(d)ooh during a downturn...advertising in a downturn ooh during a lockdown what’s next? (d)ooh...
TRANSCRIPT
(D)OOH during a downturnBrand recovery series
April 2020
01020304
What’s happening?
Advertising in a downturn
OOH during a lockdown
What’s next?
(D)OOH during a downturn
P. 3
What’shappening?1
P. 4
Situation in Belgium
• On 10 March the governement advised to cancel indoor events (<1.000 people) for the month of March.
• As from Saterday 14 March the decission was made to close all schools and horeca and to cancel all public gatherings (sports, cultural, festive…). There was no further requirement to stay home.
• On 18 March the Belgian went in lockdown. Every non-essential store had to close, gatherings of all kinds were banned, non-essential travels were prohibited… until at least 5 April.
• The decission was made to extend the measures until at least 19 April.
• On Wednesday 15 April the governement decided to extend the measures once more until 3 May.
Governement decisions
P. 5
Impact on tripsKey figures
Sources: Belga / De Lijn / MIVB / TEC / NMBS
90% of passenger
flights cancelled
De Lijn: -92% travelers / 10-15% less vehicles
MIVB: -75% travelers / 33% less vehicles
TEC: 10% less vehicles
10% occupation in trainsNo more departures after
8pm
<50% less car traffic
Restriction on trips with more than 2 persons
P. 6
Footfall decreaseFootfall is at the heart of (D)OOH. Over the years we spend up to 25% more of our time outside of our homes. The recent events however forces everyone to stay inside for their own good.
On 29 March Google shared their data on the exact impact this had on our mobility. The numbers do not lie: compared to baseline (1 month basis) there has been a significant drop in all kind of trips and in all regions.
Biggest loss is of course for the recreation and hospitality undustry, being the first ones that had to close their doors to the public, we see a drop of 84% compared to baseline on a national level.
The category grocery and pharmacies is the less impacted as they remain open to public yet with restrictions. An uplift has occured at the beginning of the lockdown in Belgium, at the beginning of phase 2 there’s a decrease as the new measures restrict trips and encourage to go to the store alone.
Full report can be found here
Source: Google COVID-19 Community Mobility Report / Posterscope
Recreation and hospitality industry
Grocery & pharmacie
P. 7
Respons from advertisersSome sectors suffer more than others. As currently almost all planes are cancelled and everyone is encouraged to stay home, travel agencies stopped advertising for the moment. Movie theaters are closed so advertising the new blockbuster has been put on hold for now… These are obvious ones, but almost every advertiser reconsidered its media spends and strategy during this crisis leading to an enormous amount of cancellation or postpones in the whole media sector. In Out of home, known for its hard cancellation policy, campaigns were rescheduled without charge.
Experts say it will take a while before the campaigns will come back, as they will need to be reconsidered or completely rebuild. Some brands are already rethinking their communication, not giving in to the current cancellation trend, by adapting the message to the COVID 19 lockdown situation. Telling everyone to stay home, thanking healthcare workers, stressing the importance of social distancing and respect, helping out the hospitality industry… These brands have sensed the mood of their stakeholders and are communicating according to it but have also understood the importance keeping the advertising up even in harder times.
Source: UBA / De Tijd
P. 8
Advertising in a downturn2
P. 9
IPA Study - Advertising in a downturn
IPA study revealed that cutting advertising spend in a downtown can
1) Impact Brand Health
2) Impact Business Performance
Key Findings:
• Cutting budget will only help defend profits in the very short-term
• Ultimately the brand will emerge from the downturn weaker & less profitable
• Better to maintain Share of Voice (SOV) at or above Share of Market (SOM) as the longer-term improvement in profitability is likely to greatly outweigh the short-term reduction
• If other brands are cutting budgets the longer-term benefit of maintaining SOV at or above SOM will be even greater
P. 10
Impact on business performance – The time lag effect
Need to consider the long-term payback of advertising
Budget cuts lead to longer sales recovery periods
Benefits of promotional activity will be short-lived
• Long-term payback from advertising can be 4x greater than the short term
• After a budget cut, the long-term business harm will be considerable (although not noticed at 1st)
Cashflow for companies, D2D Modelling
• Modelling demonstrates that a 1 year budget cut can lead to lost profitability over time
