A New Creative Direction: COVID-19’s Lasting Impact on Digital Advertising
Across the global economy, every individual is being rocked by the impact of COVID-19. As the U.S. federal government weighs stimulus packages, retailers are highly focused on making decisions regarding employee and customer safety, store closures, brand communication, and improving efficiency of all marketing channels. In uncertain times, one of the few things we can turn to for guidance are the certainties. This is what we know.
COVID-19’s Impact on E-Commerce Performance Trends
Online performance for many retailers is holding strong despite the volatility of the current environment. While overall traffic is down for most brands, conversion is still up, which reflects the fact that consumers are still shopping online. PMG has seen online traffic pick up the slack from shifts in in-store shopping across its portfolio, reflecting an upwards tick between 6 percent to 18 percent.
Clickthrough rates for online traffic continue to show strong return on investment, seeing upwards of a 61 percent increase. Conversion rates are fluctuating, however, as news of the pandemic continues to evolve day-by-day.
Search demand is down for retail, but nonetheless paid search continues to be a time-tested channel. Especially in a crisis, search is a safe space and will show resilience. When it comes to upper funnel advertisements, retailers are not presently pausing efforts, but instead updating ads to reflect the current climate. CPMs, CPCs and corresponding digital cost metrics are remaining consistent.
Budget exercises and scenario planning are the biggest priority. Given the rapid pace of developments, marketers should plan for a range of outcomes, particularly as it pertains to store closings and the resulting shift in budget to e-commerce.
The Results of Store Closings
While store closings ultimately come down to each brand, there is a playbook based on regional markets and corresponding messaging. Across our portfolio, we see a 50/50 split when it comes to closures.
For stores that remain open, it’s best to ensure all automated ad campaigns are reviewed for proper messaging. Caution is the best course of action, particularly as COVID-19 cases fluctuate rapidly. For stores that close, shifting to an online-only presence is essential.
Digital Media’s Performance Boost
Streaming services and over-the-top (OTT) video will be increasingly popular as schools close or move online, and employers implement a work-from-home policy. Already, providers are reacting quickly, with studios releasing box office hits earlier than anticipated.
In addition, video-based social media platforms will see a massive boost as younger generations spend more time at home, and therefore online. Event cancellations are further encouraging a shift in budgets to digital channels — a shift we’re already seeing as an immediate reaction to the coronavirus.
Corresponding Shifts in Brand Communication
For all of us, saying the right thing is top of mind. The good news is, China provided a positive example of brands shifting messaging to promote unity and social responsibility, instead of sales. Already, U.S. and European brands are creating earnest, united messages. Ford announced payment relief and launched a new campaign promoting unity during challenging times.
As a top priority, retailers should protect their relationship with each customer, providing sensitive and positive, uplifting messages during this difficult time. For example, images and copy that are focused on travel may appear tone deaf. A human-first message supporting those on the front lines is more appropriate.
A New Creative Direction
Planning for a new creative direction is the right response to the current coronavirus pandemic. Leading brands are shifting from a reactive to proactive, contingency-based approach that improves customer relationships using a positive message. At the very least, every retailer should closely evaluate its existing digital strategy to ensure all communication is considerate of the current social and economic climate. At the very best, retailers should develop messages and strategies that are earnest, united and uplifting.
Nick Drabicky is the vice president of client strategy at PMG, a digital marketing agency.
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