Temporary Trends and Permanent Behaviours
The term “New Normal” is up there with some of the more annoying aphorisms to have been spawned by the pandemic. Forecasts about how the world will have changed either permanently or temporarily as a result of the pandemic started to emerge early on and continue on a daily basis.
With each prophecy about the future, I’m reminded of the comment by the Chinese premier Zhou Enlai, when asked in the 1970s about what he thought was the impact of the French Revolution.
“Too early to say”, he replied.
The real meaning in Enlai’s response is that it’s dangerous to place bets on permanent changes in human nature. At the moment the pandemic is refining trends and some of those trends are pretty interesting. As for the permanency of shifts in human behaviour: “Too early to say”.
“In normal times, car values are a one-way road”, so goes the start of an FT article this week about used car prices. Cars historically have been the ultimate depreciating asset. In the months since the pandemic started used car prices have been steadily rising, caused by a supply and demand imbalance because of the pandemic and a microchip shortage.
Sports cars and convertibles have fared particularly strongly, though there are rises in every category driven by avoidance of public transport and excess household savings.
“Right now cars are an investment” says Derren Martin in the article. Personally I won’t be betting the pension on that trend staying the post pandemic course.
Similarly, data from the Halifax showed UK house prices up another 9.5% in the year to May, boosted by the government stamp duty holiday, low interest rates, higher savings rates and increased demand for larger homes.
Elsewhere the Kantar Mobility Futures Study goes further into the data, and they are award winning in their abundant usage of the “New Normal” aphorism.
“The accelerated move to remote working, combined with a reduction in people travelling on public transport and other shared mobility services, will transform the future of mobility in major cities across the world.”
That’s quite a statement.
At the moment, governments the world over are literally stopping people from travelling into cities, enforcing social distancing rules and encouraging work from home in any way possible. As soon as it is safe to do so government motivations will switch back to economic considerations; cities are the economic heartbeat of developed countries and governments will do everything they can to reverse this trend, encouraging people back to work & spend in urban spaces. We are already getting political soundbites, such as those from The Chancellor, Rishi Sunak recently predicting a widespread return to work.
Furthermore, it won’t be an imposition on people – human behaviour will normalise and people the world over will all want engage in the enriched culture and connection that cities impart. As the Clear Channel hub data shows, at each stage of the roadmap out of lockdown, audiences have returned closer to pre-pandemic norms: when people are allowed to do so, they are following the same human behaviour patterns that existed pre-pandemic.
Businesses too want their staff back in work, but can’t ask or impose that at present. Apple CEO, Tim Cook, may have gotten slightly ahead of himself “ordering” a return to work, although headlines about an ‘employee revolt’ are probably overdone. When it is safe to do so, there will only be one winner in the Apple conversation: if Tim Cook thinks Apple is more productive with a return to the office, that is what will happen.
The contract between employee and employer has shifted, but permanently changed? Too early to say.
What does this mean in a media context?
In the short run follow the trends & maximise flexibility - there is a lot of opportunity as different channels re-price against changing audience patterns.
There are also some reasonable long-term assumptions – one obvious one is that the accelerated growth in ecommerce is here to stay. Though as I looked into the data I was surprised that even that trend is showing some questionable permanence.
It’s often forgotten that in most markets ‘offline’ retail is still over 90% of all retail sales. In Q3 2020 e-commerce as a % of total retail sales in the US peaked at 16%, shifting close to 5% in a single quarter, and has subsequently fallen back to close to 13% in Q1 2021. It’s almost back to its long term trend.
Within outdoor media, automation combined with very flexible media owner terms is presenting compelling opportunities versus historical CPMs. This is the short-to-medium term trend and is creating opportunities for advertisers willing to engage.
As the pandemic subsides, our bet is that the permanency of the pandemic trends will be overstated. And as the May WARC ad spend data suggests, this normalisation is starting to get underway.