Coronavirus has hit every headline over the last few weeks, causing a sense of global panic. It’s a time of great uncertainty, raising concerns around both the global health system and the economy. We sat down with our CEO, Kevin Freedman to hear his thoughts. With 30 years’ experience in leading our agency through the ups and downs of the global economy, he shared some advice on how brands and agencies should approach this difficult situation.
Q: The coronavirus has become a major threat to the world economy; how can brands prepare to mitigate its effects?
A: Brands are now in the eye of the storm. Companies across a range of industries will be moving fast into cost-cutting mode, which will inevitably impact their marketing spend, as it’s a highly controllable cost. It’s hard to predict how hard the crisis will be. Most businesses may still be performing well, but are now faced with a highly uncertain period – whether it will take the form of a short-lived economic shock or of a more permanent recession, it’s likely to cause significant changes to consumer habits either way.
There are a number of actions that companies can take, depending on how heavily their individual sector is impacted:
- Try to measure how the current economic situation might impact their growth, preparing for slower growth, no growth or a decline.
- Analyse their cash flow, balance sheets and funding structure to understand their viability as a business.
- Focus on customer retention, ensuring that the same level of service is delivered despite the difficult situation.
- Identify geographies and the products that have the greatest potential.
- Invest in fewer, bigger products and markets.
- Cut the right costs – avoid cutting into any customer facing areas or growth investments.
- Be prepared for longer decision cycles.
Q: Adland will also be impacted by the pandemic; what’s your advice to advertisers and to agencies?
A: My advice to advertisers would be:
- Don’t cut ad spend, continue to invest in brand building, and be strategic about your chosen channels and markets.
- Continue to invest in creativity.
- Look at the efficiency of your model – are you still using that expensive ad agency? Or a highly fragmented agency ecosystem? Is your in-house structure effective? Now’s not the time to waste money.
- Look at how your content is performing locally, so you can measure how the crisis is impacting your campaign success.
- Consider reducing your spend by scaling your in-house resources and working with a creative production company.
- Create fewer, bigger campaigns as opposed to inefficient always-on content.
- Build a flexible content calendar that can cope with uncertainty.
- Choose your channels wisely – in the midst of the pandemic, keep your TV and social spend up and your cinema and OOH down.
- Don’t forget who you are as a brand.
My advice to agencies would be:
- Be on top of your cash flow.
- Put your staff’s safety first, adopting remote working and communicating constantly.
- Invest in your current customers rather than chasing new business.
- Keep making long term investments in innovations.
- Be realistic, can you last a 12 month downturn?
Q. Global warming, the rise of neo nationalism and now pandemics… There are a lot of new parameters to consider when trading on a global scale. As a global marketing expert, do you feel that globalisation is entering a new era?
A. The global wave of the virus shows just how global the world has become. It also underlines universal human values – a need for health, family, security and certainty. We’re entering a new phase of globalisation, Globalisation 2.0, which will entail:
- More sustainability – it’s no longer just about chasing the lowest cost. Companies will take a more local and quality-driven approach to supply chain.
- More flexibility in product design, with shorter lead times from design to product launch, allowing to adapt quicker.
- More versatility in sourcing, with a mix of onsite, onshore, nearshore and offshore.
- More agility in the workforce, with a mix of on-site and remote workers.
Q. And, as a CEO with offices in different regions, how are you facing the coronavirus crisis?
A. I’m putting my staff first. We’re going remote for a few weeks to minimise the risk of infection. We’re also minimising travel; for now all company travel is on hold. But we’re keeping up communication, sharing news and updates via video – nothing gets in the way of my Friday update! Our technology is all up to scratch, we made sure to test all of our systems before going fully remote, including an IT upgrade.
Q. Finally, as someone who’s run a business for the past 30 years and has been through many crises, what’s your advice to businesses out there?
A. There’s an opportunity for the smart and the strong in every downswing. Here’s a few things to consider:
- Focus on growth markets, growth products and productivity opportunities.
- Communicate with staff and engage the team in decision making.
- Make sure you have the balance sheet you need to trade through uncertainty.
- Get your working capital under control, don’t be your customer’s banker.
- Maintain market share and focus on retaining customers rather than growth. Push for growth but don’t rely on it.
- Invest in brand and product for the long term, looking at the next 5 years.
- Ensure you have a secure income stream – consider repeat purchases and subscription models.
- Consider your pricing model. Do your clients have high switching costs? How can you decrease your cost base?
We hope this has been useful, if you’d like any further advice you can get in touch here.