Around a third of the world’s population has had their freedom of movement limited to a lesser or greater extent – these restrictions include recommended or mandatory social distancing, school closures and orders to work from home if at all possible. For the billions of people now spending the vast majority of their time at home, TV has become the primary source of entertainment and connection with the outside world. It is a trusted source of information and distraction, and even acts a social glue: it’s one of few things that we still have in common that isn’t the battle against the covid-19.
TV is an industry that has seen huge change over the last few years: the pandemic will accelerate that change and, in some cases, even reshape it.
It’s no surprise that TV viewing figures across the world have increased dramatically over the last few months. In the two-week period to March 29th, overall usage of TV among viewers aged 18-49 in the US increased by 25% year on year, compared to the same period in 2019. Streaming video on demand (SVOD) services have enjoyed similar gains: Netflix subscriptions are reportedly up 27%, Hulu’s are up 16% and Amazon’s 21% (according to NBC). In the UK, TV viewing grew by 17% year on year in the week commencing March 16th – and that was a week before lockdown restrictions were implemented. Meanwhile, Statista found that 43% of US adults are now more likely to watch movies from a streaming service, while 40% of adults are more likely to watch TV online.
Primetime has shifted earlier as viewers turn to TV to alleviate boredom throughout the day. According to Conviva, daytime viewing jumped by nearly 40% in the week of 17th-23rd March, versus the week of 3rd to 9th March.
Of course, the impact of coronavirus on brands has been profound: many are seeing decreased sales with customers unable to leave the house, and with financial concerns of their own affecting purchasing decisions. With decreased revenue, many advertisers have pulled back some of their advertising spend – American travel advertisers, for example, cut their spend by 50% in the first two weeks of March: that cut is likely to have increased significantly as more travel restrictions have been implemented in late March and in April.
Sport is an incredibly important advertising opportunity for many brands, reaching as it does many hard-to-reach consumers, including young men. The fact that pretty much all live sports events have been cancelled or postponed for the next few months has left gaping holes in media plans and TV network revenues and has made premium audiences harder to reach. Advertisers are redirecting linear investment, particularly investment which had been targeted at sort, to other inventory controlled by the TV networks including digital inventory, as the latter attempt to make up for lost reach and hang on to ad revenue. However, brands are also increasingly redirecting linear TV spend to the streaming platforms, accelerating a trend that was already worrying the linear TV networks. It’s interesting to note that the streaming networks are unlikely to enjoy the same level of spend by advertiser as the linear TV networks do: ads on streaming platforms can be targeted to specific audience segments, allowing the advertisers to spend less money.
With increased pressure on their bottom lines, particularly in light of an imminent recession, some brands may be tempted to remove their spend from TV and streaming altogether in favour of Google or Amazon, which are more likely to lead directly to product sales.
The entire TV and streaming industry will be affected, but it’s likely that TV networks will suffer more than the streaming platforms, thanks in part to their reliance on live sport. Although TV viewing figures are up dramatically, this increased supply is being met with lower demand from advertisers, which is causing prices to decrease. Interestingly, when US network NBCUniversal announced that its viewing figures had increased sharply, it also shared that it would be cutting back on some of its advertising inventory in order to improve viewer experience. This is a laudable effort to stop prices plummeting, and is a trend we expect to see across the TV industry as a whole over the next months and years.
The loss of ad revenue will be a key implication of the coronavirus pandemic for the TV industry. The triple whammy of advertisers looking to make savings in their marketing budgets, a lack of live sports and the pause in production of new content leading to holes in programming, the outlook is fairly bleak, particularly for the traditional TV networks. The streaming services may fare better at least in the short term as advertisers shift their budgets to them from the traditional networks, but they will be equally affected by a lack of content down the line.
While it seems so far that the lockdown has led to a surge in subscriptions, particularly for the streaming networks as mentioned above, the upward trend isn’t reliable. The coronavirus pandemic has caused huge increases in unemployment across the world: twinned with worries about a global recession, consumers may well be looking for ways to tighten their belts, and they might be willing to forego their streaming subscriptions, particularly when the lockdown is over and financial concerns kick in.
Whether or not they are concerned about money, sports fans in the US may also consider cancelling their pay-TV subscriptions while there is no live sport. They are likely to re-subscribe when sport returns, but could be tempted by the flexibility and lower prices of services such as YouTube and Hulu: this will be a true test of the theory that it is live sport that keeps people tethered to traditional TV.
