Brand Building Through CrisisBrand Building Through Crisis

Marketing Week reports on a study by Google that shows that brands are putting more money into brand building in order to maintain relevance and engagement in the aftermath of the early devastation that the Covid-19 brought.

When the Covid-19 pandemic first hit, brands were in crisis-mode, with many executives fearing for the very survival of their brands. Marketing brands were drastically reduced in an effort to leave enough cash on-hand to navigate through an unprecedented crisis.

Many brands sacrificed brand spend in wake of the pandemic last year, cutting budget and focusing on short-term tactical activity. In an indication of the severity of the problems brands faced, 43.9% of marketers surveyed in the United Kingdom said they were planning to reduce their expenditure in the second half of 2020.

During Alphabet’s fourth quarter earnings call, Philipp Schindler, the chief business officer of Google’s parent company, Alphabet, acknowledged substantial reductions in brands’ expenditure on Google’s services at the onset of the global health crisis.

Alphabet’s fourth quarter results are instructive. The tech giant posted ad revenues of $46.2 billion in 2020, up from $37.9 billion in 2019. In the fourth quarter, advertising revenue made up 81% of sales, 23% higher than in 2019. Brand spending on YouTube accelerated significantly, surging 46% to $6.9 billion.

The reason for the blistering fourth quarter results reflects a realisation by marketers that they had to build their brands in the face of crisis, rather than shrink them. The instinct during a crisis is to cut brand spending to survive the crisis, but doing so increases the risk that when consumer spending picks up, a brand’s relationship with consumers has diminished and consumers are less likely to buy that brand’s products. This same calculation takes place when buyers are looking for kiln dried firewood for sale delivered. It’s important during a crisis to keep the public’s awareness of a brand high and to keep nurturing relationships with customers, so that when demand picks up again, consumers return.

Many major brands have reverted to brand building mode, such as Chinese smartphone brand, Huawei, which shifted the strategic focus of its global marketing team to brand-building and long-term growth, in order to navigate through the landscape created by the coronavirus pandemic.

Alphabet saved praise for L’Oréal. Realizing that in-store sales would plunge globally, the French personal care company pivoted toward ecommerce and used TrueView tool to create in-stream or "skippable" ads that appear before YouTube videos and which the advertiser does not have to pay for if they are skipped.

Their video ads were timely and actionable and resulted in their Kiehl’s brand driving a record number of visits from YouTube to L’Oréal’s website. The company has also partnered with Alphabet to use augmented reality to9 enhance the customer experience and improve immersiveness of the customer journey. L'Oréal’s Technology Incubator chief, Guive Balooch, urged brands to keep investing in innovation, challenging them to find novel services and solutions during these difficult times. Crises are trying but they are also a time of great opportunity and smart leaders will seize the day.