How COVID-19 is Disrupting the Internet
It’s been a tough, rollercoaster start to the week with increased scope in job cuts, stock market gains, grim economic predictions, and more disorder across industries. The good news is that China and other national economics are beginning to restart, and Quibi is here to snatch some quick bites out of your day — I highly recommend ‘A Dangerous Game’ if you haven’t already dived in.
The scope of COVID-19’s impact is rapidly expanding, accelerating change and disruption across industries that was predicted to take months, if not years, to take root. One is the propensity of ecommerce over in-store shopping, another, the incessant demand for engaging digital content as well as new ways to spend time online. In today’s briefing, we’re examining these trends at length to understand how people’s behavior and digital media are changing in the midst of quarantine.
Consumers continue to shuffle their spending and shopping habits, as extended furloughs and layoffs impact almost every industry, and many shoppers’ bank accounts.
For organizations with consumer demand and operations still in play (ecommerce and distribution for retail, selling and new customer acquisition for B2B and fintech), the vast majority of executives are spending their time scenario planning and in the weeds examining the macro-economy of how the outbreak is impacting their industry specifically. There is no one size fits all approach to steering businesses (and its workforce) through a global pandemic, but one thing is for certain: the amount of generosity and solidarity around the world at this time is both humbling and without precedent.
Similar to crisis response efforts of the past, Pepsi is teaming up with Global Citizen to hold the (virtual) benefit concert “One World: Together at Home” to raise funds for the WHO’s COVID-19 Solidarity Response Fund on April 18th. The benefit will likely take the form of a modern-day Live-Aid. And just last night, the CEO of Twitter and Square Jack Dorsey pledged $1B of his stake in Square to coronavirus relief efforts. This donation represents roughly 30% of his current net worth. However, experts report it will likely take years to complete the transfer, which brings us to the most recent economic development: Big Banks’ economic predictions.
Goldman Sachs estimated that the current economic stimulus packages wouldn’t cover the economic loss that results from the pandemic. In total, the investment banking company forecasts the private sector to lose $1.9T in 2020 and $1.4T in 2021. In like manner, JP Morgan Chase’s annual letter to shareholders presented detailed economic predictions concerning the extent of an impending recession, signaling that the financial effects of the outbreak will far outlast our temporary era of social distancing.
Regardless of category or business model, brands are looked to for distraction, comfort, and relief now more than ever, which is why so many of them are getting creative with how they interact with people beyond traditional advertising. For some, it’s creating Spotify playlists, at-home resources (WFH, home workouts), or enabling impromptu social media takeovers.
For others, it’s investments in coronavirus relief — either through financial commitments or manufacturing donations, or a combination of the two. (The list of brands doing good is getting longer by the day, and our heartfelt appreciation and gratitude go to those who decide to pitch in and lend a helping hand.)
Since there is likely not a single person who hasn’t been affected by the outbreak in some way, brands are getting more comfortable with WFH and stay-in messaging but still distancing themselves from brand media or programmatic ad investments that could appear next to coronavirus-related news coverage and content. Over ¼ of brands have gone completely dark, pausing all paid communications for the first and second part of the year, according to Harvard Business Review and IAB.
As a result, big retailers are suspending commerce marketing deals, and NBCUniversal is lowering its ad inventory across its TV networks due to reduced demand. Publishers like The Atlantic have outlined the effects of blacklisting coronavirus on their own publication, claiming that it will cost news outlets more than $60M if the pandemic lasts another three months, sharing “Readers are relying on us right now, and we are relying on advertising.” The slump in spending isn’t isolated to one industry.
According to IAB, overall spending on digital ads for March and April is down 38% from what companies planned pre-COVID-19, with spend falling across ad types:
41% on TV
45% on radio
43% in print publications
51% on billboards and DOOH
The challenge, of course, is that for many brands, the demand is there, but many marketers are being asked to cut budgets. Online shopping demand has never been higher, and even though some categories are in decline, others are rising fast. The ability to connect with audiences right now is “unparalleled, [with all the available ad inventory and low costs], but their willingness to accept marketing messages is limited to the right messages.” (For more guidance on marketing messaging, we recommend checking out COVID-19 Crisis Resource Hub on the PMG blog.)
Marketers for both small and national brands are also vigorously exploring innovative ways to transition ad spend and media investments into the platforms that enable the most flexibility and control, squirming out traditional long-range partnerships and into digital mediums like Facebook and Google. Luckily, these organizations are providing helpful resources (and funding) for businesses impacted by the coronavirus outbreak.
