a special report from media group online, inc. · 2020. 12. 23. · from media group online shares...

Much of the beginning of 2021 will be more like the second half of 2020 than the second half of 2021. That is the primary trend, as a consensus forecast is COVID-19 vaccines will be available to most all Americans by April. During the second quarter into Q3 is when a sufficient number of Americans could be inoculated to reduce their likelihood of contracting the disease significantly.

No doubt, the economic fallout from the pandemic has been an important lesson. The free enterprise system works much like the biological evolutionary model: as the environment changes, especially radically and rapidly, those who are prepared and are able to adapt quickly will thrive in the new environment.

Humans are impatient creatures, but more patience is required during the short term. Early 2021 is the time for preparation and planning to positioned yourself to take advantage of a revitalized economy. This Special Report from Media Group Online shares the trends likely to make the most impact during 2021 – and open new doors and opportunities for you, your station and your clients.

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A Special Report from Media Group Online, Inc.

Better Days AheadWhile the pandemic devastated businesses of all sizes, resulting in considerable unemployment and other economic challenges, it was also accelerating many trends by as many as three to five years.

Technology experienced the most acceleration and not just familiar, everyday tech tools and services, but also emerging technologies, including new tools to enhance customer interaction and maximize sales and loyalty and new applications of artificial intelligence.

In its report, Predictions 2021, Forrester estimates large US companies will increase their tech spending twice as much as those that will decrease their spending, or 40% and 20%, respectively. More CEOs will have tech backgrounds to excel in the B2C and B2B marketplaces.

Forrester also predicts remote work will increase three-fold compared to the pre-pandemic period, with almost half (47%) of North American managers expecting many more employees working remotely and permanently. Instead of spending large sums on unnecessary office space, more companies will invest in conversational artificial intelligence, machine learning and other tools to support remote workers.

Regardless of one’s political persuasion, the new Biden-Harris administration is likely to renew/reinforce economic partnerships with allies as well as adversaries. We live in a global economy and once the pandemic is conquered, there will be a very significant increase in international commerce.

5G technology and satellite Internet systems, such as Elon Musk’s Starlink, will allow people in emerging markets, such as India, Indonesia and Southeast Asia, and the future burgeoning markets of Africa, to participate in the global economy as consumers as well as the next wave of entrepreneurs.

Not to be overlooked is how the pandemic also accelerated global issues, such as climate change, sustainability and diversity and equality.

How Americans Think Corporations Should Use Their Influence, September 2020

Action Strongly AgreeSomewhat

Agree

Don’t Know/No Opinion

Somewhat Disagree

Strongly Disagree

Altering the impacts of climate change 34% 26% 18% 9% 13%

Ensuring safe and fair election 33% 26% 18% 10% 13%

Altering the economic realities for average Americans 26% 32% 21% 9% 12%

Driving change or progress on important social issues 25% 29% 19% 12% 15%

Altering Americans’ attitudes about cultural or social issues 19% 26% 21% 16% 22%

Helping to pass legislation 18% 23% 21% 16% 22%

Influencing public policy 17% 23% 21% 18% 22%

Helping to elect politicians 13% 7% 19% 16% 36%Morning Consult, October 2020

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Business Comes Roaring BackAs businesses and individuals suffered greatly during the pandemic and the “pandemic recession,” a history lesson provides an important contrast. Overleveraged financial institutions was the primary cause of The Great Recession of 2008–09, often because those institutions provided home loans to people who weren’t actually qualified.

The closures of non-essential businesses and requiring people to stay at home instead of working (except those who could remotely) drove the pandemic recession and created a K-shaped recovery.

Those Americans who were well-positioned financially and were unlikely to lose their jobs continued to be active, but cautious consumers. Those who worked lower paying jobs (and often people of color) had to reduce their consumer spending significantly, but as the economy rebounds, they are likely to be regular consumer spenders again.

During the Great Recession, annual economic growth was only 2% for eight years while US Bureau of Economic Analysis data indicates the 36.4% of economic growth lost during Q1 and Q2 2020 was largely recovered during Q3, with a 33.1% increase.

The Conference Board is forecasting a 2.8% annualized increase for Q4 2020 and 3.6% for all of 2021, with a best-case scenario of 4.0% growth, and a worst-case scenario of +0.1%. The 3.6% forecast would regain all of the 3.6% decline expected for 2020.

The best-case forecast is based on widespread availability of COVID-19 vaccines, and a new additional stimulus program, which will either occur before the end of the Trump administration or during the early days of the Biden administration, or possibly both.

More businesses, workers and the general economy will continue to suffer during winter 2020–2021 and into Q2 2021, but clearly the recovery from the pandemic recession will be quicker and more widespread than the slow process of previous recessions.

