Will ad spend rebound in 2021? — Erik Huberman // Hawke Media

Quotes

• “I saw a lot of people panic in March and April but what I see is there was already steep recovery. I know that when there’s a recession, the first thing they cut is marketing. That made sense for the past millennia but the difference is, in the past 10 to 20 years, digital is actually a big part of sales. Your marketing is your foot traffic. So it’s actually like saying, shut down the road when there’s a recession. We can’t afford to re-pave the road just shut the whole thing down.” - Erik “If you’re a business that can survive without foot traffic, sure. If you’re a SaaS business that has renewal contracts and you’re not worried about the new acquisition and you want to wait until the dust settles. I like  running in the opposite direction of a crowd when everyone is pulling back, I double down.” - Erik“We convinced most of our clients to stick with it and double down and our average client doubled their revenue in Q2 of this year. This is barring travel, leisure, hospitality. Everyone else skyrocketed.” - Erik  “We had record sales for swimwear lines in April because guess what a lot of women wear on Tik-Tok. It’s interesting that things change and as a business owner if you pivot and adapt, you probably did really well.” - Erik“Going forward, I think the people that are still on the sidelines are the big brands. The massive brands had the pull out because they can’t move fast enough so they’re a lot more risk-averse so when they saw things falling apart, companies like P&G and Unilever, shut down their marketing heavily. So, the companies that served bigger brands like that hurt their agencies and they got crushed.” - Erik“The funny thing was, all the small businesses benefited from it because when all those businesses pulled out of Facebook, the cost to advertise on Facebook dropped 30% so the small business saw a drop in their costs, they ramped up and e-commerce market share of consumer purchases in Q2 alone went up over double.” - Erik“The pandemic is going to cause a hit to the economy. The deaths, hospitalization, the closures, all do but what’s way worse for the economy than this is panic. When panic is over and I think it is, I think people will get what we’re doing now and now it’s more frustration than it is panic.” - Erik“I think this is the third quarter of the football game. We have the initial shock of the kick-off and first couple tackles and getting hit in the mouth and then things start to settle down and we have a little breather, we saw things kind of normalize and then we have our second kick-off and now all of a sudden we’re in the third quarter.” - Ben “I do believe and I don’t have the stats for this but all the money that could’ve been spent on travel, leisure, and hospitality is being spent on the stock market and goods. People are investing some of that money that they’re saving and we have higher savings than we’ve ever had in 30 years in the US.” - Erik“If the number is right, with 6 ½% unemployment, that means 93.5% of people still have their jobs, making money but have nothing to do. So yeah, I’m gonna go shopping.” - Erik“Optimism is the biggest driver. Everybody is online now. There is no brick and mortar so it’s no longer about being in a great location. It’s having great marketing that actually helps you benefit online.” - Erik“In Q2, 30% of purchases are online and Q3 is like 27%. I’m not sure when it is going to normalize but I think it will stay above 25% give or take. It will definitely stay above 20%. For next year, I think these big CPGs, it was 13% in February, so pre-COVID. That’s an important part of our business but it’s not a huge part. You pay attention to 13% but you’re not gonna double down on that. Now it’s 30%. So now all the big guys who move slower, they will realize, this is no longer a department, it is a core business.” - Erik“So I think the headline here is, the big boys are coming back. Marketing is gonna get more expensive so advertising budgets at the top tier are gonna come back.” - Ben “The market share doubled so even if the cost goes up a little bit you got so much more market share available now. I think you’ll be fine as the big guys. Word of caution I have for D2C companies is using your 2020 projections and extrapolating them.” - Erik“If you’re an agency, advertising spend is going to increase massively next year because the companies that held off are coming back and the companies that didn’t hold off grew massively. I think digital is going to skyrocket next year. Then it’s just gonna be, how does it level out because of the supply and demand nature of it and the price elasticity.” - Erik“There’s a lot of noise. The biggest thing, and I think this hasn’t changed and I think people just haven’t paid attention to it, it all comes down to, you have to keep and own your customer. Where you need to continue to win is, you have to focus on building a wall around the customer so that they keep buying from you and keep coming back because it will get more competitive as the cost go up.” - Erik“I think you’re gonna see brands that double down on content and engagement and built ecosystem for their audiences succeed. Red Bull is a good example of this. Good content, good way to reach their audience. Things that they want to see that had nothing to do with the product, ways to keep them engaged because people are consuming 70% more digital content now than they did pre-COVID. I don’t think that’s changing either.” - Erik“That’s the key in general, as a business owner, watch what’s going on in society. We know everyone’s at home but they want some adventure. But be smart and logical. When the vaccines proliferate, people are gonna want to party their ass off.” - Erik