(D)OOH during a downturn...Advertising in a downturn OOH during a lockdown What’s next? (D)OOH during a downturn P. 3 What’s 1happening? P. 4 Situation in Belgium • On 10 March

(D)OOH during a downturnBrand recovery series

April 2020

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What’s happening?

Advertising in a downturn

OOH during a lockdown

What’s next?

(D)OOH during a downturn

P. 3

What’shappening?1

P. 4

Situation in Belgium

• On 10 March the governement advised to cancel indoor events (<1.000 people) for the month of March.

• As from Saterday 14 March the decission was made to close all schools and horeca and to cancel all public gatherings (sports, cultural, festive…). There was no further requirement to stay home.

• On 18 March the Belgian went in lockdown. Every non-essential store had to close, gatherings of all kinds were banned, non-essential travels were prohibited… until at least 5 April.

• The decission was made to extend the measures until at least 19 April.

• On Wednesday 15 April the governement decided to extend the measures once more until 3 May.

Governement decisions

P. 5

Impact on tripsKey figures

Sources: Belga / De Lijn / MIVB / TEC / NMBS

90% of passenger

flights cancelled

De Lijn: -92% travelers / 10-15% less vehicles

MIVB: -75% travelers / 33% less vehicles

TEC: 10% less vehicles

10% occupation in trainsNo more departures after

8pm

<50% less car traffic

Restriction on trips with more than 2 persons

P. 6

Footfall decreaseFootfall is at the heart of (D)OOH. Over the years we spend up to 25% more of our time outside of our homes. The recent events however forces everyone to stay inside for their own good.

On 29 March Google shared their data on the exact impact this had on our mobility. The numbers do not lie: compared to baseline (1 month basis) there has been a significant drop in all kind of trips and in all regions.

Biggest loss is of course for the recreation and hospitality undustry, being the first ones that had to close their doors to the public, we see a drop of 84% compared to baseline on a national level.

The category grocery and pharmacies is the less impacted as they remain open to public yet with restrictions. An uplift has occured at the beginning of the lockdown in Belgium, at the beginning of phase 2 there’s a decrease as the new measures restrict trips and encourage to go to the store alone.

Full report can be found here

Source: Google COVID-19 Community Mobility Report / Posterscope

Recreation and hospitality industry

Grocery & pharmacie

P. 7

Respons from advertisersSome sectors suffer more than others. As currently almost all planes are cancelled and everyone is encouraged to stay home, travel agencies stopped advertising for the moment. Movie theaters are closed so advertising the new blockbuster has been put on hold for now… These are obvious ones, but almost every advertiser reconsidered its media spends and strategy during this crisis leading to an enormous amount of cancellation or postpones in the whole media sector. In Out of home, known for its hard cancellation policy, campaigns were rescheduled without charge.

Experts say it will take a while before the campaigns will come back, as they will need to be reconsidered or completely rebuild. Some brands are already rethinking their communication, not giving in to the current cancellation trend, by adapting the message to the COVID 19 lockdown situation. Telling everyone to stay home, thanking healthcare workers, stressing the importance of social distancing and respect, helping out the hospitality industry… These brands have sensed the mood of their stakeholders and are communicating according to it but have also understood the importance keeping the advertising up even in harder times.

Source: UBA / De Tijd

P. 8

Advertising in a downturn2

P. 9

IPA Study - Advertising in a downturn

IPA study revealed that cutting advertising spend in a downtown can

1) Impact Brand Health

2) Impact Business Performance

Key Findings:

• Cutting budget will only help defend profits in the very short-term

• Ultimately the brand will emerge from the downturn weaker & less profitable

• Better to maintain Share of Voice (SOV) at or above Share of Market (SOM) as the longer-term improvement in profitability is likely to greatly outweigh the short-term reduction

• If other brands are cutting budgets the longer-term benefit of maintaining SOV at or above SOM will be even greater

P. 10

Impact on business performance – The time lag effect

Need to consider the long-term payback of advertising

Budget cuts lead to longer sales recovery periods

Benefits of promotional activity will be short-lived

• Long-term payback from advertising can be 4x greater than the short term

• After a budget cut, the long-term business harm will be considerable (although not noticed at 1st)

Cashflow for companies, D2D Modelling

• Modelling demonstrates that a 1 year budget cut can lead to lost profitability over time

• It can take up to 5 years to fully recover from an annual cut in marketing spend

D2D Modelling

• The diversion of communications expenditure into price promotions is a common response to a downturn

• Widespread promotional activity means consumers expect “incentives” so they lose their efficiency generating incremental sales … resulting in a loss of profitability

