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Ideas Commentary

Navigating the new normal: Finding audiences on the path to recovery

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Plenty has been written on the pandemic and its impact on advertisers throughout the lockdown. As we move now into a fitful and fragmented recovery, what can marketers learn about how brands in categories from retail to film and television are looking to double down on lockdown successes or shake people from their pandemic habits and get them back into the physical world? 

Making it stick: Influencing Fast-Thinking decisions into the recovery

By: Bastian Lütz

The Covid-19 pandemic led us into an economic recession, and then into a decidedly “K” shaped recovery, with dramatically different outcomes dependent on geography, job, and parental status, just to name a few. But the light at the end of the tunnel comes closer, even if it still feels like we are wriggling out of quicksand.

We finally want to treat ourselves again, go out, shop, meet friends and family, go on holiday. All of the things we have been denied for most of the last thirteen months. Many countries with early vaccination success have seen demand for travel and leisure​ surpass pre-Covid norms, and as the weather and vaccination rates improve globally, wallets will be loose.

These are atypical signals during a recession, possible only because this downturn was not caused by economic factors. And it will be the same on the way back to normality. Many of the changes in behaviour we were forced to adopt were more compatible with our new, personal life situations, but emerging evidence points to less change than we might have thought regarding substantial changes like where people moved​.

Across Germany as well as globally, lockdowns were the first big opportunity for brands to influence "System 1 or Fast-Thinking” decisions, a term from Daniel Kahneman referring to the daily, automatic, and often unconscious decisions we all make. These normally intractable routine decisions (which coffee shop I choose on the way to work, and which brand of toilet paper I grab on the way home) suddenly became malleable, a once-in-a-lifetime moment for brands.

But just as the learned ability to cook pasta will not be the end of Mediterranean cafés, streaming will not herald the swansong of cinema. Both are, to a not insignificant degree, replacements, but not full-fledged alternatives. And whether Clubhouse will survive a collective outdoor summer after its first hype, seems at least questionable.

The habits now learned will be renegotiated a second time once we move from a pandemic to a more prosaic mindset. Real market shifts and sustainable growth are always economic phenomena in which advertising plays a central role, and brands will be focused on ensuring any habit shifts to their product or service remain, despite the many options competing for attention in a reopened society.

Early investments in branding will be great levers to achieve high mental availability as soon as our minds open up. Creating salience with new, relevant usage occasions will help consumers find their path between the new- and old-normal habits.

As movies return to cinema, finding audiences remains digital

By: Michael Thomas

The Pandemic has caused havoc across the Motion Picture Industry. With movie theaters forced to close across the world, theatrical releases were delayed indefinitely across all major studios. With no new releases, the major movie studios lost all revenue opportunities for the foreseeable future.

In an attempt to mitigate some of the losses, each of the three main studios (Disney, Universal Pictures and Warner Brothers) each came up with different strategies to release some of the shelved content digitally. This resulted in Universal’s release of movies such as “Trolls World Tour” on premium video on demand (PVOD), Warner’s decision to make their entire 2021 slate available on their new subscription video on demand (SVOD) platform HBO+ for all active subscriptions at no additional charge, and Disney’s decision to offer movies like Mulan on Disney+ for an additional fee (P/SVOD).

While these digital releases were initially seen as stop-gap measures to mitigate some of the fiscal year’s revenue losses, they ended up revealing significant new revenue opportunities for the studios. But, with these new opportunities have also come new challenges. Studios are finding that the TV viewing habits of frequent moviegoing audiences have also shifted during the pandemic. The proportion of this audience that has adopted one or more platform subscriptions has grown as has the average number of subscriptions each heavy movie goer has. As a result, mass-reach linear TV buys now reach a shrinking proportion of this high value audience requiring a larger proportion of investment to go towards digital and platform based media, where the audience is more readily found.

Moving into 2020 the investment mix among the major studios is expected to more heavily favor digital media, both rotational digital display as well as platforms based media (i.e. programmatic and social media inventory sources). Likewise, the studios will likely be looking to focus more attention in the digital newfronts, securing more digital and platforms inventory opportunities than in prior years as well as renegotiating upfront commitments to ensure in-network digital and platforms investment explicitly count towards negotiated upfront commitments.

