Thomas Friedman once wrote, “Capitalism and political systems—like companies—must constantly evolve to stay vital.” Now the COVID-19 pandemic has presented us with a unique opportunity to evolve and emerge stronger and better for all we serve.
But what path do we follow?
The theory to help guide us is embodied in “stakeholder capitalism,” the concept that companies should focus their returns beyond shareholders to various stakeholders including employees, suppliers, partners and customers—as well as the environment, local communities and society in general.
This concept can have powerful applications in the advertising industry. Below are the three stakeholder groups that brands should prioritize now to help with long-term recovery and sustainability.
With COVID-19, everything came to a stop and ultimately changed. Brands can’t continue, or return to, business as usual. We are operating in a new normal.
Messaging is really important now. It must be squarely focused on the consumer. It must actually benefit the consumer in some way. It must be suitable for the context in which it’s placed. The hard-sell, “buy here, buy now” mantra comes across as tone-deaf.
One of Zillow’s taglines gets to the heart of how we’re all feeling about our homes: “Now is the time you recognize how important your home is.”
Hotels.com recently pivoted messaging for a campaign produced in March. The site changed its tagline from “Be There. Do That. Get Rewarded” to “Just Stay Home,” promoting social distancing efforts. Even small, strategic changes such as these show consumers you’re listening.
Wasn’t this sensitivity already important? Yes, but the emphasis on hitting certain campaign performance numbers didn’t always correlate to consumer value.
As campaigns stopped, did sales stop right in line with ad spend? Of course not. Short-term performance numbers to which brands have been addicted to weren’t real. We’ve known this all along. What they are built on are loyal customers whose perceptions and experiences drive their purchasing power.
One big change on the horizon for the advertising industry is the replacement of third-party cookies. While originally well-intentioned, third-party cookies are less friendly to consumers and the ad environment. As we build a new technology, short-term gains can’t be the priority. We need to stay focused on long-term value.
To start, we need to adjust the definition of performance, and end counterproductive practices to boost “performance” numbers, including double-counting conversions from multiple sources, not aggressively rooting out fraud and focusing on price more than value.
As trusted partners, we need to work collectively toward meaningful KPIs, transparency and reducing waste. As an industry, we are heading in the right direction.
For example, the Incorporated Society of British Advertisers’ recent study on the programmatic supply chain outlines stark truths about levels of waste that can be found in the ecosystem. Such reports help to pave the way for change. For brands, the big takeaway is to focus on the value they’re deriving from advertising. And a situation like COVID only forces brands to get better. Attribution should get better, reducing waste and fraud should get better and the return should get better.
The work toward change is not on the ad tech side alone, as brands have a role in placing value on the technical enhancements that help them reach the audiences they’re after. If the goal remains to squeeze every dollar for one of the performance indicators I outlined earlier, then we’re not going to get very far.
At a time when brands are doing wage reductions and furloughs instead of permanent layoffs, it’s clear we value our employees and the work they do. As we emerge, let’s engage them at their best.
Company culture and employee value will be an important element to continue building during and past the pandemic, as companies that miss the mark will have their reputations tarnished and will face employee backlash. We are already seeing big investments in this area from companies like Amazon and Twitter.
The social media platform recently announced that its employees can work from home forever, emphasizing the importance of both safety and work-life balance. Companies can look to this as a major turn in the corporate world’s standing on flexible work environments. This offering is one of many ways that companies should be considering to maintain high levels of morale and engagement.
We know that this is a pivotal moment in time that will leapfrog us into a future we envisioned decades away. The steps we take now are more important than ever. Shortsightedness and going back to the old is bound to leave us behind.