By John Watson, chair, WPNC
Right now the economy is pretty much shattered, the weather is appalling and we’re all high-security imprisoned in our homes. What’s to look forward to?
Consider the following.
Households have reined in their spending to an unheard-of degree. Between April and June 2020 alone, for example, households reduced spending by £80bn (ONS). The current lockdown is going to make this happen all over again. Car sales have dropped off a cliff. Nobody’s buying clothes. Nobody’s eating out. Nobody’s commuting or traveling.
This is not a normal state of affairs. We are a consumer society, more so than most countries. And there is a wall of consumer cash steadily building up with few places to spend it.
It’s not hard, then, to see that once lockdown finishes, this cash is going to flood out. It’s already bulging. Look at house sales. Look at online spending. In those places where the money can be spent, people are reaching out and grabbing what they can. Meanwhile, interest rates are so low that borrowing money has essentially become free.
I don’t think we have to wait for the lockdown to officially end. Once the vaccination program gets fully underway – and by mid-February, notwithstanding Boris’ hyperbole, it will feel as though it’s pretty much there for most of the high-risk groups – then the mood change alone will start to drive a dramatic uptick in consumer spending. Once Easter arrives, the sun will be shining, epidemiologically, economically, and maybe even meteorologically into the bargain.
After the great influenza pandemic of 1918 (which killed more people than Covid has so far), the 1920s literally ‘roared’ back into economic life.
So does this mean brands should simply sit back, let the golden times return and carry on where we left off?
First, it’s a question of speed. The rate at which consumer spending returns will be dramatic, and so normal service will be too slow. Call centers won’t cope. At the same time, marketers who wake up one morning will find that their competitors have woken up the day before. Media slots will have been pre-empted and will become as hard to find as toilet rolls. Media costs will shoot through the roof as well: with every media business out to recoup losses, prime rates are going to be pushed as hard as they can be, and at a speed that will take many by surprise. On the supply side – agencies, production facilities, printers and customer care – there’s going to be a degree of stress that many won’t have experienced for a while. It will feel like a shortage.
Second, it’s a question of technology. Lockdown changed the marketing world forever, and at a speed that nobody saw coming. Websites designed even a couple of years ago struggled to keep up. When this consumer cash hits like a tsunami, it’s clear that the majority of websites – which have now become the primary interface with the consumer – will not be up to the job. Organizations that have fine-tuned their online experience will be ahead of the game, and in the new fast-moving world that will exist post-pandemic, the consumer will be more than happy to engage with a firm that is fleet of foot ahead of anyone else. Payment technology is going to be the biggest issue: if websites struggle with all the new payment methods available, revenues will limp along.
Third, it’s a question of audiences. Take the fundraising world. In 2020, many charity supporters switched their pledges from organizations traditionally close to their heart to more immediate concerns. Not everybody will switch back. If the aforementioned online experience is shabby then the new audiences, especially the younger ones, are going to stay away. There will be more demand for engagement; the traditional ‘do not disturb’ approach of some organizations isn’t going to stack up against a more passionate group of supporters.
So while we’re all sitting at home, trying to figure out how to get those funny backgrounds on Teams to work, and trying to remember how to unmute the sound, it really is the right time to be thinking about the new world that is only a few months away now.