With 2020 now well past us, COVID subsiding and the vaccine rollout progressing, 2021 is looking much more positive for Australia both socially and economically.
After a challenging year surrounded by border closures between states and internationally, plus lockdowns, restrictions on the numbers that could visit a home, bans on singing and dancing, and the overuse of the words “unprecedented” and “pivot”, things have started to turn back.
At the time of writing, South Australians and Queenslanders are now able to dance, while those in NSW will once again soon be able to stand and drink at an indoor bar. Choirs are also now in full voice in NSW as long as the group does not exceed 30, while in Victoria the junior footy season is set to commence, although the kids will be banned from celebratory high-fives.
We are also seeing CBDs across the country actually starting to look like CBDs, as opposed to ghost towns or sets from Will Smith’s ‘I am Legend’.
In reality it’s almost back to normal – except for the wide use of QR codes, a technology that may have been ahead of its time. Let’s not forget this particular innovation, developed by Toyota subsidiary Denso Wave, received a panning from the mobile industry for being old fashioned even when it was first launched in 1994.
While there is still some way to go before we reach a stage where Australia has herd immunity and COVID joins Black Death and Spanish Flu in the history books, the current state of play has seen business return with vigour.
Consumer and business confidence are clearly bouncing back.
The latest ANZ Roy Morgan Consumer Confidence Index showed a one per cent increase at the end of February to sit at around the long-run average. Conversely, NAB’s index of business confidence jumped to 10 in January 2021, up from -66 at the end of March last year when the pandemic got real.
Another strong indicator of the level of business confidence is the marketing sector – often the first area cut when conditions become challenging. We saw this play out with the onset of the COVID recession, with media outlets across the country announcing significant revenue falls, even those who reported increases in audiences.
Unfortunately for brands that do meaningfully reduce their marketing budgets, such decisions can adversely impact their trajectory and potentially make their commercial positions unrecoverable.
On the flip side, those that invest in such times – and benefit from greater concessions from media operators – not only maintain their market position, but come out stronger as conditions revert.
As noted by Vince Mitchell, Professor of Marketing at The University of Sydney Business School, most studies show advertising and promotion expenditures in recessions produce ROI, contributing most to earnings in the year of expenditure.
And it is not only that particular year that will experience upside, with Mitchell highlighting how the investment will contribute to earnings for up to three years following for consumer goods, and two years for industrial products. He says advertisers that boost spending levels in a recession can gain 1.6 percentage points in market share in the first two years of a recovery.
However, for those brands that had to make cuts to marketing, it is still not too late to undo the damage, and it will be interesting to see who exactly has gained and lost market share over the next couple of years.