COVID-19 Crisis: Week 1 Marketing Insights

PMG is providing near-daily observations on the economic implications of the COVID-19 outbreak. Today’s briefing is outlined below.

It’s been a long week. We hope you’re staying safe and healthy — remember to get some fresh air today.

In the U.S., the number of COVID-19 cases exceeded 11,000 as Congress weighed economic stabilization packages that could top over $1 trillion and may include some form of universal basic income for taxpayers. In China, Thursday came and went as the first day with zero new local infections, just as the economy began its revival after grinding to a halt earlier this year.

In California, residents were ordered to stay at home, the most drastic measure taken by a state leader to slow the spread of disease.

In Texas, Governor Abbott ordered the outbreak a public health disaster (the state’s first since 1901) and some of the strongest recommendations for stopping the spread of disease, including a mandated closure of all schools, gyms, restaurants, and bars. 

In New York, Governor Cuomo waived mortgage payments for 90 days and addressed concerns to clarify that the state will not be going into lockdown.

Restricted or unequal access to testing remains an overwhelming concern for people around the nation, an issue only magnified in recent days by asymptomatic celebrity diagnoses.

U.S. consumer confidence is in a free fall.
Chart courtesy of Morning Consult

U.S. consumer confidence continues to drop as fear of the virus is on the rise. A recent AP-NORC poll found that two-thirds of Americans find themselves very worried about the health of themselves and their loved ones, presenting challenging business conditions for companies not tied to essential services, healthcare, and goods. 

For many, the day-to-day volatility of stock markets is cause for major concern, and by now, most people have probably paused their Robinhood push notifications. On Thursday, early morning declines caused the circuit breaker to trip — the 4th time it’s been triggered since the outbreak. Of note, the New York Stock Exchange is closing its floor and switching remotely for the first time ever after a worker tested positive for the virus. 

Combined with mounting layoffs (70k unemployment filings last week in the U.S.), public and personal safety concerns, and the aggressive measures being used to combat the spread of disease, people are becoming increasingly concerned about their financial well-being and the impact this crisis will have on their personal finances. Despite a pending stimulus package by Congress and the Federal Reserve making an emergency rate cut to a range of 0-0.25 percent (the largest emergency reduction in its 100-year history), markets remained volatile until small gains were made on Thursday. This week, the IRS announced it would delay tax payments for some people and small businesses by 90 days with more relief likely on the way.

Many are referring to the rapidly-approaching recession as a Lockdown Paradox in which overcoming the virus means shutting down the economy. Online finance-related conversations are hyperfocused on these same concerns as investors continue to react strongly to updates about the outbreak and how the economy and consumers are faring amid unprecedented disruptions.

All that to say, it’s becoming more clear that the economic and societal effects of the crisis along with the aggressive measures to curb the spread of disease are clashing and will continue to disrupt business across sectors for the immediate future.

The travel industry is struggling as measures to slow the outbreak escalate. Airlines have announced various cutbacks, including employee furloughs and parking planes until demand recovers.

The U.S. State Department shared the message “Don’t travel abroad” and is advising Americans to return home or stay in place as the threat of the global pandemic grows. With this announcement, the global travel advisory will be raised to Level Four — the top-tier warning commonly reserved for serious disruptions such as war or famine.

Millions of Americans remain overseas, and the Administration shared Thursday that the military is working on getting anyone home who does not choose to stay abroad. Other nations, including Canada, have shared similar messages to citizens while closing borders.

Separate from the declining demand, many airports are being forced to reduce or temporarily halt operations due to the virus. In one instance, Las Vegas Airport canceled 500 flights by midday Thursday after an air traffic controller tested positive for the virus, causing administrators to temporarily closed the control tower. American Airlines and Delta are attempting to keep the lights on by operating cargo-only flights as passenger demand tumbles.

The full extent of the fallout has yet to actualize, but so far, the International Air Transport Association concluded that the combined lost revenue for airlines worldwide is up to $7 billion and counting. Of course, this amount doesn’t calculate the economic ripple effect across sectors such as hospitality, tourism, and gambling. (Casinos in Las Vegas were also ordered to close, and shortly after, the American Gaming Association put out some unlucky findings for the future of the casino industry.)

