The advertising industry seems to talk a lot about changes in consumer behavior based on the actions of brands and advertisers -- but what about how advertisers will change the way they respond to consumers?
Merkle saw an increase in the amount advertisers spent on media during the first quarter pf 2021 and into the second quarter. With vaccine rollouts, job openings and stimulus checks in pocket, consumers will continue to shop, but the way advertisers respond to how and what consumers purchase will change in the coming months.
“Pre-orders will become more common,” said Marion Gendron, senior manager of performance media at Merkle. It’s really no different than what the entertainment industry has done for the past few years. For example, The Rolling Stones might sell concert tickets in 2021 for a performance in 2022.
Gendron cited the change as a trend to monitor in the coming months, especially in retail clothing and other industries where consumers are ready to spend.
“With the stimulus checks eligible to some in the United States, there was a resurgence in discretionary income,” Gendron said. “Retail and CPG verticals popped and accelerated during the pandemic. As we look forward and try to anticipate how they will spend in the next few months, disposable income will be spent on travel and leisure.”
Consumers do see product shortages -- but different types, compared to those heading into the pandemic. Rather than toilet paper and hand disinfectant wipes, shortages now exist with lumber and concrete, as well as silicon chips built into mobile phones, cars and other products heavily dependent on electronics.
Then there are the markets around pet food, boats, cars, and rental cars. The shortages, which cause prices to rise, will affect brands and advertisers in these markets similar to the way shortages in masks slowed advertising by companies like 3M, Clorox, and Lysol.
A lot of home improvement and property management products are short-ordered, because consumers have been renovating their homes and living spaces.
“Supply and distribution have been impinged because many corporations have needed to enforce COVID protocol despite an increase in demand,” Gendron said. “Having to remain six-feet apart and pump out the products has impinged demand.”
Companies experienced manufacturing challenges in many Asian countries due to the shortage in shipping containers, which yielded much higher shipping costs. Now companies will start to pass on those costs to consumers, Gendron said. The break and slowdown in the supply chain will change how and where companies advertise.
Trends that will persist long after the pandemic point to online ordering, curbside pickup, and spending time at home. Money spent on travel, leisure and retail apparel will rise in the second quarter.
Some platforms will do better than others. We might see some shifts. Google, paid, will see an uptick as consumers get ready to return to in-person shopping experiences. Local inventory ads, especially on mobile devices. Google and Yelp will capture some of that demand. She attributes it to more consumers looking to spend locally at a neighborhood hair or nail salon.
“Emerging media channels like online video and audio now channels encompass one-third of ad budgets, which really accelerated during the pandemic,” she said. “It’s attracting advertisers with more measurable media. That doesn’t mean it won’t change, especially during the summer months with the economy improving there may not be as many of us hunkered down watching Disney+ and Discovery+.”
Emerging digital channels like video and audio encompass a notable share across advertisers who invested across multiple digital channels with display and social, averaging 33% of media spend in Q1.
Merkle in Q1 2021 also reported in the company's quarterly report that Google paid-search year-on-year (YoY) growth accelerated, with spend increasing 20% more than in the year-ago quarter.
According to Google estimates, daily store visits in Q1, were on average a mere 8% lower than average daily store visits in January 2020. Phones and tablets combined generated 59% of Google organic search visits to brand sites in Q1 2021 -- down three points from Q4 2020.
Google was not the only platform that saw spend rise. On Amazon, Sponsored Product ads were nearly flat YoY, but sales rose by an average of 36% across participating advertisers.
Click growth came in at 38% o/Y for Q1, but the cost per click fell 9%, leading to spend growth deceleration from 41% in Q4 to 26% in Q1.
Impression growth YoY for Sponsored Brands far exceeded that of Sponsored Products, while Sponsored Display experienced YoY impression declines.