• It can take up to 5 years to fully recover from an annual cut in marketing spend
D2D Modelling
• The diversion of communications expenditure into price promotions is a common response to a downturn
• Widespread promotional activity means consumers expect “incentives” so they lose their efficiency generating incremental sales … resulting in a loss of profitability
Source: D2D
Budget saved
Profit Lost
Bottom Line Impact
Time to recover
Zero budget(Year 1) £1.8m £3.5m £1.7m 5 years
Half budget (Year 1) £0.9m £1.7m £0.8m 3 years
Budget maintained all years
Zero budget (year 1)Half budget (year 1)
Time
Sale
s
Sale
s
Year 1 Year 2 Year 3 Year 4
tShort TermLong Term
Promotional activity (Incentivise spend)
Promotional efficiency (Incentive efficiency)
Spen
d / e
ffici
ency
Time
US Automative Example, D2D
P. 11
Impact on business performance – Focus on the long-term
When SOV exceeds SOM brands can expect to see
gains in market share
Severe budget cuts generate short-term gains
but long-term losses
Maintaining budget or moderate cuts are far more
profitable long-term • Estimated “rule of thumb” that for every
10 points that SOV exceeds SOMthen a brand can expect to gain one point of market share per annum
• Use this rule of thumb as forecasting tool for expenditure strategies in a recession
IPA DataMINE (127 cases)
• As marketing has a lagged effect on sales, in the 1st year of a budget cut operating profit can have a short term improvement
• However, operating profit is severely affected in subsequent years
IPAdataMINE
• Maintaining budgets or moderate cuts (e.g. 20%) may reduce operating profit in year 1, but in the long term will generate higher operating profit overall
Source: IPA Datamine 880 Case Studies Peter Field
Year 2007 2008 2009 2010
Brand X Sales £317m £314m £282m £269m
Marketing Spend £7.9m £0m £0m £7.9m
Total Costs £278m £270m £251m £253m
Operating Profit £39m £44m £31m £16m
Market share growth vs “excess” of share of voice
SOV - SOM
Market share gain (% points)
YearOperating Profit
2007 2008 2009 2010 08-10
Severe marketing budget cut (-100%
in 2008 / 2009)£39m £44m £31m £16m £91m
Moderate marketing budget cut (-20% in 2008 / 2009)
£39m £38m £33m £32m £103m
Maintain marketing spend (-0% in 2008
/ 2009)£38m £36m £34m £38m £108m
IPAdataMINE
P. 12
Impact on brand health with advertising budget cuts
P. 12
Share of voice needs to be maintained
2 key brand metrics affected by budget cuts
Word-of-mouth accentuates the effects of budget cuts
Source: Millward Brown
• Strong relationship between share of voice and share of market
• Brands that cut their ad budget relative to competitors are at greater risk of share loss
354 brands grouped on basis of relative ad spend
• Brand usage and brand image both suffer when brands “went dark” i.e. cease to spend on communications for 6 months +
• 60% of brands “going dark” decline on at least one key brand metric
85+ brands with no TV spend for 6+ months
• A brand judged to be on the way down, because it has fallen silent, will very rapidly see this manifested in word-of-mouth, which will accelerate the perception of failure
% L
osin
g Sh
are
Media Pressure(Share of voice – Share of Market)
0% 30%-30%
0%
50%
100%R2 = 0.74
Increase
Decrease
NET change
Brand Usage Brand Image
+11
-24
+22
-28
-13
-6
P. 13
Opportunities from continued advertising during a downturn
Source: Forbes
Project Image of Corporate Stability Re-Position Brand when competitors cut back on spend
Good Value Media as cost of advertising may drop
Improved SOV amongst competitors will increase SOM in both the short & long-term
P. 14
Advertising during a downturn has helped many brands over time
Source: Forbes
Kellogg’s Rice Krispies launched in the 1920s great depression
Pizza Hut & Taco Bell advertising in 1991 recession stole McDonald’s share
Amazon’s continued innovation in the 2009 recession increased sales
• Post was category leader but cut advertising budget significantly, whilst rival Kellogg’s doubled its advertising spend and introduced a new cereal called Rice Krispies, featuring “Snap,” “Crackle” and “Pop.”
• Kellogg’s profits grew by 30% and became the category leader, a position it has maintained for decades.
• In the 1990-1991 recession Pizza Hut and Taco Bell took advantage of McDonald’s decision to drop its advertising and promotion budget.
• Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.
• Amazon sales grew by 28% during the 2009 recession as it continued to innovate with new products. Most notably with the new Kindle products which helped to grow market share.
• In the minds of consumers, Amazon cemented its reputation as a provider of quality, low-cost products as it introduced lower cost alternatives consumers needed.
P. 15
OOH during a lockdown3
P. 16
OOH during a lockdownLess traffic = less impact?
