How COVID-19 Kickstarted The Online Retail Revolution

By Adam Seaborn, Director of Sales, Kingstar Media

With Canadian consumers asked to refrain for social gathering and “self isolate” at home due to COVID-19, media consumption was primed for an unprecedented explosion. As governments struggled to understand, adapt and advise citizens about the virus, consumer confidence waned and Canadians stayed indoors.

Numeris data from first 2 months of the pandemic show that TV tuning jumped almost 60% when compared to the same period in 2019. Canadians were glued to local TV and news reports for up to date information. Canadian broadcasters did their part to make 24 hour news channels free to all cable subscribers and the Canadian Broadcasting Corporation (CBC) streamed their TV news feed free online. As media consumption increased, movie, travel & tourism clients abandoned the airwaves and were forced to take break from advertising. This was the jolt Canadians needed to fully embrace online commerce and for DTC brands to capitalize on the power of TV.

Working from home means shopping from home and the best DTC brands doubled down on this opportunity to reach engaged customers in their homes looking for products and services to help them, prepare, survive and kill time during COVID-19. The stock market revealed consumer desire for products can that be ordered and delivered from the comfort of their own homes. Blue Apron’s stock price has shot up from a low of $2.10 to a high of over $16.00; Wall Street is projecting that more consumers will be looking to order in grocery kits and avoid traditional retail in favor of e-tail shopping. Wayfair, Etsy, Shopify and others saw similar stock price increase.

While COVID-19 is unlike other pandemics, the rise in e-commerce spending is a long time coming. In March, eCom accounted for only 11.2% of all retail spending in the United States (Canada is virtually the same). In 2003, China learned from the SARS quarantine that its economy was far too reliant on physical commerce and that eCom was the future of retail. Alibaba built Alipay and Taobao as a result of the SARS epidemic and set China on a course to eCom dominance. Now eCom makes up 36.6% of all retail in China and over 80% of all citizens have purchased goods and services online. As we adjust back to normalcy this fall, or the new normal at least, millions of Canadians have become accustomed to eCom as part of their retails needs. In an effort to avoid malls, retail outlets and shopping centers Canadians have purchased goods and services online like never before. It’s almost impossible to put the genie back in the bottle and this trend will continue into 2021 and beyond. The upcoming weeks and months are the best opportunity for DTC brands to get a head start on the eCom revolution as the retail economy finally moves online.

However, this opportunity is not without some uncertainty. It’s no secret that during an economic downturn, businesses will be faced with choices of where to cut spending and allocate resources. Decreasing your advertising spend should be your very last resort. 

The short-term cost saving of cutting advertising spend will have long term effects that both damage your brand and sales for years to come. Analysis by Kantar media shows that in the TV ad domain, long periods of time off the airwaves hurt brand strength, brand loyalty and sales. It can take years to recover from a lack of exposure on TV. Brands that are consistent TV advertisers and then take up to 6 months off will likely see a 5-10% decline in brand equity and it can be impossible to regain that market share. This is even more true for DRTV advertisers who know the value of each and every spot on air.

Companies should look at this moment in time not as a challenge but an opportunity to double down on TV as an ad platform and continue to spend on advertising. 

The power of TV to reach those audiences should not be underestimated. Look at a brands like Navage Nasal Care, a leading manufacturer and distributor of saline nasal irrigation products that uses DRTV as a core pillar of its business. Running DRTV spots in low demand periods, brands like Navage and others are able to take advantage of increased bonus airtime, decreased CPMs and overall lower cost per customer acquisition. Navage is now a category leader in volume and sales in the nasal products industry.  It has manufactured more than 50,000,000 SaltPod® capsules per year and late last year sold its one millionth nose cleaner. This category dominance can be attributed to a direct selling approach and long-term commitment to DRTV as a core strategy for growth. 

DRTV has the added benefit of being a direct selling platform while building brand recognition and helping top of the funnel growth for digital conversion. Customers who search for brands after seeing a DRTV spot and don’t instantly purchase are still valuable, as digital retargeting can help drive them down the funnel and convert a prospect to sale over time.