Rightsizing Marketing Spends in Crisis

History reveals that brands that actively market during a time of crisis experience higher sales than those going off the radar. Also, can brands now build connection and trust with people instead of brazenly attempting to create a demand for their products and services?

I am reading a lot nowadays of how hotel companies all over the world are putting a freeze on their marketing spends during the current pandemic and it leaves me wondering whether it is the right direction to tread. Pure economics does dictate that if consumers are not spending money on products and services, there is apparently no sense in spending on marketing them. This is why when a crisis hits, the marketing budget is normally amongst the first to go. However, across the board marketing cuts may reflect a short-term view of the ongoing global pandemic’s implications.

Historic data and research have proven time and again that companies that actively market during a time of crisis experience higher sales and net income than those going off the radar. While brands may think that when consumers are ready to purchase again they will begin marketing them, in reality it may take a long time for the crisis to be over, and during this time a customer recall for a brand may have dipped drastically. In the current crisis of the global pandemic we are not in a short-term emergency and hence we need to have a longer term vision and before cutting expenses we need to understand both short-term and long-term revenue implications of such drastic pull back measures.

How much a brand invests in maintaining its relationship with its customers during the crisis really may define its long-term success. Last month, Airbnb was forced to decrease its internal valuation by 16% as a result of a 40% drop in bookings. Airbnb hosts are angry about the company’s recent rescinding of cancellation fees and guests (post lockdown) are also now wary of using Airbnb as Airbnb hosts may back out of commitments and even their relationship with Airbnb, preferring other long-term rentals in the current scenario. If there was ever a time Airbnb needed marketing, it is now to keep both sides of its customer base (the hosts and the renters) going. Instead, it has failed to mitigate the damage of a negative impression amongst guests as well as hosts. The result is that as hosts lose revenue and feel unsupported by the company, they will leave (the exodus has already begun) and may not return.

What would have saved Airbnb from a very public backlash is a shift in how they think about their marketing actions: from creating a demand for their products and services, to maintaining their relationship with both customer groups. 

While one certainly needs to control costs in these war-like days, marketing budget rightsizing must reflect the shift from spurring demand to maintaining customer relationship or else marketers are in danger of losing the connection with their business partners and customers, as the Airbnb ordeal shows. Actions and not words are most effective. Though we are seeing most brands attempting to outdo each other through their creative campaigns as public service announcements, potential customers in quarantine don’t necessarily need a reminder of their dire situation. We are already seeing how entertainment, exercise and any sort of distraction works better than polished imagery and advertising. Whilst everyone is in quarantine, customer oriented gestures work better than being bombarded with promotions. Brands need to think about what would make their customers feel good or how they may bring them joy and distraction, or even what is the task which is required to be done for their brand community right now.

Ideas like recording videos for social media, enhancing digital marketing, making FAQ videos, interviewing guests and employees, using SEO and online marketing as solid avenues to build connection and trust with people or hosting an online video space once a week for people to check in and have a light discussion are already being implemented by some self-starters in the hospitality space and more brands need to ideate on such marketing initiatives to keep up their ‘mojo.’

As rightly said by Brand Gurus, here is an opportunity for brands across the globe and across businesses to capitalize on the shift from products to content, from physical stores to virtual membership, from transactions to inspiration, from buying to socializing and brands must consider this a necessary and holistic business adjustment. Even as hotel companies are adapting and evolving through these extremely trying times, it will be interesting to follow their marketing ethos and its evolution thereof.

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