1. The economics of the lockdown – the business impact in Sweden and Finland
2. How have Nordic Marketers Responded to the Covid-19 Crisis?
As macro- and microeconomic data from China and other major economies become increasingly available, Nordic market data remain sparse. To remedy this, we have conducted a survey to create a granular picture of how marketers in Sweden and Finland have responded to the crisis. As a backgrounder, we would like to showcase the excellent reference data by Google on the effect of mobility restrictions in Sweden and Finland.
These graphs demonstrate the differences in social distancing policy between the neighbouring Nordic countries. The reduction in movement in transit stations and retail & recreation locations is far more severe in Finland than in Sweden. These policy choices are presently under intensive debate, and are clearly evolving. The graphs also support the assumption that the Swedish economy, up until now, has been less severely hit than other EU economies. The PMI-Services index sank to just below 47 in Sweden in March, practically the lowest level in 10 years, but vastly better compared to the 27 reading for the Eurozone!
The correlation between social distancing and household spending is not only intuitive but has been established by the National Bureau of Economic Research in the US (see below). A simple truth that very few of us have previously needed to reflect upon is that the less we move around, the less we consume, or conversely allow to be produced, or generate GDP that is. Therefore changes in mobility are one of the key indicators we could focus on.
Source: National Bureau of Economic Research
The lockdown has obviously impacted different sectors of the economy unevenly. While official economic statistics are generated with a significant delay, Accountor (a major accountancy firm in Finland) analysed the virtually real-time invoicing data of 10.000 companies. This data, collected on April 2, is probably the most accurate indicator of economic impact at the moment.
Swedish and Finnish marketers are making major adjustments to budgets
Our survey of marketing intentions shows the full extent of the impact on marketing budgets and decisioning in both countries.
The survey has been conducted by Avaus in partnership with IAB Sweden and Finland, and the Data Marketing Association of Finland. The survey was conducted late last week and early this week (WK14 – WK15 2020)
The study shows that 61% of marketers in Sweden and 66% in Finland are revising budgets down, while 34% and 31% respectively will maintain their pre-crisis budget levels. Even if social distancing policies have so far been rather different in Finland and Sweden, the response of marketers is highly similar.
The differences between sectors are significant. In Financial services 41% of respondents will keep budgets unchanged, while in travel only 11% and in manufacturing 13% hope to do so. Telco and Retail place in between.
Brand is key for Swedish, customer loyalty for Finnish marketers
The study shows major differences between marketing cultures in Sweden and Finland. Swedish marketers emphasize protecting and strengthening the brand, whereas Finnish colleagues invest in customer loyalty and defending the topline in times of uncertainty.
(Loyalty priority in Finland is up from a 14% pre crisis level, see Marketing 2020 study published by IAB FInland and Avaus 10/2019)
Allocations are being shifted to eCommerce, data, addressable channels and platforms
The allocations within downsized marketing budgets are also shifting significantly. The clear priority now is that resources are mobilised to boost direct sales and eCommerce ramp up. Almost equally important is investment in customer data and data management, which will continue to receive incremental funding. Addressable channels, ranging from email to telesales, also stand out as budget priorities, attracting an increased share of spending in the new circumstances.
We would also highlight the observation that online sales tactics and customer communications currently seem to overrule the longer term strategic buildup of marketing capabilities.
Marketing headcount under some pressure
The Covid-19 crisis is strongly reflected in company priorities, and the survey results clearly point out that taking care of employee well-being and attending to immediate customer daily concerns are now seen as far more important than the securing of revenue.
The study also indicates that marketing has taken joint responsibility for Covid-19 policy communications and outbreak-related CSR-issues. This should enhance the strategic relevance of the marketing function.
Nevertheless, the survey results do indicate that headcount may be under pressure. Almost a third of Swedish respondents expect the number of marketing personnel to decline during 2020, while only one of seven of Finnish counterparts expect the same. On the other hand, a significant 19% in Sweden, compared to only 9% in Finland, expect marketing headcount to grow this year.
We will continue to follow the developments through the crisis. Both Nordic agencies and marketing departments have been hiring through the last five years, but anecdotally there are now hire-freezes, or at least significant head-winds, in most organisations.
We hope that the Nordic CMO Covid-19 Survey will offer some peer guidance for marketing officers in these emergency circumstances and who are currently under pressure from every direction. The Survey testifies that no marketeer is alone with the present challenges.
Study: The Impact of COVID-19 on Marketing Budgets 2020