Impact Of COVID-19 On Consumer Behaviour, Attitudes and Expectations

May 13, 2020

Presented by:

Kristanne Roberts, Global Product Development Director, Kantar

Duncan Southgate, Global Brand Director, Kantar

The largest study of its kind exploring the marketing implications of COVID-19 (including 25 European markets)

United StatesCanadaMexicoGuatemala

BelgiumBulgariaCroatiaCzech RepublicDenmarkFinlandFranceGermanyGreeceHungaryItalyNetherlandsNorwayPolandPortugalRepublic of IrelandRomaniaSerbiaSlovak RepublicSpainSwedenSwitzerlandTurkey*United KingdomUkraine

EgyptNigeriaKenyaMauritiusReunion IslandSouth Africa

ArgentinaBrazilChileColombiaEcuadorPeru

Australia

Countries highlighted are shown in this report as we’re comparing waves * Not included for wave 3 &4 as we didn’t have data in wave 3

ChinaIndiaIndonesiaIsraelJapanKazakhstanMalaysiaPhilippinesRussiaSaudi ArabiaSingaporeSouth KoreaThailandUnited Arab EmiratesVietnam

Wave 1Mar 14-19

Wave 2Mar 27-30

Wave 3April 10-13

Wave 4April 24-27

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Consumer state of mind1

Levels of concern peaked during “lockdown shock” at the end of March, but are now decreasing. Europeans being the least worried

5 point scale ranging from “The current coronavirus situation concerns me hugely” to “The coronavirus situation doesn’t concern me at all”.Top 2 boxes are shown.

Concern over time

40

47

42

37

34

33

34

37

Wave 1

Wave 2

Wave 3

Wave 4

Hugely concerned Concerned

Current concern by region

33

34

37

59

40

37

38

20

Europe

North America

Asia

Africa

Hugely concerned Concerned

4

Longer term concerns are increasing, as we see concern about the economy intensify and more people start to feel the impact on household income

Chart 1: Waves 1-4 data, global dataChart 2: Wave 4 data, European markets

23

28

30

31

30

31

31

32

14

13

11

11

20

17

17

17

13

11

11

9

Wave 1

Wave 2

Wave 3

Wave 4

It will take a long time for the economy to recover and will have a long term impact in terms of job losses and businesses struggling'

I believe the economy will recover quickly once

coronavirus situation has died down

39%

29%

23%

9%

Already impacted my household income

Not yet impacted my household income but I expect it to in thefutureWill have no impact on my household income

NA/Don’t Know

5

When it comes to the changes people have made to their daily lives, freedom and social interaction are the ones we miss most in Europe

Which of the following have been hardest to give up because of the effects of Coronavirus? Please select the 3 things you have found the hardest to give up.Wave 4, Europe, % of people who selected option at question

The loss of freedom being felt the most in in Turkey

within Europe

5

10

12

13

18

22

29

31

41

43

48

0 10 20 30 40 50 60

None of these

Convenience

Flexibility

Children going to school

Practice sport

Routine

Sense of safety

Big plans

Leaving the house

Social interaction

Freedom

57%

Whilst the Republic of Ireland are most missing

social interaction in Europe

55%

6

Changes in consumption behaviours

2

European media consumption has increased significantly in lockdown, with online media channels and TV providing new opportunities to reach audiences

With reference to the last month, are you using the following media ‘significantly less’ ‘Slightly less’ ‘The same’ ‘Slightly more’ ‘Significantly more’Chart 1: Wave 4 net +ve/-ve scores, globalChart 2: European net +ve/-ve scores, Wave 1-4

-38

-3

3

8

9

22

39

41

44

44

45

45

47

57

-60 -40 -20 0 20 40 60 80

Internet Surfing

Instant Messaging Apps

Social Networks

TV

Onine Videos

Websites

Email

TV On Demand

Podcasts and Audio Streaming

Streaming Online Radio

Radio

Newspapers

Magazines

Cinema0

10

20

30

40

50

60

Wave 1 Wave 2 Wave 3 Wave 4

Social Networks

Online Videos

Podcasts

Internet Surfing

8

TV Viewing in China has started to stabilise

Daily Average Mins, A4+Data source and copyright: CSM Media Research

Are we heading “back to normal”?