Source: D2D

Budget saved

Profit Lost

Bottom Line Impact

Time to recover

Zero budget(Year 1) £1.8m £3.5m £1.7m 5 years

Half budget (Year 1) £0.9m £1.7m £0.8m 3 years

Budget maintained all years

Zero budget (year 1)Half budget (year 1)

Time

Sale

s

Sale

s

Year 1 Year 2 Year 3 Year 4

tShort TermLong Term

Promotional activity (Incentivise spend)

Promotional efficiency (Incentive efficiency)

Spen

d / e

ffici

ency

Time

US Automative Example, D2D

P. 11

Impact on business performance – Focus on the long-term

When SOV exceeds SOM brands can expect to see

gains in market share

Severe budget cuts generate short-term gains

but long-term losses

Maintaining budget or moderate cuts are far more

profitable long-term • Estimated “rule of thumb” that for every

10 points that SOV exceeds SOMthen a brand can expect to gain one point of market share per annum

• Use this rule of thumb as forecasting tool for expenditure strategies in a recession

IPA DataMINE (127 cases)

• As marketing has a lagged effect on sales, in the 1st year of a budget cut operating profit can have a short term improvement

• However, operating profit is severely affected in subsequent years

IPAdataMINE

• Maintaining budgets or moderate cuts (e.g. 20%) may reduce operating profit in year 1, but in the long term will generate higher operating profit overall

Source: IPA Datamine 880 Case Studies Peter Field

Year 2007 2008 2009 2010

Brand X Sales £317m £314m £282m £269m

Marketing Spend £7.9m £0m £0m £7.9m

Total Costs £278m £270m £251m £253m

Operating Profit £39m £44m £31m £16m

Market share growth vs “excess” of share of voice

SOV - SOM

Market share gain (% points)

YearOperating Profit

2007 2008 2009 2010 08-10

Severe marketing budget cut (-100%

in 2008 / 2009)£39m £44m £31m £16m £91m

Moderate marketing budget cut (-20% in 2008 / 2009)

£39m £38m £33m £32m £103m

Maintain marketing spend (-0% in 2008

/ 2009)£38m £36m £34m £38m £108m

IPAdataMINE

P. 12

Impact on brand health with advertising budget cuts

P. 12

Share of voice needs to be maintained

2 key brand metrics affected by budget cuts

Word-of-mouth accentuates the effects of budget cuts

Source: Millward Brown

• Strong relationship between share of voice and share of market

• Brands that cut their ad budget relative to competitors are at greater risk of share loss

354 brands grouped on basis of relative ad spend

• Brand usage and brand image both suffer when brands “went dark” i.e. cease to spend on communications for 6 months +

• 60% of brands “going dark” decline on at least one key brand metric

85+ brands with no TV spend for 6+ months

• A brand judged to be on the way down, because it has fallen silent, will very rapidly see this manifested in word-of-mouth, which will accelerate the perception of failure

% L

osin

g Sh

are

Media Pressure(Share of voice – Share of Market)

0% 30%-30%

0%

50%

100%R2 = 0.74

Increase

Decrease

NET change

Brand Usage Brand Image

+11

-24

+22

-28

-13

-6

P. 13

Opportunities from continued advertising during a downturn

Source: Forbes

Project Image of Corporate Stability Re-Position Brand when competitors cut back on spend

Good Value Media as cost of advertising may drop

Improved SOV amongst competitors will increase SOM in both the short & long-term

P. 14

Advertising during a downturn has helped many brands over time

Source: Forbes

Kellogg’s Rice Krispies launched in the 1920s great depression

Pizza Hut & Taco Bell advertising in 1991 recession stole McDonald’s share

Amazon’s continued innovation in the 2009 recession increased sales

• Post was category leader but cut advertising budget significantly, whilst rival Kellogg’s doubled its advertising spend and introduced a new cereal called Rice Krispies, featuring “Snap,” “Crackle” and “Pop.”

• Kellogg’s profits grew by 30% and became the category leader, a position it has maintained for decades.

• In the 1990-1991 recession Pizza Hut and Taco Bell took advantage of McDonald’s decision to drop its advertising and promotion budget.

• Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.

• Amazon sales grew by 28% during the 2009 recession as it continued to innovate with new products. Most notably with the new Kindle products which helped to grow market share.

• In the minds of consumers, Amazon cemented its reputation as a provider of quality, low-cost products as it introduced lower cost alternatives consumers needed.

P. 15

OOH during a lockdown3

P. 16

OOH during a lockdownLess traffic = less impact?

