Planning for 2021: Part 3 – Channel considerations
In the third and final part of our ‘Planning for 2021’ blog series, we focus on how the pandemic has affected channel consumption and what this means for next year’s budgets.
Global lockdowns – a controlled experiment in media consumption?
The pandemic immediately and dramatically affected how people use media channels and the internet. These effects have been consistent at a global level, with minor differences across markets. As a result, we have learned the effect of nationwide lockdowns on media consumption, as if by controlled experiment.
The key questions are how permanent these changes will prove to be as lockdowns lift and whether the world will return to previous media consumption patterns or not. We have already seen some behaviours stick, whilst others proved to be a passing trend (are you still learning Spanish? Doing online workouts?).
E-commerce spiked during the pandemic – how permanent will this be?
The most obvious effect of coronavirus on consumer behaviour has been the growth in e-commerce. According to BazaarVoice, YoY growth of e-commerce orders has fluctuated between 65% and 160% since March. It is currently trending down, having hit its peak in mid-April. With stores re-opening again, customers are returning to traditional shopping patterns.
However, many consumers are either still scared of catching the virus, conscious not to spread it further, or both. With new regulations in place around queuing and masks, the capacity for customers to shop in store is, temporarily at least, reduced.
- In June, Ipsos MORI found 26% of British people considered the virus a threat to them personally.
- As the pandemic continues, the same survey found more people thinking the virus would last longer than they originally thought.
- 68% of people think that we won’t be back to “normal” for at least 6 months to 2 years – compared to 64% in April.
- Across the world, this has translated into a decreased appetite for visiting shops, with 39% of people worldwide not planning to return to shops “for some other or a long time”, a proportion much higher than the percentage of trade as e-commerce, pre-pandemic
- Globally, 50% expect to shop online more frequently after the outbreak is over.
Source: Global Web Index
From the increase in e-commerce shopping, we have a cohort of new customers who are now discovering the benefits of online shopping. A survey in the US by Morning Consult found 9% of Americans have bought something online for the first time – over 30 million people. The growing aging population around the world has also been shifting online, accelerated by the pandemic. One in 4 Japanese people are aged over 65 and the Rakuma marketplace app has seen a thirtyfold increase in 60-90 year old users.
Beyond e-commerce, we have seen significant shifts in online banking, a move to cashless payments, increased home-streamed entertainment and more. Some of these new habits and investments will stick.
Beyond e-commerce, the pandemic has increased media consumption
Outside of shopping, the pandemic has increased media consumption as a whole and this has benefited several channels. One clear case is video streaming. Subscriber video on demand (SVOD) service Netflix grew by 16m subscribers globally during the pandemic whilst other players such as Zee5 in India saw a 100% increase in premium members. Similarly, online video has also grown dramatically, with 51% of all adults watching more online video as a result of the pandemic (source: Global Web Index).
Similarly, social media companies have seen great growth. For example, TikTok saw a 15% daily usage growth after the pandemic whilst Facebook recorded a 27% increase (NYT).
Shifts in television consumption are also interesting because linear television watching – that is, watching a television programme at the scheduled time – has been in a downward trend for some time. However, coronavirus has led to more people watching live television, partly because television is a trusted medium for news. TV companies have offered more streamed viewing and sped up their plans for growing their video on demand offerings. In contrast, social media has suffered from an onslaught of fake news and misinformation and is therefore seen as a less trusted medium, although this has not decreased usage.
Some channels lost out during lockdown
On the downside, several traditional media channels have struggled during lockdown, either as a result of losing audience or from a large drop in advertiser demand:
Print circulations have been in long term decline with a shift to digital formats, hastened by lockdowns. Retailers who are heavy users of print have pulled advertising spend which has meant publishers have been hit with the double whammy of lost advertising revenue plus declining circulations and readership, impacting cover price revenues.
Reduced travelling for all has reduced outdoor exposure, with premium commuter formats being particularly hard hit as people worked from or stayed at home.
Reduced commuting as a result of large-scale homeworking has also had a negative impact on radio consumption for specific audience segments, although more in-home radio listening has partially compensated for that. Radio is becoming less effective in reaching audiences in high-traffic cities such as Cairo, Lagos and Mumbai, partly because of lockdown and partly because of the impact of longer-term government policies to reduce traffic.
Cinemas were forced to close and effectively have been on pause with some smaller forays into drive-in movies and outdoor screening in some markets. As a result, large scale blockbusters have been either held up or sold straight to video. Cinemas are gradually re-opening but in many places with reduced capacity, which will affect viewing figures. The halt on production will also slow up the delivery of new films in the next couple of years.
Increased audiences represent an opportunity
A key opportunity for marketers is the impact of increased audiences (for digital channels or television for example) coupled with decreased ad spend, which in many cases should result in decreased cost, for:
- Auction-based online advertising (paid search, paid social, programmatic display)
- TV which is traded on a supply and demand basis
- Other above the line media, open to negotiation as they seek to bring advertisers back on board
This presents strong advertising opportunities for sectors that are seeing increased or unaffected demand, or if your brand wants to migrate more customers to online channels.
- The pandemic has accelerated rates of e-commerce
- At least some of this growth looks set to endure
- There is residual anxiety about the virus, with consumers expecting it to continue longer than first anticipated
- Video streaming and social media were the big winners of the global lockdowns
- TV saw a revival too – based on it being a trusted medium in times of crisis
- Cinema, print, OOH and radio lost out
- Increased online audiences make this a good time to shift investment online for FY21/22
If you’re planning your marketing budgets for next year and would like to know how to capitalise on international opportunities in a post-Covid environment, please get in touch.
Sarah Jennings | CEO
Oban International is the digital marketing agency specialising in international expansion. Our LIME (Local In-Market Expert) Network provides up to date cultural input and insights from over 80 markets around the world, helping clients realise the best marketing opportunities and avoid the costliest mistakes.