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How are Consumers Changing with COVID-19?

Written by:   |  Strategy  |  May 29, 2020  |  0 comments

Providing media and marketing intelligence services for businesses across a variety of verticals we have had the opportunity to monitor rapidly changing consumer behaviour across several different industries. With regards to COVID-19’s impact, we first shared our insight on digital activity in March, then all media channels in our April update. Now, with many governments starting to embark on a multi-phased reopening strategy, we thought it would be beneficial to share our latest observations and insights on the shift in buying habits, media habits, and content habits.

Storm clouds clearing

1. Consumer Buying Habits During COVID-19

The changes brought on by COVID has shifted perception around need versus want for many consumers. I know I personally felt I needed new patio furniture four-weeks into quarantine and placed a higher value on that purchase than I would have pre-COVID. Forbes shared insight from a neuroscience firm that helps explain this behaviour, “as the length of isolation increases, things once seen as indulgent shifted to be perceived by consumers as essential”.  The article also provides predictions around what items/categories will benefit from this shift. We have combined this with our own insights and experiences from the trends we are seeing to provide insight on growth opportunities.

Initially, consumers were focused on necessities. Remember the toilet paper hoarding back in March? People began to seemingly hoard the basics, stockpiling on nearly everything. Online, we even saw an increase in search volume for items like guns (yes, in Canada – wild right?), which was concerning, yet also made sense given the general uneasiness and concern that the onset of the pandemic caused. From there consumers moved on to more reasonable products that fit the necessity requirement i.e. medicine, household supplies, canned goods, and baking needs: hence, the grocery store was out of flour, yeast and chocolate chips and search volume for recipes had increased dramatically. According to CBC, the products that surged and continue to remain high, include alcohol, coffee, cleaning products, PPE (like masks and gloves), and baking products. I am sure those alcohol and coffee purchases are done with a need versus want classification in mind.

Once governments closed schools and implemented social distancing requirements, we saw technology related searches spike. Individuals needed to adapt their home space to work from home, as well as support their children to do school from home. For businesses and schools, it was investing in the tools and infrastructure necessary to ensure their teams could work remotely and conduct business with their customers virtually. Overall, both consumers and business were forced to do more from home which created demand for these products.

Once the necessities were addressed, we moved on to entertainment. For some, that meant spending more time watching the content they are already paying for, while for others it meant subscribing to new streaming services (we get into this more in the content habit section). In the first few weeks, takeout and delivery was something many consumers were worried about, yet as time passed and restaurants adapted, demand for these services has begun to grow, suggesting many are seeing this as a need versus a want, especially as they get tired of their own cooking. To ensure proper health and safety practices, restaurants are implementing flexible pick-up and delivery options that have allowed many to stay open and meet demand.

As less cash was being accepted, more businesses and consumers were forced to adapt to digital options. We expect to see this trend continue as more businesses reopen and are required to address COVID health and safety requirements. We anticipate more apps requiring pre-payment and pick-up, similar to how Starbucks is operating with their non-drive through locations. For those businesses that do not want the cost of rent or may be forced out of a physical location due to unsustainable rent costs, they may consider moving to full ecommerce offerings. Many were cautious in the early weeks of COVID due to uncertainty, economic concerns, and concerns over a lack of resources due to hoarding. However, as the quarantine continued it was clear some consumers were starting online shopping again for various needs and wants, hence the rise in Amazon stock. On April 1, Absolunet’s COVID -19 eCommerce Report found that online revenue in Canada has doubled since March 11th with a lift of 99% across all sectors combined. They report the following growth by sector:

  • Sporting Goods +105%
  • Furniture and Home Décor +106%
  • Food and Restaurants +160%
  • Appliances, Electronics, Building Materials and DIY +161%
  • Apparel shows the “slowest” growth at +21%

We anticipate ecommerce levels will drop slightly as physical store reopening’s begin. However, we predict many will still conduct their business online and some of this growth will maintain after COVID. Below is a survey from McKinsey sharing what consumers anticipate they will do after COVID with regards to in-person activities.