Major players pivot and productize in the streaming wars

By: Dan Elddine | Mike Fisher

As mentioned above, the pandemic undoubtedly accelerated the streaming space far more than would have otherwise happened. At a macro level, the combination of sheltering in place, consumer acceptance of ad supported and non-ad supported environments, and the technology that enables near-seamless navigation from one streaming service to the next rapidly ushered in an era where capturing attention was arguably more about reducing barriers to access it than it was about the content itself. As we begin to forge a path to recovery, however, a new yet familiar trend is starting to emerge—one that incorporates tried and true vestiges from a pre-pandemic world blended with lessons learned from the decade-long year that was 2020.

Simply put, seizing captive attention will become harder as consumers return to everyday life—likely having a compression effect on the streaming landscape by forcing service providers to focus attention on content as well as meeting consumer expectations of a frictionless experience. As unique content and a great platform experience become more intertwined than ever before, fiercer competition and consolidation is inevitable. Simultaneously, as marketers, we're placing greater demands on the streaming marketplace such as programmatic buying dynamics, sophisticated targeting options, and advanced analytics solutions. Streaming services that meet these needs alongside capturing attention will win out. In some ways, this trend is strikingly similar to what's played out in the digital space where walled gardens dominate market share through tightly coupled inventory, platform, and measurement capabilities.

While early days, evidence such as Roku recently acquiring Quibi's original content and later absorbing a piece of Nielsen's video measurement capabilities is one example of stack-building that could power a walled garden-esque approach. In rather stark contrast, T-Vision, the streaming service spun up by T-Mobile mere months ago has been quickly scrapped in place of seamless integrations with established players in Philo and YouTube TV—an indication that in the competitive streaming landscape, pivots happen fast as attention shifts from TV screens back to real life experiences.

Choose your own (retail) adventure: in-store, curbside, or delivery

By: Rich Phelan

Retailers are also pivoting to a post-Covid landscape where there is a key question they are going to need to answer: What is the right combination of in-store, curbside, or ship- to- home services to meet consumer expectations moving forward? This question will be answered differently based on what type of retailer you are and your understanding of consumer expectations based on the category they are shopping.

Fulfillment by any name would smell as sweet

Although there is a desire for in-person shopping, the pandemic accelerated consumers' focus on safety and ease. Retailers like Target and Walmart, who have been investing to create a holistic commerce experience to compete with Amazon, had their investment validated during the shutdowns. In a March 2021 earnings call, Target reported that Drive Up sales had increased by more than 600%, and in-store pickup had increased by more than 70% for full-year 2020. As their guests start to return to stores, they have the advantage of being able to accommodate them regardless of whether in-store, curbside, or ship-to-home.

Inspiration in store

Not all retailers have embraced e-commerce and have chosen instead to invest in building more, small, or experiential formats, and in many cases do not offer an e-commerce solution—e.g. Burlington and Ross Stores. These retailers are betting that consumers will move back to shopping in-store—which still represents 80-85% of retail sales—and will return to embracing the treasure hunt that delivers on a value proposition.

A few specific categories are likely to bring consumers back to the aisles. According to a global consumer study released by IBM's Institute for Business Value, “the biggest categories that will see shifts toward in-person shopping are toys, games and hobbies, at 121%, and apparel, footwear and accessories.”

It's too early to say what is the right combination of in-store, curbside or ship-to-home services to meet consumer expectations moving forward. What is clear is the shift in power to consumers and the expectation of choice. Retailers that have invested in an infrastructure to accommodate this consumer control will surely have the advantage.

So yes, consumers have more control than ever in choosing how they shop, where they consume content and which lockdown behavior changes they adopt long-term (those pandemic puppies will still need walking when workers return to their offices!). Travel, leisure, and retail brands will all be hoping the consumer choice for where to spend post-lockdown sits with them. And they have reason to be optimistic: GroupM expects three year revenue growth for those sectors at 91%, 75% and 41% respectively. Also expecting 75% growth? ...Chewy Inc.