Finding a new normal for marketing means planning for future growth, even in a radically changing environment. Managing marketing investments during a recession — and particularly this pandemic-induced one — warrants a different approach. Here are several ways to maximize returns:
While it may feel like you are preserving resources by cutting the marketing budget, you will end up giving up more in lost revenue and opportunity. As discussed, every very dollar wisely invested stands to make a stronger return after the downturn — especially if your competitors have fallen silent. Additionally, according to Nielsen, on average brands realize 47% of their marketing budgets after one year. That means a reduction in spend over even a few months can have a big negative impact downstream. What’s more, messaging from brands that stop advertising now may be less effective when they ramp up their efforts again, potentially reducing patient volumes, in the case of healthcare, over the long-term. After all, what message does a hospital or healthcare system send when it is suddenly invisible to the people it has built bonds with through marketing over the years?
Share of Voice (SOV) is the percentage of category advertising expenditure spend by a brand. SOV is strongly correlated with market share — if SOV falls below a brand’s share of market then market share is likely to fall over the year following. Businesses that defend their SOV in a downturn can do so more inexpensively than in normal times, therefore such a strategy can be looked upon as a low-cost growth opportunity.
According to data from the Institute of Practitioners in Advertising (IPA), brands that took advantage of low SOV costs in the last recession to boost their SOV achieved impressive business gains. The following chart examines three equal-sized groups of cases with different advertising investment strategies measured by Excess Share of Voice (ESOV) — the difference between a brand’s SOV and a brand’s share of market. Group one, whose ESOV was zero or less were at advertising maintenance levels or lower. Group two had modest growth levels in ESOV in the range of 0-8%. Group three saw the downturn as a time to strike, and they benefited mightily with 4.5 times the annual market share growth. The conclusion is clear — while healthcare providers can be carried for a period on the momentum of previous brand-building investments, they cannot afford to coast in a downturn. Brands that are out of sight will, sooner or later, be out of mind for a large percentage of consumers.
New research by McKinsey on healthcare provider performance in recessions found that the gap between industry leaders and laggards widened in the last downturn and continued throughout the recovery period and beyond. Like the Bain & Company research referenced in the last post in this series, it found these leaders did several things differently, including creating strengthening their balance sheets, cutting costs ahead of the recession and focusing on growth — even if it meant incurring costs (e.g., driving volume to win share from competitors). McKinsey also suggested that healthcare providers get ahead of the game by building “resilience” into the organization. A key element of this is aligning on a set of well-defined recession scenarios.
Movéo suggests taking an agile planning approach around three different scenarios in this downturn, all tied to the pandemic — 1) a general continuation of the situation we have today — i.e., virus containment more or less dependent of geography, 2) COVID-19 spiking again in your locality, 3) an effective vaccine or anti-viral therapy, likely beginning in Q2, 2021. Each of these scenarios would require a different level of marketing spend, different messaging and use of different tactics.
In a surge scenario, disease control fundamentals should again be emphasized, but also reassuring messages that reinforce an emotional connection with the brand and demonstrate empathy (“We’re going to get through this together”) are vital. Spend will be lower because elective procedures will likely again be curtailed. Also, communicating actions beyond campaigns — charitable relief, frontline assistance, reinforcing public health messages are tonally appropriate under this scenario.
In a mitigation scenario, along with key service line messages, re-statement of the brand purpose is important. Regardless of patient volumes in the downturn, healthcare providers shouldn’t panic and alter their brand’s fundamental proposition or positioning. Even cash-challenged institutions would be wise to commit a portion of their marketing resources to reinforcing the core brand positioning. Reminding consumers of how the brand matters can add to the cushion provided by previous investments in building brand and patient satisfaction. Again, marketing spend should be normalized. Most businesses today already spend far less than 50% of their budget on brand-building so there is certainly no sense in cutting brand building further unless survival depends on it.
An effective vaccine(s), better testing and tracing, new therapeutics, or any combination of these things, may mean the shape of recession is relatively short but sharp, rather than deep and long. Pandemic-based downturns tend to be v-shaped, and during the last 100 years most have lasted around a year, according to the Harvard Business Review. This means that if all restrictions are lifted, there is likely to be an enormous collective release of pent-up demand for healthcare. A return to a blend of brand and service line marketing at normal spend (or even increased spend as competitors re-emerge) will be in order. The appropriate tone of advertising in this “new normal” may be different though. New human truths are emerging in our society, based on evolving behaviors and sentiment. Healthcare changes (e.g., increased use of telemedicine) may be institutionalized by the first disease-driven recession of the modern era. Providers will need to carefully re-evaluate their messaging through a new lens to determine if it still meaningful to their consumers in light of these. This may result in resetting promises to constituents.
In a downturn, using marketing analytics is critical to ensuring you’re deploying every dollar effectively. According to Nielsen’s long-term effect model benchmarks, having the right data, methodology, insights and activation can lead to, on average, a 7x return on the cost of the analytics program itself. Brands have an opportunity to use data to re-evaluate their traditional media channels, identify media consumption changes within target markets and adjust accordingly. And adjustment is key — healthcare consumer decisions are dynamically changing on the basis of availability and health conditions in the current environment. Healthcare providers must consider the long-term impacts of their marketing efforts, but also need data quickly to make short-term moves and evaluate — on a daily basis — as the environment continues to change.
This concludes our series of posts on the topic of healthcare marketing investment during a recession. While they have expansively ranged from an in-depth analysis of consumer and business behavior to high-level best practices identification, they can ultimately be summed up quite simply: in good times, marketing is an opportunity; in tough times, it is a necessity.