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COVID-19 // China POV Vol.2

Vol.2: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

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COVID-19 // China POV Vol.2

  1. 1. February 21 2020 HAVAS GROUP CHINA Market Update nCoV
  2. 2. 2 Content 1. Situation update 2. Immediate consumption impact 3. Media consumption impact 4. Economic outlook 5. Outlook key categories 6. Media market implications 7. POV & recommendation
  3. 3. 3 Situation update
  4. 4. 2019nCoV outbreak situation 4 • The government continues to increase control and investment. In addition to the three new concentrated hospitals, more than 10 temporary hospitals are also under construction. • China has introduced the potential specific medicine, American Remdesivir for clinical use. It has shown positive results in some patients. • As of Feb 20th, China has reported 74,677 infections and 2,121 casualties. 1,049 cases have been confirmed outside China and the virus has spread to 25 countries. Outside the Hubei providence, some areas including important economic regions, Shanghai, Beijing, Guangdong have achieved zero or few rate of infection in 5 days. • Many companies have extended the back-to-office time to February 23, and some will not open until the end of February. But most companies have already resumed work remotely since February 10. Controls are expected to be revoked in most provinces in March, social activities will gradually restore then.
  5. 5. 5 Consumption impact
  6. 6. Consumption impact differs per category. After the outbreak: products for immediate enjoyment and (health) security to increase Source: Kantar 6
  7. 7. Clear reduction of outdoor activities during the outbreak. Dining out, travel, and out of home entertainment will rebound sharply Source: Kantar During outbreak After outbreak 7
  8. 8. During the outbreak different FMCG characteristics: stock up goods increase, socially non-necessities decrease 8 Non-necessities (Social Activity) Non-necessities (Household) Necessities Short-term Stock up goods -50% 0% 50% 100% 150% 0% 50% 25% Household cleaner 316% Instant foodVege Grain Meat Body Care Egg Baby food Dry food Spirit Beverage Dairy Bai Jiu Pet food Beer Oral Care Skin Care Wine Confectionery Category sales growth rate in Tmall, 2020 CNY Bubble size - GMV of 25th Jan – 6th Feb influence Sources: Bain & Alibaba Regularonlinepenetration Category growth rate vs. last year same period
  9. 9. Learning from SARS: stock up goods and necessities will return to normal after outbreak, non-necessities to see retaliatory consumption 9 Medicine Household cleaner Food Beauty Apparel Liquor & tobacco Beverage Q2 SARS outbreak Short term stock up Fast return to normal Retaliatory consumption 2003 retail YOY growth rate by category Sources: Bain & Alibaba
  10. 10. Retail: offline is facing 20-50% turnover drops while online shows a booming momentum, especially O2O Source: Bain, Kantar >20% Supermarket >50% E-Commerce ~50% Traditional small shop >2X O2O Beverage category as proxi Offline channel is facing heavy challenges, while online see good momentum Especially, O2O platform gain attraction during the epidemic User: +97% Frequency: +15% 10
  11. 11. 11 Media consumption impact
