Since the onset of Covid-19, the self-quarantine and social distancing policies implemented to curb its spread have reshaped the lifestyles of consumers all over the world. The extended periods of time people are spending at home have brought about significant changes in consumer habits and behaviours that may endure beyond the pandemic, especially as they continue to minimise physical contact.
As countries across the globe begin to restimulate their economies, the mood still remains cautious, as nations teeter on the edge of recession. In this continually-evolving and unpredictable environment, we see five key opportunities and challenges that will emerge in the advertising landscape due to key behavioural changes among consumers:
Evolution of mobile consumption habits
When lockdowns kept people at home, they began to explore new experiences and value-added content that helped them cope in the crisis, primarily online. These spanned self-improvement platforms such as online education and fitness, food and grocery deliveries, online shopping, video and music streaming, gaming and e-sports.
The pandemic has also prompted older consumers to try purchasing online, and experience the convenience of home delivery for groceries, marking the first step towards a change in channel preferences. Research from Bain and Forrester found that e-commerce is likely to grow at double-digit rates in ASEAN, making up around 13% of retail by 2030 – which is close to current US penetration.
The increased use of digital services has also influenced spending patterns. Even as physical stores began reopening, consumers’ shopping behaviours from the pandemic continued, with many opting to continue purchasing online vs. brick-and-mortar stores. As people get used to spending long periods of time at home, their priorities are also shifting not only thanks to the convenience provided by such online services but because of concerns around their health and well-being and that of their families.
When the pandemic first hit, consumers were focused on necessity and spent on essential goods such as masks or stocking up on groceries, as well as to fulfill entertainment interests. A survey by Bazaarvoice revealed that prior to the pandemic, consumers’ main priorities when shopping was quality (48%), price (47%) and brand (24%). As the pandemic-related lockdowns heightened in June, consumers were focusing on availability (49%), price (36%) and quality (34%).
Yet, while social distancing has undermined offline channels, traditional trade and convenience stores will still be valuable, as they evolve to offer services beyond retail, from digital financial services to last-mile delivery in e-commerce. As a result, consumers will rely on online and contactless experiences more than ever.
Brands will need to explore building a hybrid model merging both offline and digital strategies to strategically expand, such as by turning into virtual shops and showing off styles and products, then directing people to transact online. As services shift online, people are also likely to look for differentiated and sustainable relationships in the virtual world that help them stay connected, add value to their lives and make them feel part of communities. Therein also lies the opportunity for brands to continually communicate with consumers across both digital and offline platforms, to build their relationships with them and stay top-of-mind.
Increased emphasis on brand communications
While it is tempting to focus solely on campaigns that drive sales and conversions, moving back to the basics is crucial for brands to gain consumers’ trust – to demonstrate a core purpose, be helpful and focus on serving customers. Be it through taking additional measures to maintain consumer confidence in the brand, or launching new initiatives to address the needs of certain groups, brands can seek creative and meaningful ways to help consumers and communities.
In addition to serving consumers’ needs, social issues such as inclusivity have especially been gaining global momentum in this climate, sparked by the global #BlackLivesMatter movement. With the world’s eyes fixed in the digital sphere, the movement has gained traction like never before. As a result, brands are – rightfully – looking inward and taking responsibility for both their positive and negative business practices. We are also seeing this in Asia, with Colgate’s Darlie and Hindustan Unilever’s Fair & Lovely, recently announcing rebrands. Issues surrounding misinformation and harmful content hosted on tech giants such as Facebook and TikTok have also put a spotlight on the increasing importance of brand safety.
Predictions of a longer pandemic mean consumer concerns for their health, finances and the economy continue to remain high. According to a 2020 report by Dynata, consumers now expect the coronavirus pandemic to last longer, with 65% now expecting it will last six months or longer, as compared to 52% in early May.
For brands to successfully navigate this climate of uncertainty, it is important to ensure their messages are relevant and sensitive to this time. While budgets may be constrained, brands will have to continue focusing on consumers as the priority to keep their loyalty, taking their concerns into consideration and innovating their messaging.
Growing focus on local and regional players
Local and regional players will have the upper hand as consumers increasingly focus on helping their local communities. Regional brands in Asia have been gaining popularity over Western brands. According to Euromonitor, regional brands have been successful in capturing a significant market share of 57% in the Philippines and 74% in Indonesia in 2019, across categories including beauty, fashion and smartphones.
Businesses across the world have also had to pivot their traditional business models to ensure they remain relevant in serving their communities. In Singapore, for example, numerous local food and beverage outlets took to the leading food delivery platforms, GrabFood, FoodPanda and Deliveroo – many for the first time – to keep their respective businesses afloat and staff employed.
Increasing importance of programmatic
Brands are also likely to review their advertising spend due to the impact of social distancing measures restricting “normal” operations. With out-of-home taking a backseat, marketers should focus on investing in digital advertising to reach prospective customers. As such, there is an added emphasis on performance-related campaign objectives, as marketers look to make every ad dollar spend count.
Data has hence become crucial in understanding high-value customers and their behaviours – to create new services, products and experiences that meet their evolving needs. Against the backdrop of evolving consumer consumption changes, the resulting shift in digital spending would present opportunities for growth in adtech.
Programmatic will be even more important in helping to analyse the influx of data, to optimise campaigns in real-time quickly and effectively – especially in the current, fast-changing environment. As people spend extended periods of time at home, as well as more time online and access content through different screens, strong adtech platforms can provide brands with more effective campaign extraction and activation, as well as access to the many different data touchpoints amassed.
Greater opportunity for more effective targeting
As ad spend gets reviewed, brands are also finding new ways to reach prospective customers, leading to a significant uptick in audience targeting. The removal of the third-party cookie from Google – a once common ad targeting tool – has increased the interest in audience-based, contextual targeting.
Apart from helping to safeguard brand safety, contextual targeting is effective in identifying new audiences and trends as publishers, capitalising on traffic surges and investing in new types of content during this time.
As consumers continue focusing on content aligned with their passions, contextual intelligence will be an even more essential tool for expanding brand reach as messaging can be aligned directly with the content.
Even as the impact of the pandemic continues to cause disruptions across the global economy, brands should continue to spend wisely through these times of uncertainty in order to position themselves for recovery.
Marketers should be mindful of how consumers’ ever-changing behaviour will influence their sensitivity to advertising and buying intent in the immediate future. Apart from being empathetic to both the time and environment, brands need to adapt messaging to consider attitudinal differences and cultural diversity of audiences.
Those that make consumers the focus of their decisions, striving to provide better service, compelling offerings and fast, streamlined infrastructure will drive value successfully and eventually emerge as market leaders through the pandemic.
Irene Yang is the managing director at Nativex.