The COVID-19 pandemic is impacting industries and regions differently. While sectors like travel, retail, restaurants or tourism were hit the hardest, the digital ecosystem felt a smaller comparative sting and areas like ecommerce, gaming, and mobile apps even saw growth during this period.
To get a better understanding of the coronavirus impact on the U.S. market and how advertisers should tackle this crisis, we spoke with Nativex US Sales Director Jonathan Chan, who joined the team earlier this year.
Jonathan joins us from Chinese tech giant Tencent and his vast industry knowledge, combined with his experience working for some of the largest media agencies in New York and San Francisco, made for an interesting take on the current situation, so let’s get right into it.
How will COVID-19 change ad spend for the rest of 2020?
In the U.S., we are seeing some big brands pulling back spend especially across industries such as automotive, brick-and-mortar retail, and travel. Comprising a smaller chunk of advertising spend, digitized ecosystems such as mobile apps and eCommerce may see continual budget increases as long as their performance marketing efforts deliver ROI. A bonus is that CPMs are much lower during the times of COVID-19, which signals that these always-on spenders will benefit immensely by seeing even higher returns. Platforms and publishers beware: your recommendations will be monitored with a fine-picked comb.
What change have you seen with advertisers messaging & creatives?
Themes of hope, safety, and support have been emphasized across many branding campaigns in the United States. On the flip-side, we’ve barely seen this trend across mobile performance advertising. Especially in mobile gaming, users will turn to games to escape the reality of current top headlines. Hence, advertisers reaching prospective gaming audiences may not want to test “In Times of COVID-19” creative as a way to mitigate user backlash and performance risk.
What are some positives that advertisers can learn from the pandemic that could be applied in the future?
The marketing world has tended to champion disruptors since the world recovered from the last Great Recession. All of a sudden with an external disruption, the world is experiencing fear and regret. Holistically recovering from an unfortunate event is tough. Yet, the positive of this is that advertisers will be more inclined to create contingency plans based off of different scenarios so they don’t experience that same levels of anxiety the next time around.
What new mobile habits will stick?
That’s a fascinating question as I tend to think that I’m a laggard in adopting new mobile habits. Currently, Sensor Tower data shows that the most significant increase in U.S. download volume during this pandemic has come from video messaging/conferencing and gaming. Perhaps, there will be an extension of how gaming and social widgets enhance the video conference experience.
What habits should marketers disregard?
It’s tough to state because each company and industry is unique. We also forget that marketing teams are filled with humans who are experiencing personal and/or team member losses. For those fortunate to sustain our positions, I’d recommend that you at least consider alternative resources. There are many experienced professionals willing to provide solutions for the current problems you’re facing. In essence, marketers should not close doors in haste.
In the age of COVID-19, social commerce is becoming more prominent in China with popular short-form video apps such as Douyin leading the way. Do you see this trend catching on in the U.S.?
A window is slowly opening for social commerce in the U.S., but I don’t think it will be like it is in China. China sees a lot of live broadcasts on apps such as TikTok, WeChat, Taobao, RED, and having an influencer promoting a brand is a crucial component to success on those platforms. Anecdotally, I feel that the attitudes of mobizens (mobile citizens) in the U.S. are different when they see an influencer promotion – they are more cautious about purchasing right away. Perhaps one day U.S. brands will be more willing to adapt. However, a key contrast would be that the U.S. advertisers will host their channel featuring the influencers rather than the reverse seen in China.
In these times, how is the U.S. market uniquely different from that of APAC?
Generally, population density is a major differentiator when you look at U.S. vs. APAC countries. Many APAC countries are in the top half while the U.S. is in the bottom half. I would surmise that there is some correlation between higher population density and the speed of gaining word of mouth and influence. Performance marketers who are not as well versed with APAC can consider the balance of executing paid and organic growth tactics in both regions.
Why did some marketers continue to advertise as the crisis deepened? Such as telecom, CPG, etc.
There’s a couple of reasons. First, telecom and CPG brands, which are historically big spenders, have continued to advertise because the combination of their product offering and brand voice naturally can adapt to messages of hope, safety, and support. In addition, these two categories face a fierce competitive landscape. Especially as consumers can easily change brand preferences, losing Share of Voice is not ideal. Therefore, these advertising are still building affinity through feel good messaging and optimizing the frequency of advertising to keep brand health metrics up.
If budget reallocation is an option for advertisers, where would you advise the lion’s share spent? Why?
If we are talking about mobile performance, I would pause and think about which channels are performing well and if there is still a potential growth opportunity based on the user profiles across those platforms. It is up to the advertiser to go with channels that give them the best ROI and still have growth opportunities. New channels can also provide valuable users. Perhaps the 80/20 rule can be applied here.
Q1 reportedly had TikTok as having the best quarter of any mobile app ever. Given advertisers are cutting budgets, do you see TikTok’s growth continuing for the rest of the year?
TikTok will see additional growth – maybe it’s not the same volume and percentage, but I think the world is opening up to accessible short-form video creation and hashtag challenges. Growth should continue as long as they monitor who their users are and provide product benefits that complement a user’s lifestyle. As for ad revenue growth, that is purely down to how they create ad products that engage and deliver ROI to their clients.
What advice do you have for growth marketers that may be apprehensive about testing new channels?
We understand that incorporating new channels can be a challenge – take time to conceptualize whether the consumer journey across these channels yields the performance you desire. For another pair of eyes, lean into experts who understand not just the baseline performance metrics but more so the narrative your performance campaigns have across each platform.
Jonathan Chan just joined last month as Nativex’s new US Sales Director. Based out of his hometown in San Francisco, Jonathan has previously worked for media agencies in New York and San Francisco as well as China’s leading internet service provider, Tencent. Fondly passionate about the global media marketplace, Jonathan hopes he can bring his knowledge of many client verticals across branding and performance campaigns to the growing US operation.