The onset of the coronavirus (COVID-19) pandemic last year came seemingly out of nowhere and completely changed the landscape of everyday life, resulting in mass economic hardship and forcing businesses to either adapt to this new reality or succumb to it. It is not by any means uncommon for global events to impact industry, and businesses account and prepare for this, but in many cases this preparation was not sufficient for coping with the dynamic and unique challenges posed by COVID-19, forcing many businesses to address these challenges with ad hoc strategies. Another factor compounding these challenges is how the workforce landscape is shifting alongside everything else. Across all major industries, companies are grappling with the need to have at least some employees work remotely, which carries with it a slew of personnel, operational, and human resources concerns. Even more broadly, it remains to be seen whether the sudden implementation of work-from-home policies, forced into existence and in many cases without a robust underlying plan, will have a negative impact on productivity, potentially deepening the economic impact of the pandemic.
Continued Growth of Digital Media
One area where the pandemic has had a dramatic effect on media is in the increasing focus placed on digital over the past year – with live events, attractions, and entertainment across the country on hold, people are turning to entertainment at home during their leisure time. Combine this with the profound impact COVID-19 has had on production, with many movies and TV shows experiencing delays due to the pandemic, and it is easy to see how digital media like video, music streaming, and digital publications have ended up doing so well in the past year. This means that those who are heavily invested in media channels supported by TV shows or movies are having to cope with delays in projects, consider alternative strategies like OTT and data-driven audience engagement, think ahead for a potential boost in consumption when these delays are resolved, and deal with unprecedented industry developments like digital upfronts.
According to the “COVID-19 Impact Study”, produced by Variety Intelligence Platform in collaboration with Trailer Park Group, the pandemic has resulted in increases in nearly all media entertainment available from home, encompassing everything from books to streaming to video games, and this increased consumption seems likely to come with increased media revenues from these activities as well. The biggest gains in consumption were in streaming content, video conferencing, social media, TV news, and online video games. A similar story is told by the impact data for COVID-19 gathered by Nielsen, which outlines several key findings including time spent on mobile devices reading current events and news being up more than double year-over-year in the United States and engagement with video games reaching an all-time high, with popular gaming-focused streaming service Twitch more than doubling its viewing hours at the beginning of the pandemic last March.
In particular, the spike in OTT consumption is likely to generate a persistent habit formation in consumers, and we should expect to see levels of consumption of this content remain elevated even after the pandemic is no longer disrupting daily life. Similarly, gaming appears set to benefit massively from the new media landscape and is a worthwhile consideration for media companies, particularly those wanting to reach a younger audience. With changes in consumer behavior, advertisers are placing an emphasis on digital-first and direct response strategies, but this adoption has not been whole-hearted. Despite all of the increases in content consumption, advertising spending has contracted significantly over the course of the pandemic, as many companies paused or greatly curtailed their advertising while they tried to understand what this new reality meant for them and their individual brands, resulting in the coronavirus pandemic potentially being more disruptive to advertising than even the 2008 recession.
Greater Accountability and Measurement from Newer Channels
The impact the pandemic has had on the advertising industry is probably going to be a lasting one. Just as the lockdown accelerated a pre-existing lean towards OTT, it has resulted in an accompanying push towards better measurement and understanding of this channel. This also means that during this period of learning, traditional TV will likely still retain a healthy investment from marketers’ post-pandemic, at least for a while. However, with each passing month it seems increasingly likely that CTV and digital will emerge as the dominant channels in the industry in the not-so-distant future. Even though the pandemic has certainly brought with it a set of challenges for media and advertising, it has brought opportunity as well – audiences in many segments are growing, and arguably are more accessible than ever to a broader range of different marketers.
For these marketers and the companies they work with, there are a few things that can be done to help navigate this new media landscape. First, it is essential to scale new channels like streaming, which unlike linear viewing saw a permanent increase in engagement last year, with 9% of American households signing up for a new streaming service and as much as a 50% increase in time spent on these services. To really capitalize on this, media organizations need to have a solid technology base that helps them utilize consumer data and streamline operations. It is also important to continue producing as much content as possible, even with new restrictions in place, as well as to come up with creative ways to get the most out of legacy and back catalog content. After all, content is king. Finally, it is more important than ever to have consistent branding that conveys authenticity and a strong message that will resonate with consumers. If you can successfully manage all of these factors, you could emerge as one of the fortunate few who come out stronger from what may prove to be the most impactful event in media and advertising since the turn of the millennium. For those of us in the industry, one year out from the beginning of COVID-19, the story of the pandemic is just getting started.
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