We suspect some of this activity is overstated, however, we do agree that online sales will still experience a lift even after COVID ends. The main drivers for this are:

  • Businesses have responded by offering these services and will likely continue to offer online services, so consumers have that option now, when before they did not;
  • Businesses that previously offered e-commerce or app experiences likely had gaps in that offering that hindered the customer experience. Due to the importance COVID has placed on e-commerce, we suspect those slow-to-load page speeds, poor buy flows, non-mobile friendly sites, and other issues have been addressed to enhance the customers online experience and drive maximum sales. If this is something you might need help testing and optimizing, please contact us.

We expect personal goods to normalize and align to seasons as consumers adapt to this new norm.  However, if masks or gloves become mandatory, these items will likely become more mainstream and further climb in demand. As people spend more time at home, search interest and shopping habits follow, whether it is items for the home, home improvement planning, or a new home (that provides the space you might need to make this longer quarantine more manageable). The patio and gardening category is up year over year and likely will continue to grow. Recognizing consumers are unable to travel for vacation, those with disposable income will be focused on making their homes as comfortable as possible in the meantime. ComScore reported US visits to sites in the Home Furnishing category are up more than 90% as of the week of April 27, 2020 vs. February 3, 2020.

When it comes to travel, we agree with the neuroscientists in the Forbes article, that this area is going to start to rise again soon as consumers dream of the future. It will still be a significantly impacted industry for sales while COVID and travel restrictions remain; however, it will have ample growth potential once cross-province and cross-border travel is allowed again. In the meantime, there is still opportunity for regional day trips, camping, and longer-term planning for those distant dream trips.

With recent openings to provincial and national parks, we can expect all products around camping will see a significant spike and people will be willing to spend more as they will put greater value on these items than pre-COVID. This has already led to an increase in RV’s sales. We do expect to see Hotels, AirBnB’s, and other vacation rental booking sites climb for in-province or cross-province travel as the various Governments begin to allow this, consumer confidence in accommodations increases, and if the early phased reopening results are positive. We also expect consumers to map out those dream vacations which they can take once a vaccine or herd immunity has occurred allowing travel bans to be lifted. We anticipate that search interest across these various areas will continue to climb as we get closer to the end of the school season and consumers are looking for regional vacation options.

For the fitness category there definitely was an immediate rise in those looking to figure out work-out routines that they could implement at home. Now that the weather is warmer, we anticipate demand for recreational products that support social distancing such as bikes, paddle boards, kayaks, etc. Over the summer people can do a lot of their fitness outside and will likely take advantage of that. Come fall when the weather gets cooler, people will need to start figuring out their indoor routines again and will be looking for options online if fitness facilities remain closed or there is a COVID resurgence and they are forced to close. However, we anticipate businesses to evolve and provide more online communities options similar to what Peloton, Orangetheory, and 24 Hour Fitness are offering, allowing likeminded customers the opportunity to get instruction and learn with their community from home.

Now that we understand what consumers are looking for, it’s important to understand the media they are consuming so that we can reach them with the information they are seeking.

2. Media Habits During COVID-19

Back in April, our very own Cassandra wrote a great post on how being isolated at home has drastically impacted consumers’ media habits. I checked in with her to get updates on the latest trends. Due to continued isolation, consumers are still spending more time with media than they were pre-COVID.

Video Growth Remains Strong

Overall, the majority of this time is spent online and watching videos either via broadcast or streaming services. eMarketer predicts a half-hour more daily than what they previously forecasted due to COVID. Pre-COVID, year over year time spent on TV was declining; however, eMarketer is expecting this to now increase by 10 minutes per day due to COVID. We anticipate it will be greater than that due to greater government encouragement for Canadian’s to stay home. The longer we stay home, the more broadcast TV and online streaming we will consume.