Surprisingly as of now, the current circumstances haven’t stalled future summer travel planning for many globetrotters. According to the Global Web Index, UK consumers are eager to reinstate their travel plans as soon as possible with many anticipating to travel in the next six months, and American travelers may not be far behind them.

For travel marketers, we highly recommend Skift’s live coronavirus blog to keep up to date on the latest in the industry.

Similar to travel, the entertainment industry has seen better days. From Broadway to fine art museums in LA, late-night TV, music concerts, and movie premiers, most in-person entertainment is closed for the foreseeable future in an effort to limit the gathering of large groups of people. The unfortunate truth is that no one really knows when this field will press play again, but we do know it will come back.

In like manner, entertainment brand marketers are certainly struggling to determine if it makes sense to advertise or share promotions — asking: how do we ensure we’re saying the right thing and being sensitive to this human tragedy? 

This is a tough time be in the entertainment business, but we see radical transparency and a full-court press to stop the spread of disease by shutting down performances, parks, and movie theaters across Europe and the U.S. Last weekend box office totals were the lowest since 1994.

For studios, production for many TV shows and movies have been put on pause as have media upfronts, which are typically planned for the spring season. To meet growing demand, Disney+ and others are refiguring content strategies to release box-office hits earlier than anticipated. Celebrity talent is taking to social media, offering ‘free concerts’ and unbridled access to their personal lives through Instagram live cooking sessions, at-home broadcasts, and more. 

Heading into the weekend, most, if not all, nonessential retail stores across America are temporarily closed, closing, or working under reduced hours with smaller staff. In LA County, local officials have ordered the closure of all nonessential retailers as coronavirus cases continue to climb across the area. For both national brands and small businesses, the name of the game is determining how to reduce contact with customers while still carrying out business via online shopping, drop shipping, and contactless delivery. 

Across PMG’s portfolio, ecommerce demand remains steady but with slight declines ahead of the weekend as customers adjust to a new normal of social distancing and spending more time at home. The softness is more than likely a result of customers being mentally checked out or outright exhausted from the week’s events.

As mentioned in previous briefings, an important aspect of marketing programs is to identify and mobilize with ways to support the customer. Proactive content planning that’s sensitive to the developing public health crisis and economic turmoil will be crucial in the days ahead.

A primary concern for many companies is ensuring warehouses are fully staffed, workers are healthy, and the company is able to continue making deliveries. For a lot of retailers, the demand is there. In an extraordinary move, Amazon announced it would hire an additional 100,000 workers to meet the growing demand for home deliveries. It’s for this reason that Amazon also announced it would be limiting shelf space to high demand, essential products, and supplies. As of Friday morning, Amazon’s Prime Pantry will temporarily close to restock in preparation for the days ahead. 

Further up the supply chain, some retailers and manufacturers are halting production for deep cleanings, and in some cases, even being tapped to help produce health care supplies and other essential products. In Europe, luxury group LVMH will be supporting French authorities in the manufacturing of disinfectant gel. In the U.S., GM is exploring the ability to produce ventilators in its Detroit plants.

Christian Dior perfumes is also making hand sanitizer while one car-parts company is producing hygienic masks. President Trump invoked the Defense Production Act, which cuts the red tape and allows the federal government to direct the private industry to generate critical materials in national emergencies.

It’s been a week of unprecedented headlines. Perhaps the most dominant human interest storyline revolves around people rushing to grocery stores and stocking up on all the essentials — leaving bare shelves and a social media frenzy in their wake. 

This behavior is deeply rooted in psychological understandings of the human psyche: stocking up offers people a measure of control. In less challenging times, research has found that the act of stocking up and grocery shopping delivers strong emotional benefits as it’s a primary way to provide security and to care for the family. Those emotional triggers only intensify in crises.

The panic-buying is universal, with Mintel reporting that less than one in five U.S. shoppers claim to have increased their purchase of groceries or other supplies. Given the pace of the situation, the stress on supply chains has enabled a growing opportunity for industry players to focus on how to make food shopping easier, safer, and faster, whether in-store or online. Many grocers are already adjusting their operations and philanthropic giving: 

Among other brands, Stop & Shop is opening stores early for senior customers to shop newly stocked shelves in a freshly cleaned (and less crowded) environment to enable optimal social distancing. 