The coronavirus pandemic has accelerated and reshaped a transformation that was already happening to the TV and streaming industries. Some of the effects of the virus will undoubtedly be temporary – sport will return and advertisers will pay to reach the people that watch them – other effects, such as the shift towards the streaming platforms, will be more permanent.
Image: Monkey Business Images/Shutterstock
The alarming spread of coronavirus across the world has transformed society, business, politics and life itself beyond recognition in just a few short weeks. In an attempt to stem the spread of the virus or at least ‘flatten the curve’, governments have implemented measures never seen before. At least a quarter of the world’s population is living in lock down, with severely limited freedom of movement. Consumer behaviour has been forced to change: no longer able to partake in previously quotidian activities such as going to the cinema and out to restaurants, people are turning to media platforms to keep them entertained and informed. This is having an immediate, direct impact on advertisers and indeed the advertising industry as a whole.
With so many people forced to stay at home, the media they consume and how they consume it has undergone a huge transformation The reach of cinema and OOH has declined dramatically; while some thought that radio might follow suit with fewer people driving to work, it has in fact enjoyed a boost. However, podcast downloads have suffered. Of course, TV, digital and social reach has skyrocketed, with their ability to offer entertainment, information and comfort at home.
The video streaming platforms will be one of the very few sectors that will benefit from the coronavirus. Data analysts have predicted that Netflix’s year-on-year subscription growth in the US and Canada will reach more than double previous estimates, rising by 3.8% compared to original estimates of 1.6%. Of course, Netflix now has competition. AppleTV+ launched in November and Disney+, having launched in the US and Canada at the end of 2019, expanded into the UK and Ireland last week, and will roll out in other key European markets in this month. NBC Universal’s Peacock and WarnerMedia’s HBO Max will roll out in the next few months. It seems likely that they will all benefit from the world spending the spring, and possibly beyond, on their sofas. This will be exacerbated by the cancellation of sporting events, with advertisers likely to redirect sponsorship dollars away from traditional TV and into the streaming platforms (where advertising is available) to make up for lost reach.
Conversely, it seems that the timing is not so good for Quibi, the new streaming platform which focuses on short-form video content for consumers on the go. After all, very few people are on the go at the moment, and people at home for weeks on end are more likely to want something longer and more engrossing.
Unfortunately, most organisations are likely to feel a negative impact. Reduced consumer activity and possibly worries about money in the medium term will impact on sectors as diverse as travel, technology and entertainment. Already many major advertisers have reduced or even halted activity altogether, including Airbnb and Coca-Cola, as well as a slew of travel and tourism brands. Those who haven’t cancelled their advertising spend have moved quickly to change their messaging and their creative and geographical strategies. Many brands have chosen to change their messaging to show support for health services and frontline workers, while imagery of human interaction has declined by 27.4% in social ads. We will see more changes as advertisers seek to adapt to the ‘new normal’, and general anxiety and nervousness around advertising in general.
With people cooking the majority of their own meals at home, one sector that isn’t suffering is food retail. Supermarkets should take advantage of lower costs to ramp up their advertising in a carefully considered and effective manner. Interestingly, however, is the increased tendency to use local retailers, with people doing what they can to shop as close to home as possible. It will be fascinating to observe whether these behaviours last when life returns to ‘normal’.
It seems counter-intuitive in a time when consumers will spend much more time online, particularly on social media, but tech giants Google and Facebook are also unlikely to be left unscathed by coronavirus. Analysts predict that Google will see a 15% drop in travel ad revenue in Q1 of 2020, and a 20% drop in Q2. Meanwhile, 30-45% of Facebook’s ad revenue comes from the travel, retail, CPG and entertainment industries, all of which are likely to spend less on advertising in the coming months. It’s not all bad though: it seems likely that many advertisers will seek to move much of their offline spend – particularly from OOH and cinema – into digital.
Media agencies are likely feeling the strain and this will only become more apparent, not only because of reduced ad spend, but because it’s likely that brands will start to bring services and capabilities in-house as part of their cost-saving efforts.
Back in what feels like another era – the beginning of February – we at ECI Media Management released our annual Inflation Report, providing our forecasts for media inflation in 2020. We noted that coronavirus could affect global travel and local consumption, but no one could have anticipated the epoch-defining effect the virus would have on our modern way of life. And that means, of course, that media pricing will change dramatically in 2020.
