Decades of research studies have shown that investing in advertising and marketing during a recession will enable companies to increase market share and recover more quickly when the recession ends. Nevertheless, the general view is that marketing is one of the first business functions to face budget cuts when times get tough.
It's now clear that the US economy is in recession because of the impacts of the COVID-19 pandemic. As COVID-19 spread across the country, it quickly became apparent that the pandemic would have a significant impact on marketing. But early in the outbreak - think March and April - there was little evidence on exactly how significant the impact would be or how long it would last.
Within the past several days, however, research has been published that provides several important insights about how COVID-19 has affected marketing. And the findings about marketing spending are particularly interesting - and a little surprising.
The CMO Survey (COVID Edition)
The findings of a special edition of The CMO Survey were published last month. The CMO Survey is directed by Dr. Christine Moorman, a professor at Duke University's Fuqua School of Business. It is conducted twice each year, and the results are usually published in February and August. Because of the COVID-19 pandemic, a special survey was conducted in May to capture the views of senior marketers at for-profit US companies regarding the impact of the pandemic on marketing. The survey produced a total of 274 responses.
The special survey addressed a wide range of issues. In previous posts, I discussed the survey's findings about how COVID-19 has changed customer behaviors and how the pandemic is impacting company sales and profits. This post will discuss what the survey results reveal about the impact of COVID-19 on marketing spending.
The survey asked participants what percent of their marketing budget had been lost or gained due to COVID-19 in the two months preceding the survey. The average change in budget reported by survey respondents was +5.2%. In other words, this survey panel, on average, saw their marketing budget increase in March and April. About 29% of the respondents said their budget decreased during that two-month period, while 30.3% reported no change, and 41.0% said their budget increased.
It's important to note that there was a wide variance in reported budget changes. About 28% of the respondents reported a budget increase of 20% or more, while 21.2% reported a budget loss of 20% or more. There was even a significant variance among B2B companies. Respondents from B2B product companies reported an average budget increase of +2.82%, while respondents from B2B services companies reported an average increase of +8.74%.
Other findings in the survey suggest that the COVID-19 pandemic has caused marketers to become more focused on customer experience and social media.
- In May, respondents, on average, said they were devoting 16.7% of their marketing budget to customer experience initiatives. That was up from 15.2 % of the budget in the January 2020 survey.
- In May, respondents, on average, said they were spending 23.2% of their marketing budget on social media. That was up from only 13.3% of the budget in the January 2020 survey.
The Merkle Research
The CMO Survey isn't the only recent research showing that marketers are increasing spending during the pandemic. Last month, Merkle surveyed 400 marketers at major US and UK companies spanning a wide range of industry verticals. In this survey, a majority of the respondents (52%) said they had increased marketing spending since the beginning of the COVID-19 outbreak.
When participants in the Merkle survey were asked to identify their most important tactical priorities during the pandemic, the top three priorities selected by survey respondents were:
- Trying new marketing technologies or features (50% of respondents)
- Becoming more consumer centric in marketing messaging (45%)
- Developing new transaction fulfillment capabilities (42%)
These research findings indicate that many marketers (and the companies they work for) have recognized the importance of continuing to invest in marketing during the COVID-19 recession.
Image courtesy of Sy Clark via Flickr CC.