  12. 12. Media consumption shifts and shows digital and TV benefiting from people spending more time at home • With estimated 50 million people having been quarantined at home across China, digital and TV are clearly the key media channels benefiting from a surge of media consumption. With the extension of CNY holiday and restrictions the consumption of TV and online entertainment including TV series, movies & games have gone up significantly. • During the CNY period the overall daily TV audience size went up from 690 million to 718 million, also viewing time and rating increased significantly. • TV has become the key shared media for families to stay updated on information about the novel coronavirus, particular in lower city tiers. • All TV stations’ broadcasted more content skewed towards news (8.8% of total content, increased by 1.5% vs the last year CNY period). News mentioning “n-COV combat”, ”anti-epidemic”, ”we stand together” etc. accounted for 10% of total news programs broadcasting time. • The rating of CCTV and PSTV CNY gala has reached a peak of recent years and news programs have attracted higher audiences. Also OTV viewing time has increased significantly. During the extended CNY holiday, TV and OTV providers met the increased demand and showed a refreshing media vitality. TV Daily Rating Viewing Time (Mins) TV Daily Audience Size 2020 Spring Festival (7Ds) 13.5% 194 718 2019 Spring Festival (7Ds) 11.4% 164 690 12
  13. 13. TV rating spike as people spend more time at home 6.1 5.8 5.7 7.1 9.7 10.1 6 5.8 5.9 7.8 10.7 11.2 4.9 5 5.2 7.3 9.8 10.1 3 4 5 6 7 8 9 10 11 12 (2020/1/1 - 2020/1/4) (2020/1/5 - 2020/1/11) (2020/1/12 - 2020/1/18) (2020/1/19 - 2020/1/25) (2020/1/26 - 2020/2/1) (2020/2/2 - 2020/2/8) Tier1 Tier2 Others Before VS After Tier1:+57% Tier2:+67% Others:+74% 13 Source: Infosys, Target:P18-45, Period:2020/01/01 – 200/2/08, Timeslot: All Day Tier1 including(BJ、SH、GZ、 SZ),Tier2 including almost Provincial capital The COVID-19 outbreak leads to a remarkable rise in TV ratings Reach of TV has risen significantly, especially in Tier2 and lower tier cities. 56.3 63.2 62 64.5 62.1 62.9 56.9 63.5 64.4 71.7 68.9 67.6 55.8 63.5 65.8 74 72.5 71 50 55 60 65 70 75 (2020/1/1 - 2020/1/4) (2020/1/5 - 2020/1/11) (2020/1/12 - 2020/1/18) (2020/1/19 - 2020/1/25) (2020/1/26 - 2020/2/1) (2020/2/2 - 2020/2/8) Tier1 Tier2 Others
  14. 14. PSTV’s share is on the rise 14 Source: Infosys, Market: 57 Markets, Target:P18-45, Period:2020/01/01 – 2020/1/31, Timeslot: 1800-2300 Due to its unique and high quality resources, PSTV’s share is on the rise. CCTV(National coverage) 21 Channels PSTV(National coverage) 51 Channels PTV(Provincial coverage) 257 Channel(including BJ/SH/TJ/CQ) LTV(City coverage) 1032 Channels 21 32.3 15 5.1 0 5 10 15 20 25 30 35 CCTV PSTV PTV LTV 2020 Jan Channel% Jan
  15. 15. Channel Before After Hunan STV 5.9 4.4 -25% Zhejiang STV 4.0 3.1 -23% Jiangsu STV 4.4 2.8 -36% Dragon TV 4.2 3.6 -14% BTV 3.3 2.9 -12% Top 5 CCTV channels see strong ratings due to the outbreak 15 Source: Infosys, Market: 57 Markets, Target:P18-45, Period:2020/01/01 – 2020/2/08, Timeslot: 1800-2300 CCTV PSTV • CCTV1 and CCTV 13 increase their channel shares because of the news content. • Although share of Hunan STV is still ahead of the rest provincial STVs, audience shift to CCTV channels after the coronavirus pandemic. This results in top 5 STVs drop on shares. Channel Before After CCTV1(GENERAL) 2.3 4.2 83% CCTV6(MOVIE) 3.4 3.5 3% CCTV13(NEWS) 1.3 3.4 162% CCTV3(VARIETY) 1.7 2.0 18% CCTV4(INTERNATIONAL) 1.4 1.8 29%
  16. 16. Top TV programs in Jan 2020 16 Drama • During Jan of 2020, Hunan STV should be the winner in drama field. Variety • CCTV-1’S Spring Festival Gala is No.1, “Chinese Idol” still have high rating performance variety show on STV. 0201 0403 05 ZhejiangSTV 决胜法庭 Ave Rtg 1.52 Dragon STV 新世界 Ave Rtg 1.33 Hunan STV 下一站是幸福 Ave Rtg 1.74 Hunan STV 大明风华 Ave Rtg 1.70 CCTV-1 鼠年春晚 Rtg 5.5 CCTV-1 元宵晚会 Ave Rtg 3.1 Drogan STV- 春节晚会 Ave Rtg 2.0 Hunan STV- 春节大联欢 Ave Rtg 1.7 Drogan STV- 中国梦之声 Ave Rtg 1.9 0201 0403 05 Jiangsu STV 还没爱够 Ave Rtg 1.32