The Conference Board Economic The Conference Board Economic Outlook, 2019, 2020 and 2021Outlook, 2019, 2020 and 2021

Economic Metrics 2019 2020 2021

Real GDP +2.2% -3.6% +3.6%

Real consumer spending +2.4% -3.9% +4.3%

Residential investment -1.7% +4.8% +9.9%

Real capital spending -2.9% -4.5% +4.0%

Exports -0.1% -13.5% +3.5%The Conference Board, December 2020

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21st Century Retail Sprints into the FutureFor retailers of all sizes as well as small business owners, the pandemic revealed the vulnerability of their supply chain, from global to local markets. The disruptions were enormous during the early-pandemic period, but the National Retail Federation (NRF) forecasts more investments in and emphasis on evolving supply chains to serve post-pandemic consumers.

The excessive amount of retail space in the US, which has been plaguing the retail environment for decades, finally reach the point of no return. As painful as the shuttering of major and local retailers, including thousands of restaurants, has been, it will prove to be a healthy purge, especially for the shopping mall model. It was already changing, but, again, the pandemic will accelerate the closing of many malls and their transition.

Pivoting to a stronger online presence was vital for small retailers; however, a Blue Host August 2020 survey found just 61% of small business owners had a Website. Of those able to make the pivot, more than half experienced increased online traffic and 49% said they increased their online store revenue, compared to a 61% decline of physical store revenue.

The survey also revealed almost 50% will continue as an online-only establishment and only 20% said they would re-open a brick-and-mortar location. Another positive trend is 27% were able to transition their hobby or business dream into a full-time job, indicating that American entrepreneurship is strong and vibrant.

The NRF and others predict the direct-to-consumer (DTC) model will continue to become more mainstream. The success of Casper (mattresses), Stitch Fix (personal styling service) and Peloton (exercise equipment) is expected to cause traditional brands to embrace the DTC model. Better yet, research from Comcast and others indicates the newest DTC companies increase their average Website unique visitors with the addition of TV advertising.

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Consumers Are Ready to SpendThe 21.6% increase in online spending during Black Friday 2020 to $9 billion and the 15.1% increase in online purchases during Cyber Monday 2020 to $10.8 billion is proof of consumers’ pent-up demand to shop.

According to multiple sources, Americans have actually increased their savings rate during the pandemic, resulting in $1.3 trillion in additional savings. Although it’s too soon to forecast how Americans will use this largess, some forecasters think much if not most could be spent once the pandemic has ended.

Although American consumers may have huge savings reserves and may spend it, many of their shopping habits have changed – and many forever. A late-2020 Shopkick survey of 1,400 consumers reveals some of those changes.

Consumers’ Expected Permanent Shopping Behaviors, November 2020

Behavior Percent

More stocking of essential items 67%

Fewer, but bigger shopping trips 49%

Buy more online 46%

Less focus on brand names 38%

Utilize BOPIS and other conveniences 10%Shopkick, December 2020

A June 2020 Accenture survey found 56% of respondents were shopping in nearby neighborhood stores and buying more locally sourced products, behaviors they said will continue at even greater levels after the pandemic, or 79% and 84%, respectively.

An additional Accenture survey result is good news for local economies, as 30% of consumers said they had increased their purchase of local brands, compared to 26% of national brands and only 15% of global brands.

Accenture discovered similar increased usage of digitally-enabled services during the pandemic, which consumers said will increase with the end of the pandemic.

Comparison of Consumers’ Use of Digitally-Enabled Services During and Post Pandemic, June 2020

Service During Post

Contactless payment 54% 87%

In-app ordering 54% 84%

Home delivery 47% 82%

Curbside pick-up/Click and Collect 44% 78%

Shopping via social media platforms 44% 80%Accenture, July 2020

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Ad Spending to ReboundMedia had a bit of a contradictory experience during 2020. As millions were forced to stay at home, and many with much time on their hands, they increased their media engagement, especially TV, and news sources. Despite the surge in media use, many advertisers with closed businesses pulled or significantly reduced their ad spending.

Magna Global’s December 2020 Advertising Forecasts reported US total ad revenues decreased by only 1%, driven by a 10% increase in digital media spending and the billions spent for the 2020 elections. Removing $6.1 billion of incremental political spending, 2020 total US ad revenues will only decrease 3%.

Although linear ad sales (linear TV, linear radio, print, OOH) experienced the largest decrease (-16%), linear TV, especially local TV, did much “better” than the other linear sectors.

Linear Sectors’ 2020 Ad Sales Performance, December 2020

Sector Percent

National TV -11%

Local TV -3%

Cinema -80%

Print -30%

Radio -28%

OOH -24%Magna Global, December 2020

With a projected distribution of COVID-19 vaccines during the first half of 2021, which is also expected to generate a general economic recovery, Magna forecasted a 4.0% increase for total 2021 US ad revenues. Assuming the postponed Tokyo Summer Olympics will occur, the forecast for national TV is +5%. Interestingly, OOH is predicted to increase 11%, as people are able to return to more normal travel patterns.