We cannot deny that the main driver for the success of an OOH campain is the mass being out of their houses. Once everyone is asked to stay inside, what good can come out of an OOH campaign?
The mass might be missing, the impact remains. Several brands have adapted their message during this crisis to encourage (and even force) people to stay safe and thus stay home.
Sales house have also decided to share the same message and be united during these exceptional times. The blue posters encouraging everyone to #stayhome and flatten the curve cover the whole country since mid-March.
Following slides are a deepdive into some campaigns that have successfully adapted their messaging comprehending 100% the one of OOH’s key elements for a succesfull campaign: the right message at the right time and at the right place.
P. 17
OOH during a lockdownExamples worldwide
Respect social distancing, that’s the message Coca-Cola is giving using a large billboard format in Times Square, a major commercial intersection in Midtown Manhattan in New York City. The few people walking arount will notice that the name has received more spaces as to create some distance as well within the message.
Two students of the Miami Ad School have created an OOH campaign to encourage (force) people to stay at home. To do so, they’ve created some posters as if it were a Netflix campaign containing some spoilers of some of Netflix’s most popular shows. The campaign quickly got viral and even got a respons from Netflix.
P. 18
OOH during a lockdownExamples Belgium
ABInbev decided not to advertise as planned but instead gave away their booked locations to the governement so they can provide the most appropriate message during these difficult times.
The message is displayed at Dansaert in Brussels and at the Frankrijklei in Antwerp until end of april.
Douwe Egberts decided to adapt their message to the currect situation.
The campaign on the digital screens of Carrefour (JCDecaux) showed different simplistic messages that implied that grocery shopping should be done with respect.
P. 19
OOH during a lockdownExamples sales houses
The OOH is hit hard by the currect situation. We’ve seen the impact on traffic of all kinds due to travel restrictions, the prohibition of public gathering, of indoor social activities… Advertisers have reconsidered their OOH spending because of the reduced traffic.
But that does not mean the OOH sales houses are doing nothing. Across the world messages of support and thank you’s are displayed on the most impactfull inventory.
They help spreading a positive but also helpfull messages in times were we need it the most.
In Belgium the same trend is seen. As of week 13, Clear Channel and JCDecaux have decided to dedicated the majority of their inventory to the good cause of spreading the right messages:Stay home, flatten the curve, stay safe.
This will be maintained as long as needed to make sure we can go back to normal in the near future and enjoy the wonderfull world of out of home as we know it.
P. 20
What’s next?4
P. 21
After lockdownThe end of an era
The future is yet unclear. When the lockdown will come to an end and how the measures will be lifted are still unknown factors. What we know are the strenghts of an OOH campaign and that the missing key element will return, meaning we’ll be back outside and we’ll be able to enjoy it once again.
If we do want to make some assumptions on how life will be after the lockdown we could look at how China is behaving.
Recently the security measures have been lifted and even Wuhan, where it all started, is set free again. How do the people there react?
By rediscovering the country, by going back to work, by doing some offline shopping and by staying in the country… by giving OOH it’s audience and so it’s strenghts back.
We know about the importance of keeping the communication up if possible even in difficult times – so how can OOH help?
Source: CNN / Profacts
A recent study showed that only 21% of the Belgians is
planning on going on vacation this year.
We do not know what the weather will be in the summer, but we know OOH budgets to
be slightly more attractive during this period
When the mass is back out in the streets: OOH knows not only how to reach them but
also knows where and when.