  17. 17. TV - Program update Hot documentary 17 中国医生 Chinese Doctor Period: 2020 Jan. 27th – Feb. 24th Episodes: 9 Media: IQIYI Introduction Coinciding with the outbreak of Coronavirus in China, netizens have developed a strong interest in the great career of doctors, and have developed great admiration for doctors in the process of watching this documentary. The documentary, which truly shows the status quo of the medical profession, was greatly sought after by netizens during the quarantine. Source: https://mydramalist.com/49977-ipartment-5 Accessed 20 Jan. 2020
  18. 18. TV - Program update Hot drama 18 上古密约 Ancient conspiracy Period: 2020 Feb. 11th – Mar. 30th Episodes: 36 Cast: 吴磊、王俊凯、宋祖儿 Media: IQIYI、Mango TV、Hunan STV Introduction Five thousand years ago, they were brother and sister. In order to join forces to lock the demon, Baili Hongyi sacrificed himself and sealed Jiuying in his body. Sishen also sealed his spiritual power and memory, so that this legend would never disappear in history. Only "autumn god" An Tingfeng, because of the love of not give up, did not completely seal their spiritual strength and memory, eternal, immortal, become a lonely soul. Therefore, in this life, he planned to release the evil beast Jiuying and return the world to chaos in order to put down the unbearable weight of life and die. Source: https://mydramalist.com/49977-ipartment-5 Accessed 20 Jan. 2020
  19. 19. TV - Program update Hot variety 19 朋友请听好 Listen to Me, My Friend Period: 2020.2.19 Episodes: 12 Cast: 谢娜、何炅、易烊千玺 Media: Mango TV Introduction: He Jiong invited his long-time host partner, Xie Na, and several other friends to set up a radio station on a rooftop in a community. They are collecting letters and stories across the country for their radio program.
  20. 20. TV - Program update Hot drama 20 大唐女法医 Miss Truth Period: 2020 Feb. 14th – Mar. 30th Episodes: 36 Cast: 周洁琼、李程彬、裴子添、蓝博 Media: IQIYI、Youku、Tencent Introduction This drama is adapted from the novel of the same name of sleeve Tang dynasty, told about ablative and wealthy female Ran Yan in order to find out the truth of her mother suicide. Having learned learn autopsy from childhood onwards she join hands with the criminal department assistant minister Xiao Song to solve a murder cases. In the process of seeking the truth they meet true love. Source: https://mydramalist.com/49977-ipartment-5 Accessed 20 Jan. 2020
  21. 21. TV - Program update Hot variety 21 欢乐喜剧人第六季 Top Funny Comedian Season Ⅵ Period: 2020 Jan 26th – Apr. 12th Episodes: 12 Cast: 贾冰、潘斌龙、郭德纲 Media: IQIYI、Youku、Tencent、Dragon TV Introduction: This season takes five progressive segments, compared with the previous season segments are more intensive and brutal. Source: https://mydramalist.com/49239-detective-chinatown Accessed 20 Jan. 2020
  22. 22. Digital consumption time has kept increasing Source: Questmobile 22
  23. 23. Within digital short video, OTV, news and social see the highest increases, with new formats and accelerating KOL economy Source: Kantar Slow live streaming New hospital in Wuhan was estimated to build up in 10 days. Based on 5G tech, CCTV live streaming the whole process 24 hours everyday. 110+ million people watch on 2.8, 260+ million comments in Weibo Slow live streaming is considered as more real, and people can supervise through video KOL economy accelerate With short video usage increase, KOL economy is estimated to reach 340 billion RMB in 2020 KOL play a role during outbreak – Weiya donate 1 million goods, Lijiaqi helped to raise 71.4 million RMB Change of media touch point Percentageofmention Percentageofsignificantincrease 23
  24. 24. Top 10 fast DAU increment APP, driven by short video Source: Questmobile 24
  25. 25. Social gains more user and time than usual Source: Questmobile 25