0

50

100

150

200

250

1st Jan 19th Apr

24th Jan –start of nationwide lockdown

measures and extended lunar new year holiday

20202019

9

Households with kids are seeing the greatest increases in consumption across all media channels and apps, with the younger audiences spending more time on YouTube

Chart 1: Wave 3, European platform usage by kids in HH, net +ve/-ve socresChart 2: Wave 4, European platform usage by age, new +ve/-ve scores

0 10 20 30 40 50 60

Snapchat

LinkedIn

TikTok

Pinterest

Twitter

Instagram

Facebook Messenger

WhatsApp

Facebook

YouTube

% increase in consumption

Kids

No kids

49

43

34

53

61

43

51

42

32

42

25

28

W H A T S A P P Y O U T U B E F A C E B O O K

European Average 18-34 35-54 55+

10

Social and messaging app usage is increasing across Europe, with Spain and Portugal seeing the greatest increases in those claiming they spend more time on the platforms

Wave 3, net +ve/-ve scores average across apps including: WhatsApp, Facebook Facebook Messenger, Instagram, TikTok, Twitter, Snapchat

0

5

10

15

20

25

30

35

40

11

As people have adjusted to the home centric lifestyles e-commerce has become increasingly important in many categories, but many still don’t find it to be a positive experience

Chart 1: Q: How long have you been buying the following products online? Wave 4, Europe, 3 point scale – ‘Bought for the first time’Chart 2: How much do you agree or disagree that online shopping is a more positive experience than shopping in store? Wave 4 Europe

0 2 4 6 8 10 12 14

Baby food

Eyewear

Tabacco

Alcohol

Pet food

Home Applicances

Services

Electronics

Dairy Products

Over the counter phama

Clothing and Accessories

Cleaning HH Products

Cosmetics and personal care

Food and Beverages

I purchased it for the first time this month

26

45

29

Disagree It's a positive

experience

Neither agree nor disagree

Agree It's a Positive

Experience

12

eCommerce - Opportunities and Risks

Source: Qartz April 2016: China’s Internet got a strange and lasting boost from the SARS epidemic.Kantar World Panel Vietnam feb 2020, Kantar Survey across 6 countries in Asia in Feb 2020.

SARS epidemic is often seen as birth hour for e-commerce in China

Concerns about availability hold consumers back – ensure reliability and availability. If possible, emphasize home delivery

Safety in the foreground – show measures to protect customers (delivery to front door without signature, hygiene training, etc.)

Some concerns about the environment –eco-friendly packaging, delivering all order items at one, stress responsibility for supplier health

13

What marketing and media decisions should brands be making?

3

Comprehensive COVID response plans need to look beyond survival tactics

1. Ensure the health, safety and productivity of employees.

2. Put a rapid response team in place.

3. Take stock of the commercial situation across retail, marketing, sales and digital.

4. Minimise business exposure.

5. Capture immediate business opportunities.

6. Monitor and update in real time.

7. Plan now for the recovery.

Source: “Coronavirus forces dramatic change in marketing” by Kantar in association with AMAhttps://www.kantar.com/inspiration/coronavirus/coronavirus-forces-dramatic-change-in-marketing-but-more-can-be-done-to-adapt 15

Marketers have almost all been deferring campaigns.While many are creating new ones, overall spend will be lower.

16

Whilst consumption of digital and social channels are seeing the greatestincreases in time spent, spend has been reduced most significantly in thosechannels

In what channels have reductions been made for planned marketing spend due to the coronavirus? Kantar survey fielded among members of the AMA from April 2 to April 13. 17

Only 8% …of consumers believe that companies should stop advertising, we know budgets are under increasing pressure.

18

What happens to brand health measures if you stop advertising?Net effects on brand measures 6 months after stopping advertising

*Net Change: Percent of brands increasing – percent of brands decreasing when they stop TV advertising – 2018 Kantar data

Net

ch

ange

*

TBCA TotalMentions

Buynowadays

Buy most often

Firstmention

Keyimage

Total brand awareness

Trial

-39

-21

-13-11

-9-8

-5-3

BASE: No of. brands (632) (836) (376) (501) (627) (232) (840) (744)

19

What happens if you decrease your ad spend? Simulation for a real beer brand to March 2021

Kantar simulations, March 2020 20

Source: BrandZ Global, 2019

+317%BrandZ Top 10Powerful Brands

+196%BrandZ StrongBrands Portfolio

+128%S&P 500

+59%MSCI Word Index

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

We’ve seen before that strong brands recovered NINE TIMES faster following the financial crisis of 2008

21

Kategorie 1 Kategorie 3 Kategorie 4 Kategorie 5

Media plans are being dramatically impacted (e.g. no OOH, cinema or event sponsorship). Re-allocating budget to more efficient TV and digital channels can increase impact with maintained or reduced spend

* Out of Home Advertising (Billboards, Ads in Public Transport), Sports/Event Sponsorship, Cinema Advertising, Brand Stores** Power in the Mind Share*** Stated market share: “Out of your last 10 purchases, how often did you buy each brand?”