We expect to see hugely increased screen time – likely a double-digit increase, and even higher for news, health and learning websites. As the amount of inventory expands and advertisers limit their spending thanks to pressures on their business, we should expect prices to drop significantly: publishers are already feeling the strain, particularly as brands blacklist many of the terms associated with coronavirus.
With prices dropping and a huge increase in digital reach, there is an opportunity to create highly cost-efficient brand building campaigns. Many brands and third-party ad tech firms have blacklisted keywords relating to coronavirus and covid-19 in order to maintain brand safety; budget previously earmarked for this activity could be pivoted to contextual marketing, which we believe will become a powerful tool in the marketer’s toolbox with the death of the cookie.
2020 has swiftly and unexpectedly turned into a year of dramatic change for absolutely everyone, from individual people to entire industries and economies. As we all attempt to navigate these changes from our home offices, one thing is clear: we must remain informed and ready to respond to rapidly changing circumstances. Agility, as is so often the case, will be crucial.
ECI Media Management has produced a list of ten steps that advertisers can take to mitigate the effect of the pandemic on their media performance – you can find it here. Please don’t hesitate to contact us on if there is anything you would like to discuss concerning your media activity.
Image: SFIO CRACHO/Shutterstock
Back at the beginning of the millennium, the music industry was in a serious state. CDs were in decline as consumers digitised the way they consumed music: but they were doing it for free via Napster and other pirate websites.
And then, in 2001, the industry’s knight in shining armour appeared, in the shape of Steve Jobs. He announced the birth of iTunes at the Macworld Expo, heralding a music revolution. The era of MP3 music was here, and over the next six years Apple would sell more than 100 million units of the iconic iPod with which to listen to those MP3s. Apple was at the pinnacle of its success, having redefined what music ownership looked like: no longer physical records, tapes or CDs, but a world of songs in your pocket.
In the 18 years since its launch, iTunes has become a media behemoth, a one-stop shop for users to consume not just music, but movies and TV and, latterly, podcasts too. But over the last few years, downloading has been eclipsed by a new kind of access: digital streaming.
In 2008, just a year after the launch of the first iPhone and when iTunes was at the height of its powers, a small Swedish start-up called Spotify launched its music streaming service across eight European markets. Its two-tier model – free to the consumer ad-funded, and a premium subscription option – gave users on-demand access to stream millions of tracks. Music streaming was still in its infancy, accounting for just 1% of global music revenues in 2007, and Spotify’s initial growth was good but unremarkable. By 2013, they had 30 million active users and 8 million premium subscribers.
It is the six years since 2013 that have seen a seismic shift in how music is consumed. By March of this year, Spotify’s user base had skyrocketed, with 217 million active users and 100 million premium subscribers around the world, a number which looks set to continue growing. By opening up the streaming market and persuading users to give up ownership of their music, Spotify has arguably redefined the music industry, just as Apple did when it persuaded users to give up physical ownership.
iTunes’ download model was starting to look clunky and old-fashioned. In 2015, Apple launched Apple Music, its streaming service which it hoped would compete with Spotify and other broadcasters with its three distinct components – on-demand streaming, radio and Apple Connect, which allows artists to upload songs, videos and photos for followers. Since then, as streaming has increasingly become the norm, there have been rumours that iTunes would be wound down.
That finally came to pass this week, as Apple announced at its annual Worldwide Developers Conference in San Jose that it would replace iTunes with standalone music, television and podcast apps. This will align Apple’s media strategy across the board: iPhones and iPads already offer separate apps for Music, TV and Podcast, and Mac/Macbook users can expect the same.
However, the move is symbolic as well as practical. As Amy X Wang says in Rolling Stone, “by portioning out its music, television and podcast offerings into three separate platforms, Apple will pointedly draw attention to itself as a multifaceted entertainment services provider, no longer as a hardware company that happens to sell entertainment through one of its many apps” – and that’s increasingly important as iPhone sales have started to slow.
This move towards entertainment services is being seen across the technology and communications sector: we’ve seen the tech giants buy up rights to live sport, while AT&T acquired Time Warner for $85bn and Disney bought most of the 21st Century Fox empire, fending off an offer from Comcast. This trend is of course being driven by changing consumer behaviour as internet connections over 4G and now 5G accelerate – allowing for uninterrupted streaming of music, TV and films. We’re seeing the effects of technology on the media and communications industries, and lines between these sectors will continue to blur. This blurring of boundaries will then pose another issue on how they can all be monitored & assessed both separately and in totality.