We cannot deny that the main driver for the success of an OOH campain is the mass being out of their houses. Once everyone is asked to stay inside, what good can come out of an OOH campaign?

The mass might be missing, the impact remains. Several brands have adapted their message during this crisis to encourage (and even force) people to stay safe and thus stay home.

Sales house have also decided to share the same message and be united during these exceptional times. The blue posters encouraging everyone to #stayhome and flatten the curve cover the whole country since mid-March.

Following slides are a deepdive into some campaigns that have successfully adapted their messaging comprehending 100% the one of OOH’s key elements for a succesfull campaign: the right message at the right time and at the right place.

P. 17

OOH during a lockdownExamples worldwide

Respect social distancing, that’s the message Coca-Cola is giving using a large billboard format in Times Square, a major commercial intersection in Midtown Manhattan in New York City. The few people walking arount will notice that the name has received more spaces as to create some distance as well within the message.

Two students of the Miami Ad School have created an OOH campaign to encourage (force) people to stay at home. To do so, they’ve created some posters as if it were a Netflix campaign containing some spoilers of some of Netflix’s most popular shows. The campaign quickly got viral and even got a respons from Netflix.

P. 18

OOH during a lockdownExamples Belgium

ABInbev decided not to advertise as planned but instead gave away their booked locations to the governement so they can provide the most appropriate message during these difficult times.

The message is displayed at Dansaert in Brussels and at the Frankrijklei in Antwerp until end of april.

Douwe Egberts decided to adapt their message to the currect situation.

The campaign on the digital screens of Carrefour (JCDecaux) showed different simplistic messages that implied that grocery shopping should be done with respect.

P. 19

OOH during a lockdownExamples sales houses

The OOH is hit hard by the currect situation. We’ve seen the impact on traffic of all kinds due to travel restrictions, the prohibition of public gathering, of indoor social activities… Advertisers have reconsidered their OOH spending because of the reduced traffic.

But that does not mean the OOH sales houses are doing nothing. Across the world messages of support and thank you’s are displayed on the most impactfull inventory.

They help spreading a positive but also helpfull messages in times were we need it the most.

In Belgium the same trend is seen. As of week 13, Clear Channel and JCDecaux have decided to dedicated the majority of their inventory to the good cause of spreading the right messages:Stay home, flatten the curve, stay safe.

This will be maintained as long as needed to make sure we can go back to normal in the near future and enjoy the wonderfull world of out of home as we know it.

P. 20

What’s next?4

P. 21

After lockdownThe end of an era

The future is yet unclear. When the lockdown will come to an end and how the measures will be lifted are still unknown factors. What we know are the strenghts of an OOH campaign and that the missing key element will return, meaning we’ll be back outside and we’ll be able to enjoy it once again.

If we do want to make some assumptions on how life will be after the lockdown we could look at how China is behaving.

Recently the security measures have been lifted and even Wuhan, where it all started, is set free again. How do the people there react?

By rediscovering the country, by going back to work, by doing some offline shopping and by staying in the country… by giving OOH it’s audience and so it’s strenghts back.

We know about the importance of keeping the communication up if possible even in difficult times – so how can OOH help?

Source: CNN / Profacts

A recent study showed that only 21% of the Belgians is

planning on going on vacation this year.

We do not know what the weather will be in the summer, but we know OOH budgets to

be slightly more attractive during this period

When the mass is back out in the streets: OOH knows not only how to reach them but

also knows where and when.

P. 22 Source: IPA TouchPoints 2019 – Weekly reach and mean hours/day of commercial media channels#IPATouchPoints

0 0.5 1.0 1.5 2.0 2.5 3.00

10

20

30

40

50

60

70

80

90

100

Commercial BVoD

Commercial Live Radio

Magazine (Print)

Magazine (Online)

Commercial PodcastsCinema

Commercial Streamed Music Commercial RoD / Radio Podcasts

Commercial Online News

Other Online VideoNewspaper (Print)

Newspaper (Online)

Functional Internet

Social Media

Commercial Live / Recorded TV

Mail

OOH

% W

eekl

y R

each

All A

dults

Mean hours / day

OOH generates broadcast reach, vital in a recession

P. 23

Reach is the key driver of business effects

Brand awareness over the short and long termOOH’s high reach generates +20% business effectiveness

“OOH ALSO AMPLIFIES OTHER MEDIAPress (+7%), Radio (+17%), TV (+17%), Social (+20%), Search (+54%)

