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Not all recoveries are created equally

It was 10:03am on March 23rd when the phone rang. I knew before I answered exactly what was going to be said.

“Sorry Andy, this isn’t the easiest call, but I received an email from the global team and they have completely cut the marketing budget. It’s really not a reflection of the work, but my hands are tied.”

I put the kettle on, like any Brit would do in a crisis.

Two things struck me at that moment. Firstly, the decision felt like a very knee-jerk reaction. Secondly, it showed that the decision making power sat firmly at HQ, in this case the U.S.

Every action has a reaction

Over the next few weeks, like most businesses, we pivoted, zoomed and hustled with one eye on the ever-changing news agenda. It was interesting to see the hugely different decisions being made by governments from around the world in tackling the same threat.

Some closed borders, while others remained open. Some introduced massive stimulus packages, while sadly others could not. Some said to stay at home, while others encouraged business as usual. Whatever they decided, one thing is for certain: For every action, there is a reaction.

In New Zealand, the Government was quick out of the blocks. Borders were progressively closed, a level-4 alert system put in place, mass testing rolled out, stimulus packages introduced, and now after coming out of the woodworks, an app introduced to track and trace infections.

New Zealand, and in particular Jacinda Ardern’s leadership, has been hailed around the world – to the extent of a petition circling the UK suggesting a war declaration followed by instant surrender, to force Jacinda to take the reins.

Fast forward two months and at the point of writing this article, New Zealand is now out of the deepest waters with all major restrictions lifted and Kiwis able to enjoy life with a sense of normality, while monitoring and tackling Covid-19 clusters and outbreaks.

Among some circles, there is an opinion that the steps taken were an overreaction by the New Zealand Government. However, you only have to look at what’s happening in other markets to realise this argument is nonsense. While New Zealand (up until last week) successfully managed to declare elimination of the virus from a health perspective with 24 days with no recorded cases, the economic impact bears a very visible scar. Unemployment is up with the largest drop in jobs since reporting began and the country’s highest unemployment rate since the 90s, with many experts saying a looming recession is almost inevitable.

The impact on New Zealand’s PR Industry

Out of all the marketing disciplines, PR is arguably the most resilient in times like these. The way in which brands communicate both internally and externally will have a major impact on performance. But it is by no means immune.

Within the PR industry, there are of course some that are doing better than others. Crisis communications agencies are likely busier than ever, while specialist agencies in sectors like tourism, hospitality or events have regrettably been hit hard.

The good news for the PR industry is that there is a pathway out of the pandemic. Understanding that different countries have taken different approaches going in, it’s reasonable to assume the way out and the “new norm” will be different too.

The road to recovery

One of New Zealand’s key defence weapons is the fact that it is an island. Closing the borders to the rest of the world has no doubt played a major role in containing the outbreak. In the short-term, we expect to see New Zealand act like a mini-economy, which from a PR perspective might change the notion of what a flagship account looks like.

Businesses that operate in, or sell into the local economy, are more likely to recover faster and therefore have more marketing budget available, as opposed to global brands that rely on international transactions, fluctuating exchange rates and a centralised marketing spend.

That said, countries like Fiji, and Australia to an extent, have been as successful as New Zealand in containing the virus, triggering talks of a “pacific travel bubble” between those countries at least risk. This would be a welcome boost for the travel industry and their respective travel PR agencies.

Another major factor in the New Zealand PR industry’s recovery is the Government’s Wage Subsidy scheme, which offered to pay businesses 80 percent of their employee’ wages for 12-weeks – for those who saw a 30 per cent drop in revenue – in a bid to keep staff in jobs.

Although a recent investigation found over 70 companies who received the support still folded, the support scheme was extended a further eight weeks for those businesses with a 40 per cent drop, and now marks Q4 2020 as a critical period for businesses across the country, as they peel off the band-aid to see if the financial wound has somewhat healed.

Unfortunately, there will be many agencies that are still struggling by then, so I think we can expect to see mergers and acquisitions on a massive scale. While none of us would wish that of any agency, the silver lining might be that we see the emergence of more integrated models that will drive better, more creative communications to push the economy forward.

Working arrangements will also influence the PR industry’s recovery. While New Zealand has eased most restrictions, it is encouraging heightened awareness for future outbreaks and risks and there is no assurance we won’t head back up a level or two should risks evolve.

Many businesses are still offering staff the option to work from safer home comforts and long-term we will no doubt see some super creative working models, from four-day work weeks and work-from-home policies, to adhoc rosters and weekend workdays.

These are just a handful of factors that will determine how the New Zealand PR industry recovers. A few or more of these may apply in other markets. The point is that every market is unique and the smart brands are the ones that will capitalise on that, giving marketing power back at a country level. By doing so, we can speed up the recovery process and ensure that brands are getting the best bang for their PR and marketing buck.

Andy Scales is the director of CampaignLab

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