All Channel Shifts

Digital continues to dominate our time. According to eMarketer’s May 11, 2020 update, Digital now accounts for 53% (or 5 hours and 32 minutes) of Canadians’ total media time spent each day. American behaviour is similar with a recent study from Hootsuite, We Are Social, and Kepios, which found increases across video (57%), social media, and messenger services (47%), online shopping (47%), streaming music (39%), using apps (36%), and playing video games (35%). eMarketer confirms more time is being spent on social media but not all platforms are experiencing the same growth. The platforms experiencing an increase in time spent per day year-over-year are Instagram at nearly 14% , Snapchat at 12% and Facebook at 4%. Hill and Knowlton Strategies talk about the increase in video consumption through streaming services and social media (YouTube and TikTok). Of this video consumption growth, Gen Z has increased the most at 58% through use of social media. Social Bakers found that social media ad spend has increased by 30.9%, and they are predicting this will have staying power post-pandemic, which we concur. It will not be to the same levels, but we anticipate it will be up versus pre-COVID.

Traditional media formats, with the exception of TV, are expected to decline for various reasons, such as lack of outdoor exposure, less consumer demand for printed material, and changing radio habits. eMarketer predicts the channels with the largest decline will be print and radio. Our experts feel it will be print and out-of-home (OOH) as we are seeing data that supports many are listening to radio at home and are still listening when they drive for essential services, which aligns with Nielsen’s findings as well. OOH placements affected the most will be those in venues that rely on large gatherings of groups i.e. airports, cinema, stadiums etc. As provinces begin to roll out their phases and consumers start to move about more, these offline channels should begin to pick up again.

Differences in Generational Media Habits

All generations media habits have been impacted by COVID. As expected, the change in those media habits varies by generational group. Gen Z is spending even more time watching video content online (YouTube, TikTok, etc.), while Gen X are spending more time with broadcast TV.  Millennials are consuming more content across all media channels, in particular, broadcast TV and online TV. Boomers continue to consume offline media channels and their media habits have not overly shifted from their pre-COVID habits. These generational differences offer an opportunity to leverage different channels and marketing messaging to reach the consumer at the right time on the right channel.

In addition to generational response, we were curious how remote versus non-remote working could change habits. Nielsen’s study of remote works in the US provides additional insights around this:

  • Remote workers consume an additional 3 hours of TV weekly than non-remote
  • Remote workers spend an additional 30 minutes weekly on their tablets than non-remote
  • Radio reach is almost identical between remote and non-remote workers

Inventory and Fall Planning

Appreciating the demand is there, I wanted to touch on inventory insights for those planning any fall campaigns. There is lots of inventory available and it is clear people want to get back to some sense of normalcy. Understanding they are consuming copious amounts of media, are bored, and want to hear from brands, it makes sense to be there. All that said, we recognize there is a risk of COVID infection rates resurging, therefore, our advice is to negotiate your contracts with as much flexibility as possible, especially for the channels facing a greater impact.

TV’s fall schedules are still being confirmed, as are next steps for professional sports programming with both the NHL and NBA looking at possibly playing some form of a modified short season this summer. More information for Fall 2020 programming will start to become available in June. If producers are unable to film new seasons, then the programming strategy will need to shift for broadcast and online TV buys. Radio inventory is available, and we find media partners are negotiating their spots rates and/or are providing bonusing to make Gross Rating Points (GRP’s) due to losses in audiences. As more businesses open with new social distancing measures, OOH is starting to see an increase in demand and media partners’ may provide bonusing for lower impressions.

As much as time spent is up in these channels, many businesses were apprehensive about investing in advertising when COVID hit, which left a fair amount of inventory opportunity. It’s understandable that brands want to be cautious with messaging during these uncertain times. However, research from Angus Reid supports that now is the right time to re-engage with consumers. As consumers adapt to their new normal, we are seeing them shop and be more receptive to advertising. More businesses are investing again as a result. Consumers want to support local businesses and are open to messaging around this. Don’t be scared, it makes sense to be present, just monitor your measures for success and build as much flexibility in your media plans as possible.

