COVID-19 and the ensuing economic recession have changed the way many industries operate – and marketing isn’t immune. We’ve had to change our strategies not only based on shifting budgets and resources, but new health and safety measures that affect everyone across the globe.
Where did marketers shift their spend in 2020, and which channels are they predicting will be revenue drivers into 2021?
The New Face of Marketing Events
Given the work-from-home orders and social distancing, it’s no surprise that marketing organizations chose to cut event budgets this year. Overall, event spend plummeted by 46% from Q1 to Q2.
“No worries,” marketers thought, “we’ll reinvest those funds in other programs.” But, that didn’t happen either. In our State of Spend we discovered an 85% correlation between decreases in event spend and decreases in overall marketing spend. If it wasn’t being spent on events, then it wasn’t being spent by marketing – period.
The trouble with cutting the overall marketing budget, is that events didn’t happen in a vacuum. They served the very important purpose of growing revenue. If companies are losing that budget as a whole, it’s impacting how many programs they can run to generate pipeline, and ultimately impacting the level of success the marketing organization can achieve.
56% of all companies lost more than 10% of their program spend in the first half of the year and those were the lucky ones. 15% of companies had more than a third of their total program spend cut. Sometimes budget cuts are unavoidable – but you’ll have a better chance of keeping dollars if you have a clear plan for them. We recommend mastering scenario planning so you’re prepared for a conversation about why you should move budget rather than lose it.
Events were gone for a bit, but certainly not forever. In our State of Spend forecast reports, we saw a 24% increase in event spend from Q2 to Q3. Why the sudden change?
Marketers have been testing and experimenting with different virtual event experiences, and six months in we’re starting to see what works. MarTech Today frequently surveys marketers to get their thoughts on attending in-person events in 2021. 70% of marketers are waiting for a vaccine before heading back to a tradeshow floor.
But tradeshows aren’t the only events we’re missing. We’ve also heard of marketers experimenting with hybrid events that are a mix of in-person and virtual. A small number of people are able to attend an in-person panel session or fireside chat, while the rest of the audience is virtually streamed in. The flexibility allows more people to attend, and some of us to safely socialize again.
Events are such a quintessential part of marketing strategy. They’ll never go away but they will look different in the future. Evaluate how important events, especially in-person, are to your marketing strategy, and experiment with different formats before investing fully in this channel again.
We cannot stress enough the importance of testing. Digital is going to dominate for at least the next year, so messaging is critical. Build experimentation and flexibility into your programs – get comfortable with the idea you need to rip some things out to get impact for your companies.
Net-New Acquisition vs Customer Loyalty
There are various revenue streams for companies, but it all essentially boils down to two avenues: net-new acquisition or loyal customer. Industry analysts and pundits sounded like a broken record with the number of times they said companies needed to focus on keeping their existing customer base happy with ongoing value. Did marketers listen?
Not really – overall investment in loyalty and advocacy programs decreased by 4% from Q1 to Q2. It’s not the only industry advice marketers ignored this year.
But the drop is short-lived, and the comeback is impressive. Our research shows a forecasted 12% increase in loyalty spend, with 47% of companies forecasting a more than 20% increase in customer advocacy and loyalty spend.
We have two theories for this big swing in planned spend. The first is that companies initially panicked when faced with budget cuts and directed their suddenly limited resources into areas with more impact on short-term sales cycles. But after a few months, those same companies realized the impact of COVID wasn’t going to be a one quarter deviation in their original 2020 plans. They dramatically increased their investments in loyalty programs to protect their existing base as a critical revenue source.
The second theory is based on the discovery that changes in customer loyalty spend weren’t tied to changes in overall program spend. Instead, the changes in customer loyalty spend seem more tied to staffing changes and the layoffs many companies had this spring. Customer loyalty programs generally have more staff than discretionary budget. If the marketing organization no longer had the same level of staffing, it stands to reason they would need an increase in programming funds to support that area.
How Did Marketers Drive Revenue in 2020?
Before events started to make a comeback, marketers turned to advertising to fill the gap. In our State of Spend research, we saw a 2% increase in ad spend from Q1 to Q2. But that doesn’t tell the whole story…
Digital channels will be crucial drivers of growth for at least another 12 months. Learn how different marketing organizations are leveraging ad spend based on their varying needs in our State of Spend Marketing Investment Benchmark Report.
This report is based on aggregate data from the more than $25 billion dollars that global marketing organizations are managing in Allocadia’s platform. We analyzed what happened, identified trends, and are sharing them so all teams can learn from it. Marketers need a roadmap for investing as we look ahead to 2021 – this is a guide to help inform those next steps.