Coca-Cola is cutting its ad spend to make up for lost sales, but its radio silence will hamper the company’s branding once it resumes business post-COVID.

WHAT HAPPENED: Coca-Cola cut its global marketing spend for Q2 due to widespread bar and restaurant closures caused by COVID-19. The company says it will shut off advertising entirely in many countries to free up more ad spend later in the year.

WHY IT MATTERS

  • While consumers are spending less right now, brands need to maintain marketing and customer communication during a crisis to ensure customer loyalty. Instead of shutting off its marketing entirely, Coca-Cola should pivot its advertising content and look for more cost-efficient and impactful ways to communicate with its audience right now. Coca-Cola is known for its expensive ad campaigns with mega-celebrity ambassadors, but rather than follow its typical formula, an advertising campaign around community support will paint the company in a more positive light in the long term.
  • Airbnb took a similar approach, cutting all of its marketing spend at the end of March. While this will save an estimated $800 million in 2020, Airbnb came under criticism for its lack of support to hosts—removing cancelation fees and offering little-to-no support to those reliant on Airbnb for income. But now that it’s offering a $10 million relief fund and providing grants to hosts, the company is missing out on the opportunity to both market these initiatives and counteract any negative press. While the company suffered a 40% decrease in March bookings, knowing that hosts were supported during the crisis will incentivize travelers to use the platform when travel resumes.