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What you need to know ./.0
This year, the impact of the coronavirus has been far-reaching and deeply felt. More than
50% of the world’s population has been in lockdown at some point;1 global trade is
expected to finish 2020 seven percent lower than the beginning of the year;2 and more
than 1.5m deaths have been recorded.3 As these figures indicate, the cost of the pandemic
has been personal and financial.
Across the world, individuals, businesses and governments have paused, pivoted,
accelerated, as understanding of the virus has evolved. So too has vocabulary evolved,
expanding to include phrases like ‘social distancing’, ‘circuit breaker’, and ‘super spreader’
and our greetings have adapted. Meanwhile, Google search data indicates a shift in
interest from virus symptoms to prevention and cure, which is reflective of increasing
hope as vaccinations are rolled out.4 The New York Times asks:
“Will we ever be rid of it entirely, now that it’s a human virus?
Probably not. Will we ever get past the travails of this
COVID-19 emergency? Yes.”5
As 2021 draws closer, businesses are fully aware they cannot plan with any degree of
certainty. For this very reason, it’s imperative that they contingency plan. The Drum
writes: “Assumptions kill growth. In a year of huge change and uncertainty, it’s more
important than ever to look forward, plan your next steps and identify what you can
capitalise on to make your marketing a success in 2021.”6
We all want visibility on what next year holds, and we’ve all seen a few predictions by
now. But if 2020 taught us anything it’s that predictions are just that… predictions. Really,
anything can happen. Inevitably, coronavirus and unrelenting uncertainty continue to
make predictions seem even more futile, yet we all cling to them for hope and for some
sense of what comes next.
Here’s what we know:
1 Euro News, LINK
2 Global Trade Update, LINK
3 Google News, LINK
4 Worldwide Google Searches, LINK
5 The New York Times, September 2020, LINK
6 The Drum, LINK
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THE ECONOMIC OUTLOOK IS VARIED
Analysts and stakeholders outline alternative economic models, which weigh up the
factors that impact the final scenario.7 As there is no precedent for what is being
experienced, there is no precedent for recovery. Multiple global and local scenarios are
possible, and the impact on individuals will vary.
Morgan Stanley forecasts a ‘synchronous global recovery’, which is different from the
consensus, not because they expect the virus to behave differently, but because they
anticipate ‘the equation between virus and economy is changing. We are
actually expecting a much stronger return of private sector risk attitude towards
spending.’8 This is not the only point to which they differ on from their peers: ‘We're
expecting 6.4% global growth next year versus consensus at 5.4, so a full one
percentage point higher than consensus.’9
Meanwhile, Deloitte predicts that the recession will be similar to a typical recession, with
sectors contingent on consumers’ discretionary spending most significantly impacted:
‘Even with more businesses able to open, the fading emergency supports for the economy
means that 2021 will look more like a ‘usual’ recession, with sectoral damage starting to
centralise in the likes of manufacturing, as well as in housing and commercial
construction, while sectors reliant on discretionary spending (including retail
and entertainment) will be on the slow train back towards normal.’10
Amidst the different factors, models and economic outlooks, one thing is consistent: the
outcome will be felt differently by country, category and consumer.
BUSINESSES MUST PRIORITISE RESILIENCE
Bain & Company’s analysis finds that one fifth of companies came out of past recessions
as clear winners by taking opportunities in their respective recovery periods, which led to
accelerated growth post-recession, and long-term advantage over competition.11 In this
way, periods of uncertainty and instability like the present moment are most
constructively looked upon as opportunities: ‘To outmanoeuvre uncertainty, reopening
also requires a program of reinvention. This presents an opportunity—and a need —for
many companies to build the competences they wish they’d invested in before.’12
7 Forbes for V and W shape models, Link, Gartner for square root shaped model, LINK
8 Morgan Stanley, LINK
9 As above
10 Deloitte, LINK
11 Bain & Company, LINK
12 Accenture, LINK
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Resilience, scenario planning and agility are all inextricably linked, as it’s only by
anticipating different outcomes that companies can set themselves up to best overcome
the challenges they will face. For companies in categories which are already undergoing
extreme change, such as that of retail, this is even more important. Jeff Gennett, Macy’s
CEO explains: ‘We’re ready to go, no matter what… We do so much scenario planning…I
expect our digital business is just going to get better and better. We are doing more
fulfilment out of our stores. We have been aggressively implementing curbside pick-up,
and with same-day delivery through DoorDash.’13
Scenario planning makes agility possible, as the last six months have highlighted, and
ongoing commitment to resilience will continue to be vital in the year to follow. Grant F.
Reid, Mars CEO, reflects: ‘We’ve had to shift quickly to new ways of working, address
unprecedented challenges and deal with a great deal of ambiguity.’14 Businesses must
continue to shift with the behaviour of their buyers. Indeed, a crucial part of scenario
planning is assessing which consumer behaviors will endure, as these will determine
resource allocation. AdWeek notes: “Post-pandemic, business leaders must be clear-
eyed in evaluating their earlier forecasts and deciding whether to continue with related
priorities or adapt to unexpected realities.”15
It’s clear from this year that the ability to adapt to unexpected realities will keep
businesses running not only logistically, but keep them going psychologically: ‘This year
has taken its toll on all of us. And, yet, what has shone through is resilience, hope and the
care we have for each other as a team. That has truly inspired me.’16
INVESTMENT IS KEY TO GROWTH
In times of economic turbulence investment is key to growth, and analysts agree that
currently, ad spend is vital for recovery. In particular, investing in share of voice has driven
strong growth during previous recessions.17
WARC suggests that it will take the global ad market at least two years to fully recover
from the pandemic – an expected 6.7% rise in 2021 will only recoup 59% of 2020’s losses.
Global advertising spend is on course to fall by 10.2% ($63.4 billion) this year, led by sharp
cuts in investment among the automotive, retail and travel & tourism sectors as a result of
the pandemic.18
13 Jeff Gennett, CEO Macy’s, LINK
14 Grant F. Reid, CEO Mars, LINK
15 Adweek, LINK
16 Grant F. Reid, CEO Mars, LINK
17 Marketing Week, 6 APR, LINK; Peter Field, Linked In, 2020 LINK
18 Warc Marketers Toolkit 2020, IAB, November, LINK
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However, marketers should continue to invest in their brand: ‘The brands that did well this
year (and were not looked upon cynically) were the ones that had always had a brand
presence or point of view, while the ones that just turned it on this year are the ones that
people felt were trying to make a profit from the pandemic.’19 Not only does long term
investment keep brands top of mind, it prevents them from appearing opportunistic.
Similarly, brands can avoid this by putting their consumer first, as CEO, PepsiCo CEO
Ramon L. Laguarta says: ‘we're going to continue to invest in our brands, make sure that
they are well funded, that we continue to keep our consumers in our brands, keep them
engaged.”20
WHAT THIS MEANS
If we’re being optimistic the recovery phase that will play out in 2021 is an opportunity.
Scenario planning, agility and resilience are all fundamental, as is ongoing investment into
ways of working, brand and consumer-centricity.
19 The Drum, LINK
20 Ramon L. Laguarta, CEO PepsiCo, LINK
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The information and materials in this article are for general information purposes only. Whilst we try to ensure that
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