BIA Advisory Services expect local ad spending to increase 2.5% during 2021 to a total of $137.5 billion. Unsurprisingly, the sector with the largest projected increase is leisure/recreation, or +16.5%, and the sub-sectors spending the most will be tourism and travel services; motion picture and video exhibition; and airport, cruises and other travel.

Financial/insurance (+10.0%) and real estate (+8.7%) are the second and third sectors forecast to increase their 2021 ad spending.

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As in so many other business sectors, the pandemic has also accelerated many digital tools and technologies to engage with consumers online as well as in-store. Touch-free technology, in the form of virtual fitting rooms, on-demand manufacturing and Amazon One’s palm scan to pay for groceries at Amazon Go stores. More stores and their supply chains will utilize robotics and self-driving delivery vehicles and drones are swooping into the mainstream.

Livestreaming will become one of the major new features of social media, essentially bringing the HGTV model online. The Interactive Advertising Bureau estimates global livestreaming revenues will total $120 billion during 2021.

Little space remains on this page to tout the acceleration of the most advanced technologies. Automakers are focusing almost exclusively on electric vehicles; 5G is

becoming available at a faster rate; doctors and patients have adapted quickly to telemedicine; and the dawn of a new Space Age is most aptly represented by the first high-altitude launch of SpaceX’s Starship.

Forward with DigitalDescribing the pandemic massive impact on digital media, ecommerce and technologies and the trends to come is impossible with so few words, but maybe the most obvious and most familiar is the transformation of online grocery shopping.

It’s well-documented consumers turned to the online channel when the pandemic started, and they were fearful of shopping in stores. The trend hasn’t changed much and will result in a rather astounding 53% increase for all of 2020, adding $30.86 billion to a total of $89.22 billion. eMarketer forecasts the 2021 increase will be much more modest, or +5.2%, but then increase three-fold during 2022 (+18.1%) and 2023 (+17.0%).

Data from the Accenture survey cited on page 5 indicates consumers will maintain and even increase their online purchases in 11 categories. (Keep in mind, these are “infrequent ecommerce users,” or shopped online for less than 25% of their purchases before the pandemic.)

In four of these categories, infrequent ecommerce users said they would increase their frequency of online purchases, compared to 2020, and often 300% more than prior to March 2020.

Infrequent Ecommerce Users’ Increase of Online-Purchases, June 2020

SectorBefore

PandemicDuring

PandemicAfter

Pandemic

Home décor 6% 15% 16%

DIY tools and materials 6% 15% 16%

Luxury goods 6% 15% 16%

Consumer electronics 6% 15% 16%Accenture, August 2020

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Time to Stoke Your OptimismWinter 2020–2021 will be a difficult period, but as more people receive the COVID-19 vaccines and the economy begins to move forward, everyone’s optimism will grow. Use your optimism to prepare for retailers/advertisers’ maximum effort to regain foot traffic and sales and improve customer engagement.

The Blue Host survey cited on page 4 reveals small business owners’ three biggest challenges for 2021. They can be the basis of a strategic plan for every local media ad salesperson to help SMBs overcome these challenges.

Small Business Owners’ Biggest Challenges for 2021, August 2020

Challenge Percent

Securing new customers 44%

Lingering economic impacts from the pandemic 30%

Fewer sales/less consumer demand 21%

Blue Host, September 2020

Despite these challenges, 72% of the surveyed small business owners told Blue Host they were optimistic. The Federation of Independent Businesses (NFIB) reported a similar level of optimism from its November survey. Its optimism index was 101.4, declining 2.6 points from October, but still greater than the historical average of 98, and much greater than the low point of 2020, April’s index of 90.9.

The survey also revealed 34% (seasonally-adjusted) had job openings and couldn’t find anyone to hire. Even better news for the near-term labor market is 21% of these small business owners said they expected to create new job positions during the next three months.

Although the pandemic slowed the expansion of NextGen TV technology to more stations, 2021 is likely to see a significant number of stations adding ATSC 3.0, giving local small businesses an effective and affordable means to reach consumers in their immediate geographic area. Adding this technology to your sales toolkit is every reason to be optimistic about the trends of 2021.

Sources Forbes Website, 12/20; Forrester Website, 12/20; MarketWatch Website, 12/20; CNBC Website, 12/20; Morning Consult Website, 12/20; The Washington Post Website, 12/20; The Conference Board Website, 12/20; National Retail Federation Website, 12/20; Blue Host Website, 12/20; Retail Dive Website, 12/20; Barron’s Website, 12/20; Comcast Website, 12/20; Shopkick Website, 12/20; Accenture Website, 12/20; groupm Website, 12/20; Magna Global Website, 12/20; BIA Advisory Services Website, 12/20; Media Village Website, 12/20; Grocery Dive Website, 12/20; eMarketer Website, 12/20; National Federation of Independent Businesses, 12/20.

Prepared: December 2020

© 2020 Media Group Online, Inc. All rights reserved.

www.mediagrouponlineinc.com

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a special report from media group online, inc. · 2020. 12. 23. · from media group online shares...

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