Finding opportunity in uncertain times
Finding opportunity in uncertain times
The coronavirus is an unprecedented global health emergency which has caused a level of economic uncertainty that few, if any of us, have ever seen before. As Hugh Marks wrote last week, these are challenging and unprecedented times for all business leaders regardless of their size or scale.
Our Government and our health experts are doing an outstanding job of managing our country through these uncertain times. However, as we begin to chart a course to recovery, it will be the responsibility of our business leaders and the custodians of our brands to steer Australia back to prosperity.
The good news is that we will come through this time of universal upheaval, and at some point in the future we will reflect on it as a period of great change where innovation and entrepreneurialism thrived. We must also recognise that the natural inclination in times of uncertainty is to retreat. For businesses it often feels like the safer decision is to slow down, to consolidate, to downsize, to cut spending and investment, while for consumers the desire to save and avoid spending is equally natural.
History has proven, and it will again, that those businesses and brands that are willing to look at the world through a different lens, to challenge the status quo or to satisfy a new demand, will once again be the businesses that grow, proposer, and become tomorrow’s household names and remain a part of our lives for the next 100 years.
Let me go back in time for a moment. It was the economic struggles of the 1930s that helped to define Kellogg’s as the market leader in the cereal category. At the time of the Depression, two companies – Kellogg’s and Post – dominated what was then a relatively new market.
During the 1930s, Post went with the “safe”, predictable strategy, reining in expenses and cutting back on advertising. Kellogg’s recognised that building their brand was critical. They doubled their advertising budget, moved aggressively into radio advertising, and heavily promoted their new cereal, Rice Krispies. What was the result? Well by 1933, even as the economy continued to struggle, Kellogg’s business was thriving, profit had risen almost 30 per cent, and it had become what it remains today, the market leader globally. Almost 100 years on, children still wake up each morning with the brand’s “ambassadors”: Snap, Crackle and Pop. So it’s not really surprising that these examples are etched throughout history.
Source: ‘Antique & Vintage Art Prints’, 2020 Period Paper Design
This all seems so obvious, but when times are hard most companies behave more like Post than Kellogg’s. During this global health crisis, many companies in Australia, maybe the one that you are the leader of, will reduce their investment in advertising and wait for the good times to return. Those companies will make fewer acquisitions and invest less in new product development or innovation. Those companies are less likely to see the emerging opportunities, and they won’t be in a position to capitalise on the new demands of Australian consumers as we return to the “new normal”.
History will repeat itself. The McKinsey study of the 1990-91 recession found that companies which remained market leaders or became serious challengers during the downturn were the ones that had increased their mergers and acquisitions activity, their research and development, and their advertising investment, while companies that lost market share had reduced them. It’s why twice as many companies went from being the challenger to the leader as did so in the years before and after.
Why, then, are companies so quick to cut back when trouble hits? The obvious answer is that CEOs, CFOs and marketers become more uncertain. Companies become risk-averse, paralysed by the unknown, and are prone to de-prioritise innovative and entrepreneurial thinking. Uncertainty has always been a part of business, but in an economic downturn it seems to dominate everything. Today, no one is sure how long the lockdowns will last, how consumers will react, whether we’ll go back to the way things were before, or see permanent changes in consumer behaviour.
As marketers, we must recognise that we have a responsibility to stimulate consumer demand. It is now more important than ever that during these times of uncertainty we invest in our brands.
Some local brands are already taking the lead. Carlton & United Breweries have pivoted their business to produce hand sanitiser alongside their strong and powerful alcohol brands. They will donate more than 20,000 litres of hand sanitiser to frontline medical staff as they fight COVID-19 in emergency wards around the country and have also launched “For the Love of Your Local” initiative to help raise money to help save struggling local pubs.
Australians are known for our ability to come together as one during difficult times. It’s part of our DNA. Koala’s current “Support Your Local” campaign, which recognises the exceptional times we are living in and gives us an important message about the importance to “buy local, support local, spend local”, is a fascinating brand campaign. This is not Koala’s core business – in fact the message and the creative is not even remotely connected to their core business. So why are they doing this? Because it’s different, because people don’t expect it from them (or maybe we do now), and because it makes us feel something about them. They are investing in their brand and, funnily enough, next time I need a new mattress I might just think about them.
Source: ‘Doctors and nurses given helping hand during COVID-19 crisis’, 2020 Carlton United Breweries
At Nine, we understand that magnitude of the challenge in front of us. We don’t know exactly how things will turn out, but I do know that as custodians of a great media brand we have a responsibility and an opportunity to lead the way. The more creative we are, the more innovative and entrepreneurial we are, and the more we challenge the way things have always been done will be directly proportional to the speed and magnitude of the economic recovery.
There is opportunity out there and it will be fascinating to see which brands take the lead.
Michael Stephenson is Nine’s Chief Sales Officer.