Life in the U.S. sees major disruptions with the nation edging closer to shutdown as the virus continues to spread. Europe has become the epicenter of the outbreak with European nations sealing borders and enacting strict lockdown measures. Across the global economy, consumers are rocked by unprecedented volatility as economic levers are pulled to weather the storm, but often without global coordination.
The private sector has stepped in to aid governments across regions. In the U.S., Google and other leading companies are assisting the federal government with drive-thru testing and more. In Europe, luxury group LVMH halted assembly lines to begin producing hydroalcoholic gel to help French authorities combat the spread of COVID-19, and other brands such as Rolls-Royce may be following suit. Over the weekend back in the U.S., international travelers were stuck in packed crowds and long lines for hours to undergo additional COVID-19 screenings upon landing back in the U.S. ahead of the newly-enacted travel ban.
Since Friday, many retailers closed stores or reduced hours across the country, emailing the news to customers and making it clear that “it’s not business as usual, but online stores are still open.” As to be expected amid the volatility and social distancing measures, consumer spending is declining fast but at pace with other economic signals — Morning Consult noted this morning that U.S. consumer confidence is at a two-year low amid the virus outbreak.
Trends Across the PMG Portfolio
Brands are looking for advice and concrete data to support the decisions being made across the supply chain. As of now, questions and commentary around the following topics remain top of mind for PMG customers and media leaders as the COVID-19 outbreak continues.
- Ecommerce Performance Trends
- Consumer Media Consumption Shifts
- Store Closings
- Brand Communications Across Channels
Ecommerce Performance Trends
Since last week, PMG has been tracking day-by-day and hour-by-hour performance trends across our portfolio of brands in the U.S. As it pertains to ecommerce:
- Online traffic increases help pick up the slack against store closings, work from home operations, and social distancing efforts. We’ve seen upward ticks between six to 18% depending on the scenario.
- CPMs, CPCs, and corresponding digital cost metrics have remained constant and consistent over the last few days. For the time being, we’re seeing these strengths ease concerns as brands are able to stay efficient despite the headwinds and ever-changing business climate.
- Click-through rates (CTRs) have seen an upward trend, up almost 61% in some instances — signaling that consumers are engaging with more content in these last few days than was to be expected.
- Conversion rates, however, are a bit of a mixed bag and specific to the situation. Despite the increase in CTR and traffic, we are starting to see conversion rates drop especially in the retail space, ranging anywhere from 8% to 44%.
Digital Media Consumption Will See a Significant Boost
Following the patterns seen in regions hit first by the virus outbreak, digital media consumption is expected to increase, according to eMarketer. Social media and other digital platforms will likely see huge upticks in time spent as people turn to these platforms to stay connected and informed amid social distancing measures. In like manner, streaming video services such as Disney+, Hulu, and Amazon Prime Video will be even more popular among subscribers as people seek a break from the news. (It also helps that studios are releasing box office hits earlier than anticipated amid rapid school closures and WFH arrangements.)
Popular media platforms such as YouTube and Tik Tok will also likely see a monumental boost as kids and teens spend more time online and at home. Lastly, event cancellations amid coronavirus concerns are encouraging marketers to reallocate budgets from OOH and events into digital channels while also ensuring that any creative and copy are not insensitive or travel-related. As store traffic began to decline in the U.S. late last week, this shift was an immediate reaction to reallocate funds to those higher-performing channels.
Store Closings
To close or not to close? That is the question on every retail marketer’s mind. While it ultimately comes down to the brands’ decision, there is a playbook for either scenario that’s based heavily on regional market strength and appropriate messaging. As of today across PMG’s portfolio, it’s about a 50/50 split to stay open or close stores. A few thoughts on the topic:
- For those that remain open, messaging must be considerate of the situation. It’s best to ensure that all automated ad rules are reviewed and reviewed again, especially in markets where COVID-19 cases are more concentrated. In other words, caution is the better part of valor in this situation.
- For store closures, having a seamless shift to an online-only presence is critical. While no entity will be operating in a “business as usual” environment anytime soon, many companies are still open for business and should communicate that clearly.
Brand Communications Across Channels
First and foremost, marketers have a responsibility to protect the relationship with each customer and her experience with the brand. As we look to the various “levers” that can improve performance, understand that each consumer touchpoint (particularly across social platforms and some programmatic environments) during this time will be perceived through a different lens than ever before. During crises, it’s important to not be tone-deaf to the situation at hand.
Most brands have been taking a somewhat “business as usual” approach to organic social content strategies (global handles) but reducing paid social advertising or pausing altogether. While some have announced store closures, many were slow to react over the weekend. Though, we expect this to accelerate significantly in the days ahead.
Planning for a new creative direction in response to the crisis is underway across leading brands — moving from reactionary to proactive and contingency-based that builds appropriate brand communications for this protracted new reality. If nothing else, we recommend each brand take a closer look at digital programs and communications scheduled over the next two to four weeks to ensure all communications are considerate of the current social and economic climate.
PMG will be monitoring media and market trends closely as we continue to provide customer guidance in the days to come.