How COVID-19 Is Changing The Digital Landscape

By Kristian Gosvig & Charlie Becker, on March 30, 2020

There’s no denying it. We are living through history — a quiet, mundane version of history for many of us stuck at home… but history, nonetheless.

Fortunately, for us at algofy, any dull condition has been overshadowed by the compelling perspective we have during these times as a digital performance agency. The 50+ online advertising accounts we manage across several different countries, industries and platforms gives us a pulse on how overall digital behavior has changed and continues to evolve each day.

As a result, we have compiled our recent observations here in an effort to move the needle towards improved understanding in these uncertain times and maybe even help guide some strategic decisions through this crisis and beyond.

So without further ado, below you’ll find our recent insights and their longer-term implications as it relates to:

  • Ecommerce/Amazon
  • Services, B2B
  • Services, B2C



——–

Ecommerce/Amazon


Recent Performance Insights
  • In our client portfolio, total volume of sales has increased, but consumer dollars have shifted from some product categories to others. Health (e.g. protein supplements) and everyday home goods (e.g. hand soap) are significantly up, while “non-essential” product categories (e.g. jewelry and luxury goods) are the hardest hit. We have also seen outdoor goods impacted negatively.

  • On the advertising side, we are seeing a slight decline in cost-per-click (CPC) rates, which we attribute to less competition as some sellers are deciding to scale back their costs where they can. If you happen to be a seller that’s seeing a positive trend in demand over the past couple weeks, now is the time to take advantage and increase your budget while costs remain low.

    Long-Term Implications
  • Ecommerce, especially on marketplaces like Amazon, is expected to come out of this stronger than ever. Many consumers who had not yet jumped on board with services like Amazon Prime and online grocery delivery are now learning how convenient these services are. Thus, there is little chance these new adopters will completely abandon this convenience when other aspects of their lives return to normal.

——–

Services, B2B


Recent Performance Insights
  • For companies that live to serve other companies, this is likely a difficult time. Many business sectors have been compromised by the world’s response to the coronavirus, and thus have been forced to suspend certain operations, causing a rippling effect across a massive network of business-to-business partnerships.

  • If you fall under this category, it’s likely best to reduce your ad spend across platforms to help save costs where you can. It will be more efficient to make up any lost ground in the future when demand and conversion rates return to previous levels.

    Long-Term Implications
  • While we fully expect the B2B service space to rebound when the economy recovers, there’s uncertainty around how long that will ultimately take. If this is a trigger that leads to a global recession similar to 2008, then a down period may be experienced for several years and many businesses will unfortunately be forced to close. However, we’re optimistic that the recovery period won’t take years, and if businesses can weather the storm for the time being, they’ll see things return to business-as-usual much sooner than during the last recession (more on that later).

——–

Services, B2C


Recent Performance Insights
  • As you can imagine, our clients that provide virtual services like online yoga classes and online therapy are seeing a recent surge in business. However, those that provide a service which involves an in-person element, such as a flooring company that provides in-home consults, are facing challenges.

  • We’ve seen some service-oriented businesses adapt during these times with great success. A client that organizes events around life-coaching has pivoted to provide the same service via webinar, and performance has continued without missing a beat.

  • If you’re running Facebook ads, you may have noticed what we’ve seen: a significant drop in CPM. In fact, across our portfolio, Facebook CPMs are down nearly 55% since the beginning of March. This is due to the combination of higher social media traffic and lower competition for ad space, as some businesses have decreased or suspended their ad spend. With rates as cheap as this, even if you’re seeing a drop in conversions it still very well may be worth maintaining your spend budget.

  • In contrast, impact seen within the Google Ads platform has had a higher degree of variance, in that it’s largely a case by case basis depending on what is being sold. At a high level though, it appears overall spend has been tightening and conversion rates are dropping. We’ve also noticed a slight shift of ad dollars to desktop which is something we’re projecting to gradually see more of over the next several weeks.

    Long-Term Implications
  • Like with ecommerce, we expect consumers that have become new adopters within digital services to carry over well beyond coronavirus’ impact. Overall, a win for the digital economy.

——–

Recovery


Finally, why don’t we close with some good news for everybody.

With a $2 trillion stimulus bill primed to ease investor and consumer concerns, some recent negative trends could bounce back. Additionally, Goldman Sachs points out that if we review bear markets going back to the year 1800, those that were “event-driven” were significantly shorter in both length and recovery time.

If history serves us well, the current bear market could be over by the end of the year. That gives credence for cautious optimism for those businesses struggling the most right now.

Want to double your Amazon sales?
Download our 2020 Amazon Seller Handbook.




Charlie Becker | Amazon Service Lead

Our team of experts will
identify specific opportunities to take
your account to the next level

Get in Touch

© 2020 algofy. All Rights Reserved, algofy LLC