Big Tech will still suffer from the global reduction in ad investments, especially given the number of small businesses that use the platforms for advertising in local markets. Remember that Amazon Prime Day has been postponed to (at least) August, as essential goods are prioritized over the fulfillment of orders with products deemed nonessential.
Speaking of small businesses, the $350B loan program dubbed Paycheck Protection Program has just begun but is already running out of money as it attempts to counterbalance the financial toll of mass layoffs (10M and counting in the U.S. alone). As a result, U.S. Senate leaders are working on providing more funding to the program by this week, with some estimates predicting a $250B infusion. The domino effects of the outbreak are never-ending. As posed by The Information, it’s difficult not to notice the amount of cash on hand in the private sector when looking for ways to fund a global economy in turmoil.
Technology companies’ war chest totaled upwards of $570B at the end of December 2019, which is likely why two developments have occurred. First, Big Tech’s response to the coronavirus (including donations and funding programs) has come under fire in recent days for being “too low” or “not enough.” Second, Jack Dorsey supplemented his $1B personal pledge with quick math abstracting his net worth from the total donation amount to stymie that pushback. Once at the throes of a hostile takeover and potentially losing his position as CEO of Twitter, Dorsey is back in the good graces of the general public and private sector.
Digital media is in its heyday. Across platforms, global records of engagement and time on site are being broken daily as people direct their attention to screens of all sizes to pass the time at home.
According to partner insights,
Pinterest has seen incredible YOY spikes in engagement, including a 60% jump in searches, a 30% boost in sign-ups, and a 43% increase in board creation.
YouTube captures 10M search queries and billions of views worldwide related to COVID-19 authoritative news coverage per day, every day.
Reddit is experiencing double-digit growth in site visits.
Similar web reports that news readership is on the rise, with The New York Times and The Washington Post recording a 50% growth in traffic last month.
Despite the outbreak, product development and mergers have not taken a backseat. This week, Foursquare and Factual merged and are expected to generate $150M in ad revenue, representing more than 80% of all programmatic spend, Facebook launched a messaging app for couples, and Pinterest rolled out a new shopping feature.
Unsurprisingly, video chat demand continues to skyrocket as consumers adjust social plans to comply with social distancing.
Two quick callouts on developments in the gaming and streaming worlds, both of which are experiencing record viewership.
In gaming, which, as a category, is thriving amidst the turmoil of the outbreak, the new hit title is Valorant. The new game captured 1.6M viewers on Twitch during its closed beta (via an invite-only soft launch) earlier this week. Created by Riot Games, Valorant shares foundational similarities to uber-popular Fortnite, with a battle-royale metaverse that will likely enable countless sponsorship and brand opportunities in its future.
The game is in closed beta, so no partnership opportunities yet, but keep an eye on this game. If Riot knows anything, it’s how to attract attention and generate hype around a new title, with plenty of tricks up its sleeve. Across titles and platforms, gaming is growing while sports sit this one out, as evidenced by Twitch’s ~20% rise in viewership, and ESPN’s 40% drop in site traffic.
According to AppAnnie, multiplayer mobile games are in high demand as well, resulting in record mobile game downloads. Most popular in mobile gaming today are Words With Friends 2, ROBLOX, Call of Duty: Mobile, Magic Tiles 3 and Mario Kart Tour, among others, which have fueled a 50% increase in worldwide weekly downloads of games from March 22-28, 2020, versus the average weekly level in Q4 2019.
In streaming, mobile video app Quibi launched on Monday, the first notable digital product to launch during the pandemic. In press coverage, the app’s early success is being compared to Disney+’s first-day subscriber growth (which totaled 10M and is now ~28.5M). I echo similar objections as industry analysts have in response to the coverage. Bottom line: it’s not a fair comparison.
Quibi features Hollywood-produced, mobile-only content, not an archive of IP and the brand equity of Disney. It’s the first of its kind and the newest medium of digital content that required an exuberant amount of capital to get off the ground ($1.8B in funding). The streaming platform fits into a category all on its own, with its closest adversaries being YouTube and TikTok, though those platforms depend on user-generated content. The Quibi app features a seamless browsing experience, well-reviewed UI, and content you cannot find anywhere else on the internet.
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The long-term success of the app (and the core idea’s vitality) is too early to predict, but the first day garnered an estimated 300k+ downloads, and ad inventory is sold out until April 2021, totaling $150M.
Posted by: Abby Long
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