Case study by Dada Agency

Advertising in times of crisis

Many economists agree that there will be a global recession in 2020 as a result of COVID-19 and that the recovery, while we are all optimistic, will be long. In these more difficult times, the natural tendency of companies is to reduce their spending. Among these, marketing expenses are often at the top of the list and are sometimes reduced to zero. However, many studies conducted following the last global recessions, including those of 2008, 1990 and 1982, have shown that companies that maintained their advertising during the recession recorded significantly higher net income gains not only during, but even more, two years after the recession.

According to a September 2019[1] Forbes Magazine article, during the 2008 recession, advertising spending in the United States fell by 13%. Research shows that companies that reduced their advertising spending during the recession generally saw their sales and revenues fall by twice as much. This situation has also increased the pressure on price reduction, and distribution has become more difficult to maintain without advertising support. In addition, the companies that reduced advertising took much longer to recover, as such action not only had an impact on sales, but also on market shares.

But of course, it can be difficult to justify advertising investments when employees are temporarily laid off or placed on work-sharing programs. No one knows what tomorrow will be made of and, in this sense, investments in marketing, although studies show their positive impacts, tend to remain an option that few companies opt for.

That being said, customers are still customers, whether they are buying right now or not. They don’t suddenly become strangers to your brands. It is therefore important to keep in touch with them, to maintain the conversation and the engagement. Companies that have the financial means can stand out from the crowd. There is less advertising noise, and target audiences are, in a way, more captive and consume media like never before.

When it is skillful, especially in these difficult days, advertising can reposition a product or  a service to take advantage of new purchasing concerns, give an advertiser a stable and credible image in a chaotic environment as well as the possibility of having a sustained presence in the advertising media, depending on the industry of course.

People were looking to connect before with their favorite companies or brands. They are still trying to do it now; maybe even more so. Their desire for connection has certainly not disappeared since the sudden arrival of COVID-19 in their lives.

(Re)invention in times of crisis

Psychiatrist and influential thinker Carl Gustav Jung has written:

“Crisis, upheaval and illness do not arise by chance. They serve as indicators to correct a trajectory, explore new directions, experiment with another way of life. »

This is true for humans and it is also true for companies because crises can be a powerful accelerator of new ways of doing things. It is in these times of crisis that unforeseen opportunities can emerge. We must therefore see the crisis we are currently experiencing as an ideal time to reinvent ourselves, even if this prospect may, in the short run, be difficult to explore.

By definition, crises have a very dynamic trajectory that requires a constant reframing of our plans. Same thing here; this is true for both humans and businesses. The initial ignorance, the total lack of understanding of what will be done tomorrow, has given way to discovery and the creation of meaning. Then you try to plan your response, get organized and think of the recovery strategy. Finally, you think and do the postmortem of your learnings. But this process must be quick to avoid getting stuck in the fine-tuning of things and slowing down the reactivity to changing circumstances.

In these challenging economic times, it is important to look to business model innovation to cope with ongoing changes in the market landscape. Every successful company already meets a real customer need with an efficient business model. But the new needs of clients emerging from crises also create opportunities for innovation. It is therefore important to ask questions, to reflect on its raison d’être, to question its positioning as a company and the possibility, precisely, of positioning itself differently. I’m sure your teams have the time to do so if they’re well-supervised in the process.

Threatened by the crisis, many companies focus on defensive actions. This is normal, especially when they have to perform layoffs or when cash flow is tight and unpredictable, but the Chinese experience shows that some companies have boldly innovated around emerging opportunities. [2]

Closer to our reality,  let’s take a look at the case of Seduction boutiques, which, like many others, had to temporarily close their retail doors on March 23. The company had to continue to “operate” in a different model, make a necessary transition from physical to digital, while being aware of the shortcomings of its online store – it is on track to be improved in the coming weeks. But in these times of crisis, we must proceed like start-ups, that is, by iteration, and accept that not everything needs to be perfect to be viable.

The search for happiness in times of crisis: Seduction case study.

Seduction is a leader in North America in the erotic products sales industry. Faced with the major crisis and mandatory containment, the company wanted to deploy an impact advertising campaign in order to “rediscover Seduction” with a wink approach and, taking advantage of the absence of its competitors in the advertising landscape, establish its position of leader in the market.

Seduction boutiques are not part of the essential services companies (and why is that?). They are therefore all closed until further notice. Their online shopping platform, which is expected to be completed in the coming weeks, aims to maintain connections with existing customers and to build new ones.

After being accompanied by dada for its (re)positioning, the company unveiled a brand new campaign deployed on many platforms all over Quebec. Only Quebec-owned media were selected. A major blow to the offensive, the front page of the Journal de Montréal after Prime Minister Trudeau announced the closure of Canada’s borders. It read:

Promising results

Proof of the campaign’s undeniable success: after only a few days, the company measured a 20% increase in online sales, and engagement rates doubled on its social media. It also had extensive press coverage, on the front page of the Business section in the Journal de Montréal and on 98.5 prime-time radio, in addition to a dozen other interviews on local stations.

(Re)positioning, (re)invention and (re)connection

All the beautiful scenarios we had planned for the next two years are to be reviewed. Many companies will have to reinvent themselves, rotate their business models, review their positioning and communications. With newly thought perspectives based on which consumer behaviour will change and where new habits will be introduced. One thing is certain, opportunities and innovation come much more easily when you have time and you are somehow disconnected, than when you go a hundred miles an hour.

You can and you may, as a company, help bring happiness into people’s lives, when and where they need it most. And then see how you can reinvent yourself for it. This is where we can help you. With love and purpose.

[1] When A Recession Comes, Don’t Stop Advertising, Forbes, September 2019

[2] CoronaVirus – Business, Harward Business Review, Special edition, March 2020