  26. 26. Within Social, WeChat and QQ reporting strong growth 26 Source: chinaskinny
  27. 27. Short video skyrockets with big increase in DAU and user time 27 • Due to the epidemic people have more time and use short video APPs for entertainment and information • Douyin increase of almost 40% YoY, Kwai reports a growth of 35% Source: chinaskinny
  28. 28. Short video became a key window of information, having hundreds topics related to epidemic Source: Questmobile Mobile Internet “Coronavirus” Report Bytedance eroding ad revenue share from BAT Lost in Russia premiere on short video, bring obvious user increase Overall reached 600 Million Click 180 Million Watch Epidemic related topics on Douyin 28
  29. 29. Also daily active usage of OTV increases significantly Source: chinaskinny 29
  30. 30. Key moments and shows Source: chinaskinny 30
  31. 31. News APP gain huge attention during the outbreak, with Toutiao leading Source: Questmobile 31
  32. 32. Consumers spent more time playing e-gaming, with ‘Honor of Kings’ leading the way Source: Questmobile Mobile Internet “Coronavirus” Report 113 135 159 CNY 2019 Regular 2020 day CNY 2020 Average time Chinese mobile gaming users spent playing daily (minutes) 111 99 38 49 94 194 124 56 51 127 Honor of Kings PUBG Mobile Anipop Happy Poker CrossFire CNY 2019 CNY 2020 Average time Chinese user spent daily on top- 5 mobile games (minutes) 32
  33. 33. Not surprisingly OOH and Cinema take biggest hits during the epidemic • For offline OOH taking the biggest hits as people spend more time at home and have limitations to go out. However the negative impact is expected to be short- term and recovery during Q2 is predicted o In building LCD, so far only those that need manual change materials are affected, wireless control formats LCD are normal o Elevator posters. Can’t be operated due to community access control o Metro and bus shelter publishers have not started working, no booking change is accepted yet • Cinema is facing many challenges as many movies declared to postpone their release dates due to the government policy on closing all public entertainment places. Bytedance struck an exclusive deal of around $100M to premiere the film Lost in Russia (directed by Chinese famous director Xu Zheng), releasing on its Toutiao, Douyin & Xigua App for free after all theatrical releases were cancelled due to the outbreak. The film was viewed by over 180M UV (forecast around 40M if played in cinema) on Bytedance’s apps. 33
  34. 34. Cinema is predicted to bounce back after the outbreak • Online poll show that 64.2% of people will choose to go to the cinema after the outbreak is over and theatres re-open. • The Labor Day with 5 holidays in total this year, is expected to bring in more than 5 billion yuan at the box office. • Summer and vacation period accounts for about 30% of the annual box office. The canceled and unscheduled movies are likely to be released during this period, and a wave of box office growth is expected. Data source: EntGroup Focus film 34
  35. 35. 35 Economic outlook
  36. 36. China 2020 GDP growth will fall under 6%, most likely to 5.4%. Besides it is expected to slow down global GDPs Source: Bain; Deutsche Bank 5.7 5.4 6.7 6.8 6.6 6.1 4.5 2 3 4 5 6 7 8 2016 2017 2018 2019 2020E ~6.0 China GDP growth rate per year (%) in different Coronavirus containing scenarios Estimation impact of the Coronavirus on the growth of global GDPs (Q1 2020) End in Feb, 25% possibility End in Mar, 50% possibility End in Jun, 20% possibility 36
  37. 37. Even as the economy will sharply bounce back, while the impact is expected to heavier than SARS Source: Bain The Coronavirus outbreak is estimated to cause 300 Billion – 500 Billion RMB lose >100 M People in “house quarantine” >30% People income are affected >50% Company delay open Longer and wider coverage Deeper economy impact Significant industry impact SARS caused 100 billion RMB lose VS. 37
