands and categories. It is unlikely, however, that anything like normality will return much before the middle of 2021, and marketing investment will inevitably lag the market. Zenith anticipates that full recovery may take at least three years, and this projection is echoed by analysts in other sectors, including central banks modelling economies as a whole.
Untangling complex supply chains
Relationships across the media and marketing supply chain – from advertisers to agencies and on to service providers, production houses, media vendors, creative agencies, and technology platforms – have become increasingly agile, fluid, and tangled. Very few brands will end 2020 with a marketing laydown that bears any resemblance to what they planned carefully at the back end of last year.
The anarchic flux of 2020 has created huge amounts of complexity in marketing. Given the rapid shrinkage in global advertising spend but the enduring requirement of agency holding companies for their operating businesses to maintain margins and profit, advertisers need to scrutinize 2020 agency performance more keenly than ever. And they need to do so now.
With brands cutting spend and switching investment to new and different channels – particularly digital to follow consumer eyeballs, and notably away from out-of-home and the long-shuttered cinemas – agency resourcing to meet client needs has also changed. With lower levels of staffing and efficiencies in ways of working now commonplace agency-side, brands need to know if and how agency partners have complied with contractual obligations during the pandemic. Where savings have been made, they need to be sure these have been passed to them by their agencies.
The opportunities presented by the pandemic
As brands plan media and marketing investment for 2021, auditing 2020 agency performance is the perfect place to start. In recent years, auditing contract compliance has often taken place one, two, or more years after the event. Yet because so many brands have invested their marketing dollars differently this past year – as well as typically spending much less in this period – brands should seize the opportunity to assess contract compliance for 2020 as soon as is practicable.
Sunshine will be possible for many brands in 2021, following the torrential downpours of the past year. But this can only happen with a clear understanding of the dynamics and practical realities of their agency partners’ compliance with contractual obligations this year.
A call to arms
Winston Churchill is said to have said: “Never waste a good crisis”. To help get the media and marketing industry back on its feet, brand owners should use the opportunity served up by the pandemic to improve the levels of transparency they receive from their agency partners in all media and marketing channels, products, and services.
By Federica Bowman Global CEO at FirmDecisions