How Current Events Are Impacting Consumers and Economic Outlooks
Abby Long is the Senior Managing Editor at PMG.
It’s been a tiring few days. After the police shooting of Jacob Blake in Kenosha, Wisconsin led to violent clashes and growing unrest nationwide earlier this week, the Milwaukee Bucks became the first NBA team to protest* against playing over the police shooting Wednesday night. The remaining NBA games of the evening, along with the WNBA and several MLB teams, including the Milwaukee Brewers, quickly followed suit in postponing their games. NBA insider Adrian Wojnarowski tweeted that the “NBA, owners and front offices didn’t see this wave of player boycotts coming today… This is a pivot point for the NBA and professional sports in North America.”
This social crisis comes just as Hurricane Laura intensified to a Category 4 storm, making landfall along the Texas and Louisiana border last night and driving thousands of residents to evacuate their homes and relocate further upstate and away from the storm’s path. Fortunately, on the West Coast, cooler temperatures and weaker winds have allowed firefighters to get a better handle on the wildfires sprawling across the state of California. Over 650 wildfires have contributed to the burning of more than 1.25 million acres since August 15th, a stretch of land more than six times the size of New York City.
Concerning the coronavirus pandemic, allegations of political interference are growing. Shortly after the FDA approved a new coronavirus treatment, news broke that the CDC narrowed virus testing recommendations as of last Thursday, which excludes asymptomatic individuals from needing to be tested for the disease, even if they’d been in close contact with an infected person. Soon after, it was found that Dr. Fauci was not present for the meeting, and in fact, under general anesthesia when the decision was made.
Related: Several coronavirus reinfection cases are reported worldwide.
Dr. Fauci’s absence only added fuel to the proverbial fire that the decision to push forward the plasma treatment and new testing guidelines resulted from political pressure from the US Administration. Health officials assured the media that this was not the case, but lingering doubts remained in Thursday morning news coverage of the vaccine distribution recommendations laid out by the CDC.
With all these crises dovetailing us into the end of the month, let’s take a look at how current events have impacted consumers and industry trends.
In new data from The Conference Board, US consumer confidence dropped to a more than six-year low in August as worry about the labor market, schools reopening too soon, economic uncertainty surrounding the election, and business conditions all cast doubts over the economy’s recovery from America’s pandemic-induced recession.
At least 28 million Americans are on unemployment benefits, and many are becoming discouraged as Congress remains in a deadlock over reaching a deal for new coronavirus relief measures. The Conference Board’s index sank to 84.8, down from its revised 91.7 last month. In the report issued this week, the confidence levels remained well-below pre-crisis levels, signifying the pandemic’s profound impact and the difficulty of a full economic recovery. In a statement, the senior director of economic indicators, Lynn Franco, said that while consumer spending has rebounded in recent months, increasing concerns “amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead.”
According to Ipsos, US consumer sentiment returned to its “pandemic normal” after signs of improvement made their debut, most notably, before last week’s disappointing unemployment claims, which topped 1.1 million. As we mentioned in weeks prior, the relevant economic indicators all seem to confirm that consumers are essentially trudging through the pandemic and surrounding crises, with no real improvements in sentiment, comfortability returning to normal activity, or confidence in economic conditions during the last several weeks.
Global Web Index outlined the latest media trends, one of which outlines that the average American now spends over nine and a half hours per day with different content across online TV, social media, and online press.
In its latest figures, Nielsen reports consumer favorability during COVID-19 has catapulted streaming as the predominant future of content consumption.
Additionally, public interest in political tech scrutiny has grown in recent months, just as technology companies absorb more market share and play an even larger role in our lives.
In breaking news overnight, TikTok CEO Kevin Mayer resigned from his position, nearly three months after joining the short-form video app. His departure wasn’t too big of a surprise, according to media analysts, given how drastically the company’s situation (and political pressure against the company) had changed between his June start date and today. Earlier this week, TikTok formally filed suit against the US government over President Trump’s executive order. As a result, we learned that TikTok officially has 100 million monthly active users in the US, of which, 50 million are daily active users. The complaint also shows that the app has some 689 million global monthly active users as of July 2020, shockingly high usage and growth numbers by anyone’s standards.
Related: TikTok faces government restrictions in the UK.
For reasons unknown, seemingly every Big Tech firm released an update or overview of its misinformation removals or policy changes to enable safer conversations online this week. Notable highlights from these reports include:
Twitter rolled out a new Transparency Center with new policy categories and data visualization capabilities to see how the app addresses misinformation and reports of platform manipulation.
Facebook provided an update on how the platform is fighting against coronavirus misinformation.
Additionally, Facebook unveiled the new Temporal Interaction EmbeddingS (TIES) research model, which, over time, will help the platform detect fake accounts and address misinformation faster.
LinkedIn addressed new AI technologies to help stop the spread of inappropriate content.
The looming disputes between tech giants, government entities, and consumers haven’t slowed down product releases and news developments related to consumer technology and marketing.
Amazon faces a new antitrust lawsuit from online sellers in India.
ViacomCBS set the price for the 2021 Super Bowl at $5.5 million for a 30-second spot.
New, unredacted legal documents show Google engineers are just as confused about Google’s privacy settings as consumers are.
The US government announced a $1 billion push for AI and quantum computing.
This week saw the S-1s of new companies wanting to go public. Let’s take a closer look at those filings and the risk factors of Silicon Valley’s most interesting up-and-comers.
