You’re invited to AW2020, Advertising Week’s digital event, September 29-October 8 to help work through solutions to some of the advertising and marketing industry’s biggest problems. From climbing unemployment to racial inequality and an unclear future, now is the time, more than ever, to think and work together. Register to learn more.
Turns out we did build a massive wall in 2020, and then drove into it as self-imposed regulations crippled the U.S. economy in our effort to “flatten the curve” and save lives. Whether you believe these efforts went too far or not far enough, American business is now navigating an obstacle course with no real end in sight.
Things have been thrown further into a state of confusion by the very public murder of George Floyd at the hands of law enforcement officers. How brands should now live in light of this recent society altering event deserves more attention than we will give it here. For today, let’s address the first crisis of 2020 one last time, put a bow on it as it relates to our business operations, and free up space for the long-term societal shift that will require our full attention afterward.
Before police brutality and our failings as a nation to adequately address racial inequality, companies were already in a state of bewilderment, demonstrated by numerous reports of nervous brand advertisers halting, letting up on inventory demand, pulling ad dollars and generally freezing in place. There is little to be gained by this level of recessive adaptation, at least for those of us who have a choice. The only way for us to get through this is to, in fact, go through this. Lean in, dive in — the water is warm. While it may seem counter-intuitive, now may be the best time in your entire career to double down on marketing directly to ready consumers and do so profitably.
After all, with this degree of a pull-back, inventory availability is up, and advertising costs are naturally down for the foreseeable future. Publishers will not be announcing this, but when you lose 30% of your demand in an instant and continue sitting on the same supply, which is instantly worthless when unsold, you tend to get more flexible with your pricing. So, we are seeing digitally native, performance-focused brands enter these warm waters and achieve unprecedented efficiencies in acquiring customers and consequently ramping spend to great effect. Just look at e-commerce penetration. Over the past decade, e-commerce as a share of total retail sales increased; recent statistics show ecommerce brands’ share of retail sales in the U.S. rising 11 points to nearly 27% over the course of April and May alone.
That means demand is up and prices are down, allowing many Direct Brands to ride this black swan until it turns into gold. At this very moment, a D2C brand can likely acquire customers for the lowest cost that they’ll ever experience in the life of their business. Imagine how liberating it would be to not fret about when we are “going back to normal,” but instead shed the very concept of that and figure out what you can do right now to leverage the moment.
Of course, this is not a time to be exploitative and capitalize on the pain others are and will continue to experience as a result of the crisis and now the national unrest and widespread rightful protest that has followed. But if you can help reignite the economy and get more dollars circulating through the system, while creating jobs and providing meaningful goods and services to the public, why hold back when we need you? Indeed, compassionate attention to creative and messaging is the softer art of right now — striking the right tone, offering only what is most essential, demonstrating substantive efforts to make people’s lives better, in the most affordable way possible. Consumers do not need you to get sentimental, as much as they just need a good deal on the things that they want and need in this period. You can provide all of the above with authenticity, and growth does not require that you compromise your integrity. You just have to be extraordinarily mindful of messaging.
For those who get it, it’s working. With ad rates down, for now, there is wisdom in the concrete action of continuing, and even ramping spend, given the current desirable economics. Many of our clients have been realizing this opportunity. In fact, since the crisis began, 38% of our 2020 clients increased spend, including in categories like cleaning, home decor, and personal care. And, across cleaning, delivery services, personal care, home products, there’s notably more activity volume.
For a historic perspective on this type of thinking, and a lesson in how disruption becomes a necessity, let’s flashback to 2012 when we worked with Dollar Shave Club to push their way into offline advertising. This emerging popular consumer brand was novel because they actually shipped razorblades to your house. This is about the least innovative thing you could imagine today. But in 2012 that really was a breakthrough. Then, the whole startup world began migrating to this D2C model and so-called disruptive brands began unseating the establishment. As for right now, the overall impact in the simplest of terms is that nobody needs to go to the store anymore. Prior to the pandemic, this was already becoming the case. And now, here we are, experiencing a surge in demand for DTC brands, who early on during the lockdown ran out of inventory in categories like food delivery, exercise equipment, and even bidets.
If you consider the new opportunities within our new mode from a tech and media delivery standpoint — they’re pretty easy to embrace as marketers. In early April, roughly half of Americans were working from home, and one-quarter of those said that coronavirus crisis had impacted their daily routines, according to The Spring 2020 Smart Audio Report by Edison Research and NPR, surveying adults 18+ years old on March 31 and April 1. With online as the dominant option for connectivity in the day-to-day, you can see in the data that people were forced to advance their online capabilities beyond where they would have been. You’ve got people really using technology now, day in and day out. There are new audiences entirely – people in their 70s and 80s – using video chat now who never would have done so even a few months back. They may have gone their whole lives without doing so. Further, with the quarantine in full force, smart speaker usage is up, led by an increased need for easy to access news coverage from trusted sources. While the pandemic and the “stay-home state” has forced it, everyone is getting more tech-savvy in the process, leaning in online more than they were. Every month in lockdown likely has catapulted society a year forward technologically. We would do well to move in concert with this trend.
Even when society as a whole re-enters live physical spaces, some of the habits of social distancing will stick and our new ways of doing things will persist. There will, without question, be to some degree a permanent shift in behaviors, resulting in a hybrid lifestyle between where we were before the crisis, and where we were in the middle of it.
This is therefore the moment that your business has to do exactly what it should have been doing the whole time, which is moving with technology and limiting the necessity and friction of having to go places physically. Last call: if you haven’t done that fully, now is the time. And if you’re already there, you have a first-mover advantage to build upon with an infinite edge this year. Now that the available marketplace has been expanded for you, this is the moment that you need to go all-in and be of service.
Picture the great restoration that is to come — how the exuberance of being set free may also ignite a sudden boom in sales. Look no further than people wanting — no, needing — to travel, making up for any number of expectations delayed by 90 days. This is on course to function akin to post-war retail spending once victory is declared.
When we come out of this, make no mistake, you will have built new muscles while running a business in quarantine and amid the most tumultuous, culturally charged period of our lifetimes. These can and now more than ever should be flexed for good. Do not let your new strength atrophy. Normal is gone. Adapt your business and your messaging fully today so you’ll be prepared for the long hard slog that lays ahead. Trust that you’ll also be prepared because the world has already started moving the way of the Direct Brand, and there’s no turning back now. Our national state of strife has become a forcing function as commerce adapts completely to a digital world and the rate of change has accelerated well beyond its natural momentum. That war is over. Ecommerce won, and brick and mortar can be thankful for its diminished role in the equation. Anticipate a world where the present changes are actually permanent and you will be well prepared to emerge from the health crisis, and fully engage with the demands of the second crisis, which will require great focus going forward.