Pandemic Accelerates Key Trends In Brands’ Digital Transition
Signs suggest that spending most of 2020 in quarantine may have accelerated the United States’ transition to a “store-less” direct brand economy five times faster than pre-pandemic rates. The transition is one of several critical trends identified in the 2021 Brand Disruption Report recently released by the Interactive Advertising Bureau, an organization representing the media companies, brands and technology firms responsible for selling, delivering and optimizing digital ad marketing campaigns.
The IAB’s report notes that most categories of consumer goods and services are now “majority digital,” with more consumers shopping by ecommerce than shopping solely at brick-and-mortar stores. Research by McKinsey projects that virtually every consumer category will experience 15-45-percent growth in permanent online shopping. Ecommerce is now 23-25 percent of all retail commerce in the U.S. The IAB also expects brick-and-mortar store closures in the U.S. to likely top 25,000 this year, nearly three-times last year’s record number of closings. Notable bankruptcies include Brooks Brothers, J. Crew, J.C. Penney, Lord & Taylor, Nieman Marcus, Pier 1 and Sur La Table.
Online shoppers have come to expect more instant gratification from online retailers. As an example, IAB highlights Target’s same-day delivery growth of 350 percent during COVID, while Target’s BOPIS (buy online, pickup in store) grew 700 percent. Forty-three percent of the top 500 U.S. retailers now offer BOPIS, up from seven percent last December. IAB also points out that Walmart and Amazon are competing to make two-hour delivery the norm in major markets and delivery partnerships for rapid fulfillment are now essential for all brands.
“Storeless-ness” combined with government privacy regulations and browser/OS data restrictions are driving 60 percent of marketers to stress-invest in first-party data—this is information collected directly from customers and includes data from behaviors, actions or interests demonstrated across a brand’s websites or apps.
There has been massive growth in directly “shoppable media”—livestreams, social commerce, virtual consultations and shoppable ad formats—which IAB expects will be the fastest-growing advertising categories for the foreseeable future. Companies including L’Oréal and General Mills are already making the shift. This year, global livestream-generated sales are expected to double to $120 billion. In China, one event, Singles Day 2019, generated $2.9 billion in sales. Another high-growth medium is free, ad-supported streaming TV and IAB anticipates that the introduction of shoppable formats will make it quite formidable.
“This is the biggest inflection point in advertising and marketing since the rise of national broadcast networks” says Randall Rothenberg, IAB executive chair and lead author of the report. “Brands must become data companies that make things, not the other way around. Consumer-facing companies cannot remain competitive without growing their first-party relationships and first-party data.”