P. 22 Source: IPA TouchPoints 2019 – Weekly reach and mean hours/day of commercial media channels#IPATouchPoints
0 0.5 1.0 1.5 2.0 2.5 3.00
10
20
30
40
50
60
70
80
90
100
Commercial BVoD
Commercial Live Radio
Magazine (Print)
Magazine (Online)
Commercial PodcastsCinema
Commercial Streamed Music Commercial RoD / Radio Podcasts
Commercial Online News
Other Online VideoNewspaper (Print)
Newspaper (Online)
Functional Internet
Social Media
Commercial Live / Recorded TV
OOH
% W
eekl
y R
each
All A
dults
Mean hours / day
OOH generates broadcast reach, vital in a recession
P. 23
Reach is the key driver of business effects
Brand awareness over the short and long termOOH’s high reach generates +20% business effectiveness
“OOH ALSO AMPLIFIES OTHER MEDIAPress (+7%), Radio (+17%), TV (+17%), Social (+20%), Search (+54%)
0 %
5 %
10 %
15 %
20 %
25 %
30 %
£ 0
£ 50.000
£ 100.000
£ 150.000
£ 200.000
£ 250.000
£ 300.000
£ 350.000
31-Dec-2018
7-Jan-2019
14-Jan-2019
21-Jan-2019
28-Jan-2019
4-Feb-2019
11-Feb-2019
18-Feb-2019
25-Feb-2019
4-Mar-2019
11-Mar-2019
18-Mar-2019
25-Mar-2019
1-Apr-2019
8-Apr-2019
15-Apr-2019
22-Apr-2019
29-Apr-2019
6-May-2019
13-May-2019
20-May-2019
27-May-2019
3-Jun-2019
10-Jun-2019
17-Jun-2019
24-Jun-2019
1-Jul-2019
8-Jul-2019
15-Jul-2019
% A
d Aw
aren
ess
Budg
etWeek Commencing
Traditional 2 week burst Lighter For LongerHeavy burst comms awareness Light weight comms awareness
Weekly Reach
Source: IPA Marketing Effectiveness in the Digital Era & IPA OOH Database Analysis 2017Source: Dentsu Aegis Channel Planner
OOH can be planned, i.e. lighter weights for longer, to maximise OOH advertising awareness and influence ROI
Lighter weights for longer can not only make OOH more effective, but also provides more weeks to amplify other media
P. 24
OOH boosts both short-term sales and branding Important as largest effects of recessionary advertising are in the long-term
Source: IPA OOH Database Analysis 2017OOH Power Users: OOH 15% of Media Budget (55 cases) vs Non OOH (92 cases)
Campaigns with a High OOH budget
BOOST BRAND VALUES / METRICS
Sales Activation Effects
+ 47%Long Term Business Effects
+15% Customer Acquisition+26% Profit+30% Market Share
MORE EFFECTIVE
+41% Brand Esteem
+32% Fame
P. 25
Brand Trust is especially important in a recessionCO
MPE
TENC
E EMO
TION
• Financial Performance
• Product Concerns
• Functionality
• Innovation
• Reliability
• Quality
• Customer Concerns
• Societal Concerns
• Heritage
• Sincerity
• Ethics
• Care
In a recession, consumers focus on the 2 key drivers on brand trust
2019 Edelman Trust Barometer Special Report: In Brands We Trust?
Brands and Consumer Trust summary report
1) Core Product Benefits 2) Family / Community Values
P. 26
OOH builds brand trust
1/2Feel as OOH is in the public space / familiar environment makes it more trustworthy
Over
OOH is in a familiar community and public domain
OOH delivers relevant messages, proven to be more effective & trustworthy
OOH is a high frequency channel on a large canvas driving brand fame & trust
Source: OCS, Sample size: 2,897 GB Based Consumers (4 statements on familiar environment / public domain) Source: Moments of Truth, 2020 – Combined Neuroscience, Ad Recall and Sales Effect
+17% Increase in effectiveness from contextually
relevant messages
Increase in honest / transparent metric amongst
consumers with multiple OOH exposures
Source: On Device Research Studies Average Equity Score for 3 Broadband / Energy Provider Campaigns
+8%
P. 27
OOH advertising is trusted
Source: OCS Belgium 2.045 respondents / Nielsen
110affinity index / adults
More likely to trust brands that are
advertised in (D)OOH
144affinity index / students
108affinity index / actives
Panels blend seamlessly into the environment. They’re strategically placed to be non-instrusive yet with a high capability of engaging with customers when they are
open to brand interaction.
About 56% of the population trusts messages displayed on billboards and other OOH formats. 58% of the customers who have seen the OOH ad are likely to
take action.
Advertisers dedicating budget in OOH saw an increase of more than 20% in brand trust.
P. 28
“Innovative” as a trust driver
73%Innovative Audience - Very Important
Now thinking about brands and companies in particular ... Which of the following characteristics are most important in helping you trust them?
Source: OCS
The OOH audience is often more receptive to trust drivers
Somewhat Important
Notice DOOH in National Rail Stations
Very Important
51% 22%
Index 108
75%agree
Notice ad in restaurant/barsIndex 106
69%Agree
Notice ad at supermarketIndex 152
29%strongly agree
Notice DOOH in street
Index 105
72%Strongly agree
Notice (D)OOH Billboard
Index 146
41%Strongly agree
01020304
Recessions provide opportunities and advertising should focus on core brand values and consumer
Brands advertising in a downturn benefit in both the short term but especially the long-run
Numerous reports / case studies prove that brands should continue to advertise in a recession
OOH’s broadcast reach and key attributes demonstrate it is perfectly suited to help brands through a recession
Summary