Consumer brand, Europe

+ 0.5%

+ 0.4%

+ 4.8%

+ 4.1%

- 1.6%

- 1.4%

Brand equity share**

Sales Volume share***

Normal investment

Scenario 1: Investment on affected touchpoints* stopped

Scenario 2:Investment on

affected touchpoints* stopped, optimised invest on

remaining TPs

Scenario 3:Investment

re-distributed to remaining touchpoints

Source: Kantar Connect Budget simulations

22

If you double-down on digital, don’t just focus on short-term performance. Adidas recently needed to reset their balance.

adidas analysed their sales data and found that that, whilst the brand enjoys a core fan base of loyal heavy users it’s essential to build on the light user who still form the bulk of sales.

Source: Kantar Dimension 2020 “Media nad Me” report

More targeting is positive but it’s important not to lose sight of the power that television has … in delivering one message to everyone. We see the pendulum swinging back to brand building.

The company’s strategy to drive direct-to-consumer growth led to more short-term thinking, simply because the marketing team had more data and they could literally see the sales happening.

Previously, when people bought in a shop, we had little visibility [of those sales]. Once it became a direct transaction, because you can see sales in the moment, there is a temptation to over-focus on that and forget about the long-term.

Andy PilkingtonMedia Director, Europe

23

What should brands be saying?

4

78% 75% 72% 67% 65% 50%

Should Show how they can be helpfulin the new everyday life

Inform about their efforts to face the situation

Use a reassuringtone

Offera positiveperspective

Communicatebrand values

Talk about brands like they have alwaysdone

Should not 74%exploit coronavirus to promote a brand

Advertising should be useful, positive and consistent with your values.Don’t exploit the situation, and don’t just drive your usual messages

Advertising…

Q12. And in this situation, how should brands advertise? Advertisements today … - top2 (wave 2 data) 25

1) Tangible help 2) Pure emotional support 3) Business as usual

Three camps emerging

Reference COVID-19 No specific reference

26

Tangible help ads tend to drive stronger long-term equity gains.Emotional support ads tend to see a more muted response.

Long-term potential - Power

1) Ads showing how brands help the fight or help people day to day

2) More emotional ads offering hope or encouraging good behaviour

98

Heinz

93

Edeka

89

Tesco

65

Aldi

64

Penny

61

McDonalds

100

Decathlon

43

Birds Eye

42

Durables Brand

28

Skyscanner

12

Financial Services

7

Nike

92

Skoda

15

Telecoms

27

Kantar Link parallel study – USA/UK/Brazil/France/Germany/China/Italy/Philippines/Japan/Thailand/Australia/New Zealand (n = 4500)

So keep on testing

• Now more than ever, getting communication right is crucial

We have also learned

• ok to show ads with people in social situations

• don’t need to edit ads to show people wearing masks

For Business As Usual ads, parallel studies show consumer attitudes have not fundamentally changed

78%Before COVID-19

74%During COVID-19

76Before COVID-19

69During COVID-19

Probability of short term sales(STSL)

Strength of contribution to long-term equity(Power)

28

And when it comes to humour in advertising views are a little polarised, but ultimately it’s about staying true to your brand

Q12. And in this situation, how should brands advertise? Advertisements today should avoid humorous tones – top2 and bot2 (wave 2 data)

…of people feel humour is

inappropriate in advertising at this

time

35%

…don’t think it’s inappropriate

65%

29

Conclusions and recommendations

A COVID state of mind

People around the world are living through tough times, so help and a little light relief from brands is appreciated

Impact on consumption

Has shifted significantly, with major increases in TV and digital

Given supply > demand, CPMs will be falling, and achieving higher SOV is likely more affordable than usual

What should marketers be doing?

Maintain/ redeploy media investment as much as possible to ensure long-term growth

If you need to cut, reduce least effective channels, not just those which are easiest to exit

What should advertising be saying?

Tangible help > Emotional support

Don’t get overly concerned about business as usual, but do test to see if your content and placements are still relevant

30

Thank You

For more information, please visit: www.kantar.com/en/Campaigns/Covid-19-Barometer

Or contact:

Kristanne Roberts –Kristanne.Roberts@Kantar.com

Duncan Southgate –Duncan.Southgate@Kantar.com

IAB Europe Economic Trends Forum Webinar: COVID-19 Update

20th May, 16.00 CEST / 15.00 BST

IAB Europe’s Chief Economist Daniel Knapp will provide an update on the data he presented in April which will take into account the latest market statistics.

Daniel will provide an economic outlook for the digital marketing and advertising industry based on his analysis of market trends and financial reports in the last few weeks. The forum will include a Q&A session for all attendees.

Register here.

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