  38. 38. 38 Outlook key categories
  39. 39. 39 Travel & tourism
  40. 40. Domestic travel market is disturbed, outbound travel market still expected overall growth 40 44.4 50 55.4 60.2 46.3 2016 2017 2018 2019 2020E Domestic Travelers (100 Million) 1.22 1.3 1.49 1.68 1.81 2016 2017 2018 2019 2020E Outbound Travelers (100 Million) Sources:Davost Intelligence, National Tourism Administration, Cotri Analytics Forecast rationale Forecast rationale • Most of the domestic travels are related to visiting family especially during CNY. The majority of cancelled trips are likely not be rescheduled; • Trips in Q1 were estimated to account for 20%-25% of total travel in 2020 (1,200 – 1,500 million), the drop during CNY will impact the overall number of trips • The majority of international, especially intercontinental, travel of Chinese is done for non-leisure purposes, for business, MICE, VFR, studies, health etc., those trips will be rescheduled to later in 2020; • In 2019 44% of border crossings travel went to Greater China, 56% of travels went beyond. • In 2020 travel within Greater China is expected to see only a small increase of 3%, given the decline of cross-boarder day-trips due to political tensions
  41. 41. Drop in Chinese outbound travels is felt globally as Chinese travelers spent more on outbound travel than any other country Source: 2019 Chinese Outbound Travel Report by Trip.com and UnionPay international, the economist In 2019 the total consumption of $127.5 billion, a growth of 17% over the previous year was reported. Despite growth in other spending categories over the year such as catering, tour guides, and accommodation, shopping remained firmly atop the list of Chinese travelers’ expenditures. Though female travelers were likely to indulge in some retail therapy during overseas trips, as they accounted for 55% of all Chinese travelers who shopped abroad, their male counterparts are willing to spend more. The average retail expenditure for Chinese men while overseas was 1.15 times the amount of those from Chinese women in 2019. Global tourism predicted to take a US$80 billion hit until the Chinese outbound tourism will have fully recovered. Asean countries will be hurt the most as the number of Chinese tourists to these destinations are expected to drop by 30-40%. Top 10 overseas shopping destinations for Chinese travelers Japan UAE UK France Singapore US Spain South Korea Italy Australia Top 10 countries with fastest shopping growth Holland Malaysia Ireland Switzerland Denmark New Zealand UAE UK France Australia US dropped out of the top 10 ranking 41 2019
  42. 42. Travel within Greater China is impacted, especially Hong Kong suffering due to a drastic drop of arrivals 42 Sources: Cotri Analytics, HKTB In January 2020 Hong Kong welcomed 3.2 million visitor arrivals only. This daily average of 100,000 arrivals equals a 53% drop compared to the 200,000 daily arrivals received in the first half of 2019. The decrease was caused by a huge drop in arrivals from Mainland China and short-haul markets. Average daily arrivals recovered to 130,000 with the pre- Lunar New Year rush in January. But the outbreak of COVID-19 intensified the decline, as many airlines suspended flights to the city and reduced services overall. Preliminary data in February suggests that the arrivals have continued to decline, with average daily arrivals falling to below 3,000, of which 75% were non-mainland visitors. Putting the travel and hospitality industry, but also the overall economy under immense pressure.