0 %

5 %

10 %

15 %

20 %

25 %

30 %

£ 0

£ 50.000

£ 100.000

£ 150.000

£ 200.000

£ 250.000

£ 300.000

£ 350.000

31-Dec-2018

7-Jan-2019

14-Jan-2019

21-Jan-2019

28-Jan-2019

4-Feb-2019

11-Feb-2019

18-Feb-2019

25-Feb-2019

4-Mar-2019

11-Mar-2019

18-Mar-2019

25-Mar-2019

1-Apr-2019

8-Apr-2019

15-Apr-2019

22-Apr-2019

29-Apr-2019

6-May-2019

13-May-2019

20-May-2019

27-May-2019

3-Jun-2019

10-Jun-2019

17-Jun-2019

24-Jun-2019

1-Jul-2019

8-Jul-2019

15-Jul-2019

% A

d Aw

aren

ess

Budg

etWeek Commencing

Traditional 2 week burst Lighter For LongerHeavy burst comms awareness Light weight comms awareness

Weekly Reach

Source: IPA Marketing Effectiveness in the Digital Era & IPA OOH Database Analysis 2017Source: Dentsu Aegis Channel Planner

OOH can be planned, i.e. lighter weights for longer, to maximise OOH advertising awareness and influence ROI

Lighter weights for longer can not only make OOH more effective, but also provides more weeks to amplify other media

P. 24

OOH boosts both short-term sales and branding Important as largest effects of recessionary advertising are in the long-term

Source: IPA OOH Database Analysis 2017OOH Power Users: OOH 15% of Media Budget (55 cases) vs Non OOH (92 cases)

Campaigns with a High OOH budget

BOOST BRAND VALUES / METRICS

Sales Activation Effects

+ 47%Long Term Business Effects

+15% Customer Acquisition+26% Profit+30% Market Share

MORE EFFECTIVE

+41% Brand Esteem

+32% Fame

P. 25

Brand Trust is especially important in a recessionCO

MPE

TENC

E EMO

TION

• Financial Performance

• Product Concerns

• Functionality

• Innovation

• Reliability

• Quality

• Customer Concerns

• Societal Concerns

• Heritage

• Sincerity

• Ethics

• Care

In a recession, consumers focus on the 2 key drivers on brand trust

2019 Edelman Trust Barometer Special Report: In Brands We Trust?

Brands and Consumer Trust summary report

1) Core Product Benefits 2) Family / Community Values

P. 26

OOH builds brand trust

1/2Feel as OOH is in the public space / familiar environment makes it more trustworthy

Over

OOH is in a familiar community and public domain

OOH delivers relevant messages, proven to be more effective & trustworthy

OOH is a high frequency channel on a large canvas driving brand fame & trust

Source: OCS, Sample size: 2,897 GB Based Consumers (4 statements on familiar environment / public domain) Source: Moments of Truth, 2020 – Combined Neuroscience, Ad Recall and Sales Effect

+17% Increase in effectiveness from contextually

relevant messages

Increase in honest / transparent metric amongst

consumers with multiple OOH exposures

Source: On Device Research Studies Average Equity Score for 3 Broadband / Energy Provider Campaigns

+8%

P. 27

OOH advertising is trusted

Source: OCS Belgium 2.045 respondents / Nielsen

110affinity index / adults

More likely to trust brands that are

advertised in (D)OOH

144affinity index / students

108affinity index / actives

Panels blend seamlessly into the environment. They’re strategically placed to be non-instrusive yet with a high capability of engaging with customers when they are

open to brand interaction.

About 56% of the population trusts messages displayed on billboards and other OOH formats. 58% of the customers who have seen the OOH ad are likely to

take action.

Advertisers dedicating budget in OOH saw an increase of more than 20% in brand trust.

P. 28

“Innovative” as a trust driver

73%Innovative Audience - Very Important

Now thinking about brands and companies in particular ... Which of the following characteristics are most important in helping you trust them?

Source: OCS

The OOH audience is often more receptive to trust drivers

Somewhat Important

Notice DOOH in National Rail Stations

Very Important

51% 22%

Index 108

75%agree

Notice ad in restaurant/barsIndex 106

69%Agree

Notice ad at supermarketIndex 152

29%strongly agree

Notice DOOH in street

Index 105

72%Strongly agree

Notice (D)OOH Billboard

Index 146

41%Strongly agree

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Recessions provide opportunities and advertising should focus on core brand values and consumer

Brands advertising in a downturn benefit in both the short term but especially the long-run

Numerous reports / case studies prove that brands should continue to advertise in a recession

OOH’s broadcast reach and key attributes demonstrate it is perfectly suited to help brands through a recession

Summary