Marketers seem to be favoring performance marketing even as brand may be gaining in consumer importance.
Should marketers be investing in top-of-funnel campaigns or performance advertising right now? That question is being hotly debated in a lot of places, including major earnings reports where performance seems to be winning.
Making the case for brand. New consumer data from Survata makes a strong case for brand marketing and argues that trusted brands are winning during the pandemic. The survey also contains interesting findings about messaging and what consumers want to hear from brands right now.
Survata polled 1,016 U.S. adults on shopping behavior and brand expectations. The company found a strong preference for established brands over private labels or generics in a number of product categories. This seems at least partly at odds with another of the survey’s findings: almost two-thirds (64%) of consumers are cutting back on spending in a significant way.
Brand preference despite spending reductions. According to Survata, “In previous periods of economic uncertainty, generic products have performed better compared to their brand-name counterparts because consumers aren’t willing to pay a premium.” That doesn’t seem to be as true in this unprecedented instance, despite consumer-spending cutbacks.
In numerous product categories (cleaning products, frozen food, coffee, soda and packaged foods) consumers indicated they were much more likely to choose familiar brands. In non-prescription medication and personal care products, however, the audience was more evenly divided with a somewhat higher percentage choosing generics or store brands, presumably to save money.
Consumers becoming more cautious, selective. Multiple recent surveys indicate that consumers are cancelling or delaying purchases in the current economic climate. This is not unexpected but still very worrisome because 70% of U.S. GDP is driven by consumer buying and critical to any recovery. Survata found one quarter of respondents intended to cut spending by 30% – 40%, and one in five said they will reduce their budgets by 50% or more.
In contrast to consumer spending cutbacks, major tech company earnings and IAB survey data reflect that advertiser spending recovered a bit in April causing investors to celebrate. However budges are still short of plan and nothing like at pre-pandemic levels.
Brand messages consumers want to hear. The Survata research also explored consumer expectations of brands and what messages they wanted to hear. There are also some surprises here too:
- Commitment to product availability (36%)
- Commitment to brand’s employees (25%)
- Commitment to product safety (24%)
- Commitment to controlling price / costs (14%)
Beyond messaging, other buying considerations included regional product source (is it from a virus-impacted area?), price (for a substantial minority) and brand trust. Trust was the most significant factor influencing purchase decisions for 40% of respondents. In addition, consumers are now 3x more likely to research products before buying than prior to the outbreak, according to the survey.
Survata CEO Chris Kelly commented to us in email, “Consumers are clearly very cognizant of a brand’s message right now. While we know consumers expect a brand to be responsive to the current times, it was surprising that so many consumers felt that the most important thing brands should communicate to them was a commitment to their employees. There might be a sense of American ‘in-this-together-ism’ when you unpack that, but it’ll be important for brands to measure the tricky balance of putting out the right messages.”
Restaurants, vacations and shopping. Asked where they’re looking forward to spending money when the lockdowns end, survey respondents indicated they were most interested in going out to eat, followed by vacation and shopping (in stores):
- Dining out a restaurant by a 2:1 margin over #2 travel
- Retail shopping
- Personal recreation or care services (gyms, yoga, massage, hair, etc.)
- Sporting events
Why we care. Consumer behavior is shifting and must less predictable right now. We’ve moved in about six weeks from a position of near full employment to roughly 20% unemployment with more to come. That kind of economic whiplash is totally unprecedented.
While marketers should ideally address the full funnel, most no longer have the budget — so they’re defaulting to performance campaigns because they’re easier to track. Any spending that can’t be justified in terms of clear ROI is being cut in many places. But the Survata data and other evidence indicate that brand visibility may be more important than ever — during the crisis and, especially, when it’s finally over.
This story first appeared on Search Engine Land.