  43. 43. 43 Automotive
  44. 44. Key automotive events postponed 44 2020 Auto China (Beijing) event pending F1 postponed the event scheduled to be held between 17 April and 19 April
  45. 45. Automotive supply chain shows clear disruptions • The Hubei province is a major car manufacturing hub for several companies including Dongfeng Motor Group, Honda Motor, Renault SA and Peugeot SA. All companies have announced that they will be delaying the restart of production. • Companies that operate plants outside Hubei including Tesla, Volkswagen, and General Motors also announced that their factories will be closed during the epidemic. 45
  46. 46. The production schedule is impacted Government announced delay for resumption of work. Employees Required to stay at home for 14 days after they came back from holidays The shortage of personal protective equipment is impacting resumption of work. Restricted passage of out-of- town auto and investigate strictly in highway LEAD IMPACT • Output capability • Foreign venture might adjust the distribution of production to avoid overly dependence on manufacturing in China. 43.70%37.90% 12.60% 4.40% Time distribution of part of auto production base Work resumption before 2.10 Work resumption among 2.10-2.16 Work resumption among 2.17-2.23 Work resumption after 2.23 52.50% 36.50% 0.50% The extra vacation days of some Automotive parts enterprises 1-10 days 11-20 days over 20 days 46 • Low factory operating rate; • Tight supply chain
  47. 47. Car production and sales in fell sharply YOY in early 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Y2018 2,456 1,476 2,169 1,914 1,889 1,874 1,590 1,790 2,060 2,047 2,173 2,233 Y2019 2,021 1,219 2,019 1,575 1,561 1,728 1,528 1,653 1,931 1,928 2,057 2,213 Y2020(Forcast) 1,614 0 500 1,000 1,500 2,000 2,500 3,000 Monthly Sales in ChinaUnit:000” • In Jan.2020, car production and sales are expected to be 1.441Mil and 1.614 Mil. • Sales decline 27.1% MOM, 20.2% YOY. China Association Of Automobile Manufacturers 47
  48. 48. The impact to the car industry: from demand and supply side Outbreak Controlled Recovery Residents reduce their desire to buy cars Consumer confidence weakened Passenger car demand decreased Auto production/marketing campaign are limited Impact on auto sales due to impact on supply chains To purchase car which postponed by the epidemic The demand for cars and sales rebound Stimulate consumers to buy cars in advance 48
  49. 49. Automobile sales forecast in 2020 49 25% 20% 15% 10% 5% 0% -5% -10% -15% 0 500 1000 1500 2000 2500 3000 Y2020 Passenger car sales trend estimation in China (‘0000) Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20E (no covid) Y20E (covid) Sales YOY Data source: 易车研究院
  50. 50. Measures are taken to minimize the economic impact of the Coronavirus Multiple supportive measures to support businesses from government • Tax and rent deductions to businesses • Delaying loan payments • Reducing interest rates • Waiving overdue interest on loans • Offering fresh loans to companies with low liquidity Sellers seeking livestreaming to promote sales 50
  51. 51. 51 Example of BMW using Tmall & JD livestreaming • On 6th Feb, BMW launched “BMW经 销商掌上办公” App, support sales consultant follow up clients at home • BMW leveraging Tmall&JD livestreaming to introduce different types everyday from 10th Feb - 1st Mar.
  52. 52. 52 Luxury & retail
  53. 53. Luxury retail impacted as footfall plummeted Footfall in China’s boutiques and luxury shopping malls has plunged with gov’t-imposed restrictions and Chinese consumers social distancing. Examples: • 24 of Burberry’s 64 stores in Mainland China are closed with remaining stores operating with reduced hours and seeing significant footfall declines • Chow Tai Fook, the world’s biggest jewelry chain by revenue has temporarily halted operations in about 80% of its stores in mainland China • European luxury retailer operating in China reported foot traffic decreased from between 600-800 people in a day, to no more than 5 customers entering the store per day Jewelry sales expected to drop by as much as 60% In the first quarter as in previous years Chinese Lunar New Year and Valentine’s Day were seen as peak seasons to purchase jewelry for gifts. 53 Sources: McKindsey report, jingdaily.com
  54. 54. Retailers are moving quickly to online channels by launching Mini Programs and livestreams to make online transactions easier 54 Hangzhou Department Store Group launched Livestreaming Initiative with Taobao – Linkshop.com In collaboration with Taobao, the Hangzhou-based Yintai Department Store launched a livestreaming initiative for thousands of sales assistants to continue to work at home. Backed by Alibaba’s investment arm, Yintai is a local retail giant in its home province of Zhejiang, and owns 65 department stores across China. So far, over 50 of Yintai’s tenants, including Estée Lauder, Lancôme, Kiehls, Nike, and Fila have joined the initiative.