3. Content Consumption Habits During COVID-19

Now that we have the update on consumer needs and the media they are consuming, the final piece is looking at the content. When Cassandra did her post back in April it was clear content consumption was way up, the question we have now is will that growth be maintained? According to Nielsen (US data), staying home has led to an almost 60% increase in the amount of content people watch:

  • 46% increase in connected device usage
  • 59% increase in game console usage
  • 53% of Americans watching more shows and films on streaming services (Netflix, Hulu, etc.)
  • 80% watching more video-based content (broadcast TV, online videos, etc.)
  • Hulu is seeing more binge-viewing, as sessions grew over 30% late April versus the beginning of March and a 54 percent increase in time watching news versus the beginning of March 2020

Recognizing people are consuming more media, the next question is what content are they watching or engaging with? As the pandemic continues, these habits are evolving. In our previous post, we saw that much of the growth was across news, gaming, and comedy content. I was curious to see if this trend was continuing, because let’s face it, there is only so much comedy content, and many are getting tired of the COVID news. Unfortunately, there is not a lot of Canadian specific updates since our last COVID summary, however Comcast shared their US findings, which we suspect would be similar habits among Canadians. A few of their key findings:

  • Weekday and weekend viewing habits are starting to blur together in that they have the same viewing levels now. In the last 2 weeks of April, Monday saw higher time spent than Saturday
  • Households are viewing a full 8 hours more of content per week – moving from 57 hours to 66 hours
  • Change in time of day habits for content consumption. Late-night from 11pm -2am is up 40% while 6am to 8am is down 6% (In Canada we are seeing a small increase in late-night viewing of about 8%)
  • More news consumption – In the early weeks of the lockdown viewers were watching 64% more news versus the pre COVID timeframe. This has come down to approximately 30% more
  • In our April post, Numeris found that Canadians had a desire for more light hearted content, with comedy content increasing 23%. Whereas in the US, Comcast is seeing content consumption patterns that are similar to pre COVID habits i.e. Dramas are up 30%, News is up 29%, Comedies are up 18%, Reality Shows are up 15%, and Action and Adventure is up 15%
  • Signals that people have watched all their shows and are looking for more. Comcast reported a decrease in DVR usage while a 50% increase in video on demand usage. Users are even looking for suggestions with Comcast finding that they are seeing a higher volume of voice commands saying, “what to watch” or “surprise me”.

This demand for more content across all categories is reinforced by the stats of those downloading new subscription services. MarketWatch noted by late March “29% of new subscribers in the US chose Disney+, followed by Hulu at 21% and Netflix at 15%.” Recognizing that Hulu is not offered in Canada, we suspect these trends to be similar and include AmazonPrime. In late April, the Canadian Media Fund indicated that “Netflix has reported 16 million new global subscribers have signed up between January-March 2020”, which is approximately a 10% increase vs. subscription totals reported at the end of 2019. In addition to those that have already subscribed to these services, Hill & Knowlton shared research findings that, “43% of consumers are considering paying for a subscription service (Netflix, Disney+ and Spotify) they didn’t have before COVID-19 and this is most common among Gen Z (57%) and millennials (56%)”. All of these services are poised well to capitalize on this demand by constantly adding new content and adding movies scheduled for a theatre release directly to the platform. 

Summary

There is no doubt that COVID has impacted consumer behaviour, customers are:

  • Shifting perception of certain products or items from wants into needs
  • Spending more time online and on video/television platforms
  • Consuming unprecedented amounts of content and are looking for more as the quarantine continues

Some of these trends have tapered off, yet many are here to stay at least for the interim and some for the long term. Our advice is to stay focused on what is important to the consumer and ensure you are providing services and experiences that meet those needs. Here is a check list:

  • Assess the products you are promoting and ensure they are relevant to current needs
  • Online and digital payments are here for the long run, make sure your ecommerce and/or app experience works and is easy
  • Be present, talk to consumers and get your message out there; however, ensure your media plans are flexible in case of a resurgence

We are always here if you have any questions or aren’t sure where to spend your media budget for maximum efficiency. If you’re interested in a virtual coffee or just need a quick gut check, feel free to reach out.

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