M&S cuts marketing spend by a third as it accelerates shift to digital

Marks & Spencer is cutting its marketing spend by £50m this year, with much of that saving coming from TV and press as the retailer turns to social media amid the pandemic.

Marks & Spencer (M&S) is moving more of its marketing budget from traditional media to performance-based channels as Covid-19 “accelerates” its shift to digital, and the pandemic forces its clothing and home division to become a “pureplay” online business.

“The first place [the cuts] will be noticed is in above-the-line campaigns; there are less people travelling around therefore the requirement to use nice, old-fashioned media has changed,” CEO Steve Rowe told Marketing Week on a press briefing this morning (20 May).

“On the flipside, we are doing more and more social media and social marketing. It will be a further movement of traditional media to digital media.”

M&S is cutting its marketing spend on clothing and home by £50m this year. That means spend will fall to around £100m compared to the around £150m it has spent in the past few years. Chairman Archie Norman said there is “no point” in spending a lot of money in marketing when there are no customers there.

“This trickle of sales in clothing is mostly online, there’s no point spending a lot of money marketing until the demand comes back and we don’t expect a return in demand to be back to anything like normal any time this year,” Norman told Marketing Week.

“We’re a pureplay business with clothing at the moment because that’s where our volume is. If you’re a pureplay, suddenly your marketing is all about online. The demand we’re seeing online is completely different to what we have seen before and therefore what people are buying now in clothing is completely different to what it would have been a year ago. To compete you have to swivel your whole marketing platform.”

Why are brands turning to direct response amid Covid-19?

M&S expects revenue from its UK clothing and home operations to plummet by 70% in the four months to July, with only a gradual return to original budgeted levels by February 2021, creating a £1.5bn hole in annual revenue.

During the first week of March alone, UK clothing and home sales fell by 6.2% and then by 26.9% the week after. At their lowest point to date, clothing sales dropped to 16% of their level a year ago.

M&S is anticipating a decline of 20% in UK food revenue during the same period, impacting annual revenue by £400m.

“On the food side, people’s shopping choices are only being made out of emergency at the moment so circumstances are different,” Norman said. “But you can see either way out of this we’ve learned a lot about what we can do with the marketing spend, we’re learning rapidly with what we can do online.”

In spite of the shift to more performance-based marketing channels, Rowe said M&S is still thinking about long-term brand-building.

“You have to think about both things at the same time,” Rowe said. “We need to make sure we’ve got trading positions properly established but at the same time you do have to build a brand for the future. The quality and value aspect of our brand, those wardrobe staples that are suitable for staying at home, are areas we will absolutely be focusing on now.”



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