Kroger made a $3M donation to its Zero Hunger | Zero Waste initiative to help fund local food banks and hot meals for children with closures. 

Walmart and The Walmart Foundation (the retailer’s philanthropic entity) pledged $25M to aid front-line organizations.

Social distancing, a run on grocery stores, WFH directives, and nationwide school and university closures are all resulting in more people staying home — and eating there too. Over 70% of people (of those who are able) are working from home, and nearly 33M children are out of school.

Despite the bare shelves, companies that supply meat, vegetables, and other staples have assured customers that the U.S. has plenty of food. But that supplies are struggling to redirect supply chains to high demand regions. 
Because of this (and as you can imagine), restaurant seated dining is facing historic lows across the world, driven by mandated dine-in closures and fears of the spread of disease.

The online booking engine OpenTable has been leading the charge in providing its nearly 60k restaurant partners with data and preparedness resources for weathering temporary closures and crises such as COVID-19.

Chart outlining restaurant Demand by OpenTable

In most (if not by now all) major cities and urban areas, local officials and technology partners like OpenTable are urging customers to safely support local restaurants during this time if they’re able — from purchasing gift cards to ordering take-out and delivery. As dine-in declines, take-out and meal-kit delivery services soar. 

COVID’s impact on B2B and technology have come in two waves. The first when trade shows canceled amid early concerns of the coronavirus. The second, when customers and businesses began to recognize the toll and financial impact this global health crisis would have on their bottom line. It’s too early to tell, but for businesses with longer buying periods, weathering the storm may be business as usual. For others, it may be more difficult — it all depends on the business model and sales and marketing’s ability to remain agile.

Before we go any further, we should recognize that “B2B” is a commonly used category that spans a vast number of businesses. For instance, organizations that are built around remote connectivity and business operations are thriving amidst the rest of the world’s turmoil — Zoom being a shining example. Others are doing well and providing guidance, resources shifting to meet the needs of customers — both current and future by demonstrating the utility of their products — like Slack or Microsoft. 

From a marketing perspective, what we’re seeing is B2B brand marketers shifting budget from trade shows or in-person activations into digital channels to support evolving content strategies that can demonstrate the versatility and usefulness of their product during an era of great change.

Speaking of B2B and technology, social and online platforms, as well as media companies, have joined forces to enact emergency measures and are aiding the WHO and federal agencies to combat misinformation about the novel coronavirus and keep COVID-19 precautions top of mind.

With quarantines and nationwide lockdowns across Europe, Netflix is experiencing record-breaking days alongside other streaming platforms. So much so that Netflix and YouTube were asked by officials to reduce the quality of streaming to help avoid internet overload and massive outages.

People are spending more time indoors and at home, causing online gaming and livestreaming platforms to see upticks in engagement and traffic as well. To support preventative measures, Niantic (the company that makes popular games Pokemon Go and Harry Potter: Wizards Unite) eliminated the walking requirements for players within the battle games. What started as a unique way to socialize mobile gaming has now temporarily been removed for the experience.

According to traffic analytics firm Parse.ly, 15% of all daily web traffic is going to news about the coronavirus, while cable news viewership skyrockets. Notably absent from the rankings is sports, which usually accounts for ~6% of TV viewership. To supplement the loss of live programming and sports news, ESPN and Fox Sports are replaying old games and content for viewers. A shining star at the end of 2019, Disney has been hit on multiple fronts by the virus outbreak: parks closed and cruise liners docked and ESPN’s loss of live programming. Amidst all the chaos, Nielsen is estimating that sheltering at home could lead to a 60% increase in time spent with media. 

Of note, Synthesio reports that this week the top four topics discussed in online organic conversation across platforms (beyond the headlines surrounding the outbreak) were:

Economy and Finance: 722k organic mentions

Taking Action and Prevention: 705k organic mentions

Authorities and Politics: 705k organic mentions

Travel challenges: 295k organic mentions 

Combined, these trends only add to the mounting evidence that the outbreak is top of mind for seemingly everyone and is, unfortunately, causing a chain reaction of uncertainty across most aspects of everyday life.

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A special thanks to Angela Seits, PMG’s Director of Consumer Insights and Engagement Strategy, for contributing to this COVID-19 briefing.