Should hospitality brands invest in advertising during COVID?

Introduction

Hotels and resorts have experienced unprecedented business restrictions due to COVID-19. With non-essential travel halted, the industry is one of those most affected. However, brands have not 'closed' alongside their hotels, nor advertising stopped but there are new considerations for communication strategies moving forward.

This essay examines some of the issues facing a multinational hotel brand when deciding how much to invest in advertising during this time.

Objectives

Clear, straightforward objectives addressing commercial business needs are vital and should be rooted within the business proposition (Houghton et al, n.d), especially following significant environmental and economic changes. When external factors change, business requirements often change too. Consequently, objectives need realigning.

A 60:40 balance between long-term brand building and short-term activational objectives is cited as the optimum blend (IPA, 2016). However, the impact of lost revenue and the need to survive will likely challenge this split and impact budget allocations.

Instinctually, businesses will focus on short-term gains to compensate for financial losses. Some gains may stem from cost-cutting measures, impacting advertising spend. However, strategists should consider the Share of Voice (SOV) equilibrium (IPA, 2016) before restricting budgets. SOV is crucial for strong brand performance and share of market, with excess SOV leading to faster growth (IPA, 2016). Additionally, maintaining excess SOV prior to launching campaigns leads to more effective results (IPA, 2016), evidencing the need to maintain expenditure.

Historically, this multinational hotel brand has activated brand activity from a global perspective with varying, regional activation campaigns. With budgets under pressure, objectives are likely to focus on short-term goals with budgets determined by affordability. Strategists should, however, consider how short-term objectives and results play into the long-term brand objectives that enable growth. Excess SOV is an important KPI when setting budgets (IPA, 2016) but maintaining and optimising SOV is unlikely to be a simple continuation of previous activity (CMDI, 2019) and strategy will need to evolve inline with external factors.

Targeting

The most effective campaigns reach the whole market by targeting both new and existing customers (Binet and Field, 2013). Existing customers offer the advantage of brand trust and direct access, however, customers are not loyal (Sharp, 2010) and focussing only on loyalty rarely generates successful results (Binet and Field, 2007). The brand should focus on market penetration, especially as customers are unlikely to travel frequently. Moreover, campaigns with increased penetration objectives are twice as likely to see positive business results (Binet and Field, 2013).

However, loyalty should not be dismissed, especially as the pandemic may deepen connections between customers and brands they trust (Szekely and Bell, 2020). This brand has strong brand fame and should maximise the opportunities of their existing customers through a mixed targeting approach.

Targeting new customers involves purchasing data which is expensive, however with programmatic targeting matching hotel stay criteria with consumers and insight into early adopters (Taylor, 2020), budgets can be effectively maximised. Conversely, targeting parameters should not be too restrictive as to lead back to existing customers (Binet and Field, 2013). Parameters should be reviewed to reflect real-time trends as previous parameters are unlikely to remain relevant.

Channel Mix

People are consuming media differently as daily life changes. Brands must ensure they’re reaching customers through channels they’re already engaged with - and this may have changed (Houghton et al, n.d). Trusted channels such as TV and radio can be important in uncertain times (Dumouchel et al, 2020) but they’re often budget intensive and not appropriate for all messaging, so a mix of channels tailored to the objectives and budget is required. At times of severe disruption historic marketing mix models are deemed ineffectual as consumer habits change (Rubinson, 2020).

Channel planning should link to the objectives and activation-to-brand activity split. The mix must be integrated to support the brand objectives with brand channels that support the core trust and belief in the brand, such as press and display (IPA, 2016) that help enable activational channels such as search and direct to drive revenue.

This activity balance may change frequently and alter by region. Constant performance monitoring against KPIs is imperative.

Measurement

Ongoing measurement and testing enables brands to make data-driven decisions leading to optimal results (Davidson, 2020). However, during uncertain times, consumer behaviour evolves meaning previous methodologies, like econometrics that use historical data, are unlikely to succeed, resulting in the need for numerous, short-term tests (Davidson, 2020).

Measurement of activity must link back to objectives and KPIs. Online proxies are an effective measurement tool (Dias et al, 2014). The multinational hotel brand commonly uses direct response metrics for real-time analysis, enabling quick adjustments and optimisation which is suitable for times of constant change by allowing adaptations for targeting criteria and regional nuances - great for short-term objectives and planning. However, to gain actionable insight that can nurture long-term objectives, the brand should establish qualitative, in-depth measurement techniques across all active regions in order to effectively grow and adapt for their ever changing markets.

Insight

To maximise budgets, all decisions should be based on actionable research and insight. With historic insight no longer relevant, strategists must draw upon readily available information, looking for confluence; where macro-trends intersect to create opportunities and analogies; observing and borrowing innovations from competitors and other industries (IPA, 2016).

A PESTLE analysis (Kotler, 2006) to understand the external market forces will establish the foundations of complex and industry specific insight but the multinational brand must work to understand what is motivating and/or prohibiting consumers from being active in the industry.

Complimentary industries such as airlines and travel companies may also offer insight for the brand. Insights will enable them to assess how relevant previous objectives and strategies are; for example price sensitivity vs added service value and consumer appetite for advertising creativity vs direct sale messaging.

The multinational hotel group halted their brand campaign as the pandemic began, the campaign focused on the additional ‘perks’ of staying with them. New learnings should help assess whether this messaging is still relevant or whether consumer priorities have changed.

Summary

In times of vast change, brands must revisit the grounds for all previous decisions. Consumers and the environment in which they make decisions has changed, therefore the market understanding once held no longer stands true.

When budgets are likely to be restricted, it is even more important that strategists maximise spend with thorough research, targeting and measurement techniques to ensure that all communications are optimised and capable of achieving their objectives. Strategists must be ready to respond quickly and adapt to the new norms that can’t be predicted, especially for a brand operating globally. This, however, must be done without compromising and neglecting the long-term brand goals that will ensure continued business success.

Olivia Cox is a Senior Account Manager at SEMA4. This essay earned her a Distinction for the IPA Advanced Certificate in Communications Planning.