Published in Jul-Aug 2020
According to The World Economic Outlook published by the IMF, global growth in 2020 is set to fall to three percent from the projected 6.3%. According to the IMF this will make the ‘Great Lockdown’ the worst slowdown since the Great Depression of 1929.
Pakistan too went into lockdown and as a result we are witnessing a catastrophic, once in a generation event, with a dwindling stock market, a crumbling aviation industry, empty schools and diminishing tourism. The Federal Government had forecast economic losses to the tune of two to 2.5 trillion rupees for the April-June period.
Furthermore, according to a survey by Gallup Pakistan, net expectations about the future of business fell from nine percent in Q4 2019, to -4% during the initial months of 2020, falling further to -9% after the Covid-19 outbreak. Such uncertainty leads both people and brands to make adjustments. In a slowdown, consumers develop coping mechanisms which can be split into two verticals. Firstly, financial by cutting back on spending and focusing on active and conscious shopping – in other words, deliberate and diligent shopping; i.e. they shop more for essentials. Secondly, psychological, by going into a cocoon and hibernating (self-sustenance). Given the above, shelf off-take can be divided into essentials (baby care, food, milk, tea) life essentials (powdered milk, snacks, hygiene) and non-essentials (cars, home appliances). From the start of the lockdown to the pre-Ramzan and Ramzan period, we have observed changes in consumer behaviour, media consumption and media investment.
As footfall drops at public venues, consequently so does OOH exposure. As consumers avoid physical stores (or face product shortages), online shopping behaviour increases as do options that will minimise in-store time such as BOPIS (buy online pick-up in-store) and DTC (direct to consumer). There has also been a huge boost in sales of personal hygiene and home cleaning products and food delivery services. There has been a 32% increase in online shopping activities with noticeable increase in searches for brands like Cheetay, Daraz, Foodpanda, KFC, McDonald’s and Hum Mart.
According to the PTA, since the start of the crisis, digital media consumption has increased by 15%, mostly because people are consuming media throughout the day. Similarly, daytime TV viewership has increased and there has been a 28% increase in news channel audiences.
Here is a viewership analysis of the first 21 days of Ramzan 2020 compared to Ramzan in 2019 (Total Population/Pak Urban). In terms of Total TV average ratings compared to Ramzan 2019, there has been an increase of four percent in overall TV viewership. In the same period, there has also been an increase of four percent in terms of total TV average minutes viewed. There has been an increase of two percent in the ratings of entertainment channels and a seven percent increase in news. There has also been an increase of five percent in the reach of terrestrial TV.
Consumers locked down at home have increased their video viewing habits (TV, OTT, OLV, etc.), gaming and staying connected on social platforms (mobile first). People are in constant search of content as 69% say they kill time watching Netflix in the day (source: BCP Survey). There has been a 42% increase in YouTube streaming. The norm during Ramzan is that 73% of individuals use their mobile while watching TV. In 2020, this number is expected to be higher. Social continues to be a strong channel with people tuning in to get their news updates.
This significant increase in consumer media consumption has not been reflected in the Adex. In fact, Adex in Pakistan declined by 10% compared to the pre Covid-19 period and in the first 15 days of Ramzan. Businesses will face a further drop in Adex post Eid due to no sports events, school closures and the effects of the pandemic. Covid-19 has caused a lot of disruption in our daily lives and created new norms. While grappling with the challenges of this pandemic, we should also use this opportunity to brace ourselves for potential changes in our lives even once these trying times are over.
1. Recognise the Enduring Change in Media Behaviour
Identify emerging trends arising from changes in behaviour and convert them into growth opportunities. New/diversified business opportunities/categories (e-comm, fintech, construction, etc.) will emerge as ad spenders, bringing new investments that will ameliorate the declining ad spends. Increase emphasis on social, search and targeting in-market consumers. Identify innovative opportunities surrounding the new reality of virtual comms and online education. We are observing a population shift from urban to rural areas due to the pandemic, as people wanting to economise return to their hometowns. Brands need to reassess their target audiences accordingly.
2. Remain Agile
Our wins in the future from all these disruptions will depend on the adaptability and agility with which we embrace these challenges.
3. Capture Online Sales Potential
There has been a 32% increase in online shopping activities since the outbreak of the crisis. We need to build on this growth as more people turn to digital payments. Implement new e-commerce models (home delivery, contactless delivery, DTC) that are in line with the new shopping behaviours.
4. Focus on In-home Media
We have already observed an increase in daytime video consumption, be it on TV, digital or social during the crisis. Given that WFH is likely to continue, albeit on a comparatively lower scale once the lockdown is over, brands need to revisit their media strategies and plan their campaigns accordingly. As the saying goes: “When times are good, you should advertise; when times are bad, you must advertise.” A study by Kantar revealed that going dark to save costs will result in a 39% reduction in brand communication awareness. So plan budget shifts (balancing penalties) and reduce spend in areas with declining volumes due to restrictions (cinema, transit, workplace).
5. Update Brand Suitability Guidelines
Update brand safety policies with all partners to avoid it from appearing adjacent to Covid-19 related content; for example, for campaigns that appear on YouTube, use the right keywords to ensure that they do not appear with content related to Covid-19.
6. Sports Marketing
What happens to sports marketing budgets without sports? Brand marketers spend billions on tent-pole sporting events annually, but with live sports either cancelled or postponed for the rest of the year, they must figure out where to repurpose that budget or decide if they can use it at all. According to Nicole Pike, Head of Global Esports, Neilsen, some marketers have adopted a ‘wait and see’ approach for the big leagues, whereas others are finding their audiences elsewhere and still others are taking the ‘take me out to the virtual ball game’ approach. According to her, “a lot of this is experimental and there is going to be different levels of interest and acceptance from brands.”
7. Partner to Produce Meaning and Value
Broadcasters have been affected by declining Adex, changes in programme formats during Ramzan, delays and cancelations in content production, negative fresh content in the coming quarters, cash flow challenges, layoffs and salary cuts. The test for TV networks will be to effectively negotiate deals on current inventory, while providing more beneficial terms on future inventory. Agencies and broadcasters need to work together to face these challenges and offer customised solutions to ensure advertisers sustain their campaigns and advertisers must respond in the same spirit by fulfilling their commitments.
We certainly don’t have all the answers for navigating these turbulent times. There is no playbook to follow. We have to be agile to adapt to the next normal.
Farhan Khan is COO, Starcom Pakistan. email@example.com