  55. 55. Opportunity to communicate comfort, encouragement, softly connected with products and launches As massive store closures are hitting the industry, brands can only seize opportunity online. In addition to provide financial or material support in the first two weeks, some nimble brands have started to leverage the power of words supporting consumers spiritually and marketing products tactfully. …When the haze passed, we will meet in the sun…we are waiting the day meeting in the spring… Waiting for the spring, waiting for the restful world back Wow so hopeful!~ I want to hangout with my new bag! Brilliant copy writer! …The unknown of life and death, the fear of illness, the loneliness and loss…I don’t know how to show my love… I come Gucci to read love poems I’m dying for the copywriter! The first time I want to buy a bag just because of the copywriter! 55
  56. 56. 56 Media market implications
  57. 57. The virus outbreak is also impacting the ad market forecast for 2020 8% 14% -6% -10% 10% -1% -1% -10% 5% 20% 3% -10% -10% -6% -1% -10% -15% -10% -5% 0% 5% 10% 15% 20% 25% Source: MAGNA; www.sohu.com; CODC OOH research Note: excluding media spending on social and search; discounts are estimated based on Havas methodology 57 • Digital is expected to grow significantly. Also TV is expected to increase given the positive trend on view time and ratings increased investment will follow. • Whereas ad spend for outdoor and cinema are expected to decline. The negative trend for print remains. Previous forecast by media channel Current forecast by media channel
  58. 58. 58 POV & recommendation
  59. 59. Recommendation on marcom and investment 59 1. Estimate your business impact and how the following developments effect your category: • From a historical experience, consumption is expected to rebound shortly after the epidemic. • China has a more active and developed retail, e-commerce and logistics industry now, compared to the SARS period, middle class grew about 7 times since. Consumers have high spending power. • Especially products for immediate enjoyment and (health) security will increase. • Additionally the Government announced policies to boost the economy as well as domestic consumption. 2. Continue to keep brand exposure: • It is important to maintain the consumers brain position of your brand. • Higher media inflation is expected in the post-Corona period and shortage of inventories
  60. 60. Recommendation on marcom and investment 60 3. Focus on the post-Coronavirus period, try to pre-empt with pressure on branding and pursue more tactical campaigns in the post period: • Many (international) brands will quickly rebound. China stays the market with highest growth in the world and is the key growth driver for many industry like luxury, tourism, lifestyle and automotive. • Some product launches have been postponed, they will be launched shortly. • Many brands will do promotions to recoup sales loss 4. Be cautious with social discussions or relating your message to the epidemic. As people have been quarantined at home for a prolonged period, they are in not in a positive mood yet. Therefore, any content or social campaign which aims to borrow traffic or sentiment from the epidemic is risky.
  61. 61. 61 Additional notes: It is estimated that TV, online video, short video, news app’s usage and stickiness will greatly increase. So far, the Chinese national and top media have opened “Fight Against Coronavirus” column to rolling update the real-time epidemic status from Jan 20,2020. Which almost fully catch the Chinese audience’s attention. Phase Digital TV Outdoor Phase 2 Stabilization Feb 9 -End of the outbreak Focus on digital media as it will remain their primary source of consumption and less time will be devoted to entertainment than in the beginning. OTV, social and news content will occupy most consumers' time As consumers return to work, daytime ratings will decline and evening prime- time ratings will hold up Drop in spending. Focus outdoor media concentrated commuting routes, residential Media / lift Media and in BCDs Phase 3 Post outbreak - Recovery Gradually return to normal. Higher inflation rates expected for platforms popular during the outbreak. Return to the original usage pattern Gradually return to normal 1. The Coronavirus development is taking place in three phases with different media consumption pattern. Havas Media will work with clients to adjust their media strategies accordingly. After the outbreak period we are now in Phase 2 of stabilization. 2. Lock premium resources for the post outbreak period 3. Look for opportunity buys in media types that have been highly effected: OOH, transport media and cinema Recommendation on media strategy
  62. 62. SHANGHAI 11/F Novel Building 887 Huaihai Zhong Road Shanghai 200020 +86 21 3397 8666 GUANGZHOU Room 07, 16/F CTF Finance Centre, No 6 Zhujiang Road East, Tianhe District Guangzhou 510130 +86 20 3877 3282 BEIJING 1006, 10th Floor, China Youth Plaza, 19 Dongsanhuan North Road, Chaoyang District, Beijing 100020 +86 10 5923 2791

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Vol.2: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

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