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Investing for Future: Short-term cost-cutting could have long-term impact

Published:  10 September, 2020

A unique set of circumstances created by the coronavirus epidemic has made investment more vital than ever for business, as consumers become ‘hyper aware’ of the activity of brands in times of crisis.

This was the key message from last week’s Investing in the Future webinar, where a diverse panel of experts from both inside and outside the drinks industry discussed the impact of austerity measures on businesses’ ability to thrive.

Consumers are usually more attuned to their purchases during times of economic stress, panelists from the Institute of Practitioners in Advertising (IPA) and Facebook agreed. However, neither the industry, nor the world, has ever experienced the unique circumstances of Covid-19.

The microscope is on businesses both large and small more clearly now than ever. Cutting spend in areas of engagement and communication in the last quarter of 2020 would not only create a ‘hole’ for competitors to fill, it is also a missed opportunity in an age where consumers are looking for leadership.

“Brands that cut back in recession are always the ones that find it hardest to recover afterwards,” said Simon Frazier, senior research and marketing manager at the IPA.

He continued: “But consumers are considering their purchases a lot more. They’re considering what they’re spending and they’re actually engaging a lot more as they have more free time to engage with [things] like environmental and corporate social responsibility issues. Brands that aren’t aware of these things or if brands aren’t [visible] at that moment of consideration, if marketing and advertising spent is cut, then recovering is going to be very, very difficult.” 

Investing in the type of messaging was also highlighted by the panel.

"Consistency of communication, and not losing share of voice is vital," said Peter Buckley, connection planner, Northern Europe, Facebook. However, he also highlighted the importance of the fast-moving situation with the pandemic, where new consumers habits – and opportunities to engage – particularly in areas of health, safety and responsibility, are still being formed.

“People are using the platform in different ways. So we’ve seen a lot more live usage with people using Facebook or Instagram to post longer videos. How people are using our platforms – that’s what advertisers haven’t caught up on yet,” Buckely said.

The comments were made at last week’s webinar where panelists were asked to consider the long-term impact of short-term cost cutting.

Against a backdrop of thinning government support, including the ends of the rent moratorium, furlough and Eat Out to Help Out schemes, panelists from Enotria & Coe, Graft Wines and Phipps Relations all weighed in on the topic of building long-term strategic growth.

The message was clear: the logic behind maintaining share of voice, and not creating opportunities for competitors can be applied to investment NPD and staffing, too.

The session also linked the growing importance of sustainability initiatives, not only from an environmental perspective, but an economic one.

Faced with a deepening global recession and ongoing health pandemic, the question was whether environmental initiatives will continue to be important to consumers and companies?

“I think we’re reaching a tipping point,” said Nik Darlington, director, Graft Wine. “Over the past 40 years, whenever there’s a recession or an economic downturn, interest in environmentalism has dwindled. But while we’re hearing dire news of Covid, we’re also hearing that the air quality is better. Environmental and social awareness go hand in hand. Brands putting those together stand to win.”

To hear more from, Facebook, the IPA, Phipps Relations, Enotria & Coe and Graft Wine, visit YouTube where the full video is available to view for free. Click here to watch

The full report of this session is also included with the September issue of Harpers, out tomorrow (Friday 11).