Advertising in the wake of Coronavirus in MENA
Brands and the broader marketing community across the MENA region are starting to come to terms with the impact of the COVID-19 pandemic. They’re facing up to how it has impacted their ability and freedom to trade, radical changes in consumer behaviour, and what the resulting consumer media consumption patterns mean for marketing investment medium-term.
According to the World Federation of Advertisers’ COVID-19 Response Tracker, across the world around 40% of brands have deferred campaigns by six months and more than half have negative feelings about the current business environment. While there may be signs of modest improvements in business sentiment by year-end, 2020 will clearly be very different compared with the expected boom just six months ago.
In the MENA region, a recent survey showed that 70% of advertisers expect to decrease spend this year. With consumers shopping less often and spending less money – particularly in bricks-and-mortar malls, though still online – many brands are cutting creative spend, preferring to sweat existing assets longer. Equally, they’re rightly wary of deciding which campaigns to continue investing in and concerned that messaging does not to appear to be capitalising on the pandemic. With consumer freedom of movement fundamentally changed, media consumption patterns change too, and many brands are reshaping media channel mixes. Out-of-home and cinema are out of favour for obvious reasons, while other mediums such as gaming are now being considered.
Where Advertisers Should Focus?
With marketing budgets tightening as result of the pandemic, I believe there are three areas where advertisers should focus attention in the months ahead: contract compliance, future agency strategy, and transparency.
Brands should assess the extent to which both creative and media agencies are complying with existing agreements. When agreeing to two-to-three-year deals, both parties are usually quite clear about what they aim to get from the exchange, but business environments evolve. Those who negotiate deals are rarely the people who use them day-to-day, and misunderstandings often arise. Budgets, markets in scope, services requested can all change during the agreement’s lifetime and this can lead to misunderstandings on costs. The turmoil created by the pandemic means that the impact of these changes can be especially profound.
Consider the addition of a new market by an advertiser: the agency may need to subcontract the work, adding layers of complexity and fees to service a market where it has no presence. One important issue for advertisers is often whose responsibility is it to keep tabs on these frequently-undocumented alterations and ensure value for money; is it procurement, marketing, legal, or finance? If there are misunderstandings, the agreement can quickly become unfit-for-purpose. Only by reviewing compliance can advertisers identify and correct inefficiencies, recover any overspend, and prevent future waste by enshrining the details in a new agreement.
Future Agency Strategy
With such dramatic changes to the customer landscape and marketing strategies, it may well be time to revisit agency strategy. Questions advertisers should consider include:
- Given the significant changes to marketing plans and resulting media touchpoints, what creative services and assets do we need to bring campaigns to market?
- Can we sweat our assets longer? Could we simply adapt global creative for a while, or do we need to continue to develop local creative, specific to countries in MENA?
- Taking these issues into consideration, how many creative agencies do we need? Could we rationalise our roster?
From a media perspective there are a range of options from in-housing some or all media buying to consolidating traditional and digital into one buying entity if two are used. Similarly, for those advertisers experiencing their consumer base shopping increasingly online, investment in merchandisers and in-store retail marketing may also need to be scaled back. Just as taking the decision to deploy merchandisers at retail should increase sales via improved look-and-feel for the advertiser’s brands, so advertisers also need to look at whether such investment still yields meaningful return. Bold choices may need to be made here – and fast.
In addressing these issues, brands should also consider what commercial model and structure they need; we estimate that there are 30+ different agency models on offer today. For instance, with downward pressure on overheads and headcount, in-housing can be seen as a burden, but with asset-based pricing and in-housing an external agency, there are definite cost benefits from some aspects of in this approach.
Finally, bearing compliance and agency strategy in mind, brands should also seize the opportunity to review the extent to which their contracts and processes are sufficiently transparent and agile for the marketing challenges ahead. Easy-to-understand, commercial models that are flexible and scalable should be the priority. Given all the other decisions brands have been forced into by the pandemic – on rightsizing teams, streamlining activations and investments, and altering ways of working – there’s a lot to consider and assess.
Advertisers and agencies work best when they work together in genuine partnership. We’re not suggesting that brands should take decisions – about compliance, strategy, and transparency – in isolation from agency partners. But the entire media and marketing ecosystem exists because of brands’ investment, so it’s natural that marketers should take the lead in reshaping how they do business as we enter this new and very different world.