First up, Unity, the game engine company with a perfectly-timed S-1 amid the Epic Games versus Apple legal stand-off. Unity is a popular competitor to Epic’s Unreal Engine, boasting 1.5 million monthly active creators. Additionally, over 50 percent of mobile games, PC games, and console games combined are made with Unity’s platform. In total, Unity reports three billion app downloads per month. But it’s not just games such as Fall Guys or Monument Valley 2, Unity’s 3-D rendering and technology also powers media and entertainment, architecture, engineering and construction, and automotive transportation and manufacturing projects around the world. In the S-1, Unity makes mention of Apple’s App Store policies, worries around increased privacy rules, and how less data collection would harm its business and hamper growth.
On that note, a few developments in the gaming industry worth mentioning,
Fall Guys, created by Unity, surpassed seven million copies sold to become the most downloaded PS Plus game ever.
Riot Games signed a Spotify deal for League of Legends podcasts.
Fortnite will split into two different games as the new Fortnite season kicks off today amid Epic Games’ legal battle with Apple.
Trendwatch: Gaming full-time is becoming more attainable for players during the pandemic.
Next, Snowflake, the cloud database company. To start, a hefty 11 percent of the company’s revenue came from one client named Capital One. Despite the impressive client roster, the company is still not profitable. Interestingly, Snowflake’s product is available on Google Cloud, Azure, and AWS, which are also some of its top competitors. In the filing, Snowflake mentioned this, saying those firms could change their prices and policies on a whim, putting Snowflake in an even more difficult position as it attempts to turn a profit.
Palantir’s operations have largely been kept secret for years until the S-1 filing released this week, but the prospectus confirms the company is a giant government contractor, selling software to government agencies “to target terrorists and keep soldiers safe.” Despite the business model, Palantir claims it doesn’t data mine like it’s Silicon Valley counterparts. In an unusual move, the founder and CEO, Alex Karp, wrote a strongly worded letter to investors that accompanied the S-1, taking aim at its tech neighbors by saying, “our company was founded in Silicon Valley. But we seem to share fewer and fewer of the technology sector’s values and commitments.” Palantir has not turned a profit since its founding in 2003, despite revenue growing 25 percent last year.
Ant Group is an affiliate of Alibaba and a payment and financial technology company that’s set to be the biggest market debut with a dual listing in Hong Kong and Shanghai. The company aims to raise more than $30 billion and is profitable, generating $17 billion in revenue, earning $2.5 billion in profit by handling $16 trillion worth of transactions across its Alipay network. Additionally, Ant Group has $500 billion in investments and $290 billion in loans. The S-1 describes Alipay as “a ubiquitous super app,” touting more than one billion users and 80 million merchants.
JFrog, a DevOps company, also filed an S-1 this week. In it, the company outlines its growing list of products and competitors. Some of these are industry titans, including IBM, Google, GitLab, and Microsoft. The DevOps firm says its main product has an open-source version, which may hurt its proprietary version and reduce the demand for subscriptions. JFrog is also concerned about what going public may do to its corporate culture, writing “it could lead to disparities of wealth among our employees that could adversely affect relations among employees and our culture in general.”
Asana, SumoLogic, and Amwell also filed S-1s. Asana’s founders say they are pledging 100 percent of their equity for philanthropic purposes, and that competition and project management startups remain a challenge. SumoLogic, a data analysis company, admitted its reliance on AWS as well as its international plans and intentions to acquire competitors. Amwell, the telehealth company, seems to be coming onto the scene right on time as consumers opt to stay home instead of venture out. Amwell details the possibility of negative publicity around telehealth, the looming threat of larger healthcare companies entering the sector, and more than a dozen pages of the prospectus were dedicated to HIPAA compliance concerns and possible legal challenges.
Helpful: A cheat sheet by The New York Times of all the major tech listings coming soon.
As mentioned by Protocol’s David Pierce, the most significant learning from this batch of S-1s is that every newcomer is either relying on the biggest tech companies for critical infrastructure or competing against them — sometimes both.
On the topic of stock markets, Best Buy’s earnings report this week gave us more clues into what the post-COVID future of brick-and-mortar may be. On the call, Best Buy detailed its plans to turn hundreds of brick-and-mortar stores into shipping hubs to meet growing ecommerce demand. This move comes just in time for the holiday season, where brands are shifting plans and preparing for consumers to buy more online and shop less in-store.
Related: Back to school sales figures are heavily skewed with the purchases of laptops, printers, and big-ticket items that are now back-ordered nationwide.
I think almost everyone can agree that travel and hospitality remain one of the verticals most heavily impacted by the coronavirus pandemic. Surprisingly, all US hotel sectors reportedly turned a profit in July, according to the Skift, but that demand isn’t expected to hold up as local outbreaks deter travel plans. Similar to what we saw earlier this summer, budget and mid-level hotels are doing better than their luxury counterparts.
According to The Wall Street Journal, road trippers and essential workers on the go are the most frequent travelers amid the pandemic. As a result of dwindling demand and federal relief coming to an end, American Airlines reports it will be forced to lay off 19,000 workers if relief isn’t secured ahead of the October deadline. The airline industry warns job losses could top 40,000 this year once the first wave of federal relief dries up.
Sign of the times: The 2021 World Economic Forum summit will be rescheduled.
According to The Wall Street Journal, Fed Chair Jerome Powell is expected to reveal conclusions of the central bank’s review of its monetary policy framework sometime this morning. As analysts lie in wait for Powell’s upcoming speech on what economic recovery will entail, others are already reimagining what it looks like. According to eMarketer, nearly half of US business leaders expect an economic recovery to take shape between 2021 and 2022. And in new data, likely as a result of these trends, B2B digital advertising is reportedly thriving amid the pandemic.
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That’s it for this week. I hope you’re staying safe and have a restful weekend ahead of you. See you Monday.
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