COVID-19: A Look at Affiliate Performance in Turbulent Times
COVID-19: A Look at Affiliate Performance in Turbulent Times
Since the start of the pandemic, CJ has published the COVID-19 Network & Consumer Trends Report, an interactive view into consumer shopping trends and performance across four sectors and 20 categories. As each market around the globe has adapted and responded to the initial crisis, we hope this weekly report gave you a better understanding of the trends and consumer behaviours brought about by COVID-19. In this report, we share how the affiliate channel responded to market impacts from March to October 2020 as individuals and businesses moved from crisis response towards recovery.In order to see how COVID-19 impacted 2020's peak ecommerce season, we recently launched our A Look Back at 2020’s Peak Shopping Performance.
As brick and mortar stores closed, shoppers turned an eye towards replacing in-store shopping with digital shopping. Because this shift occurred quickly, consumers sought to understand and evaluate options that they may not have otherwise considered. Publisher sites quickly identified and adapted to consumer needs and shoppers turned to these resources for information and immediate, basic needs. These publishers also played a key role in educating consumers on inventory, supply, business shifts, and more to help brands quickly connect with shoppers who had not previously considered their brand. During this time period, the following occurred:
- Engagement with affiliate content and social publishers increased 40% YOY as individuals sought out information on the pandemic.
- Consumers rapidly purchased health and personal care items (vitamins, hand sanitiser, thermometers, toilet paper, etc.) from online retailers, to avoid in-store shopping.
- Inventory and delivery issues reached levels unfamiliar to many and would shape consumer choices and behaviours in the months ahead.
- Suspended travel caused bookings to plummet 82% YOY, while hotel and holiday booking brands dealt with cancellations.
- Finance brands pulled back consumer offers to mitigate risk due to high unemployment rates and economic uncertainty. Affiliate leads in the Finance sector decrease 10% YOY.
- The number of online shoppers grew as traditionally offline shoppers were driven to shop online due to the pandemic. According to eMarketer, nearly 150 million more people will be ecommerce buyers this year than last year.
As global communities endured lockdown measures, shoppers sourced options for new and recurring needs with affiliate sites being a valued third-party resource for identification of brands. Store closures, stocking, shipping, and fulfillment issues drove consumers to seek new online alternatives beyond Amazon and previously preferred brands. Here are examples of how consumer demand shifted during this stage:
- A mindset of cost-savings and hedging against the unknown spurred bargain hunting, which brands met with very deep discounts. Sales from voucher and coupon sites increased 20% YOY.
- In the US, the government-issued stimulus payments helped fund consumer spending. Affiliate sales for the mid April - early June time period increase 35% YOY.
- The US tax deadline was extended in light of record-high unemployment, drawing out and delaying seasonal filing peaks associated with tax.
- Across Europe, governments rolled out furlough programs which helped cushion income losses and maintained consumer spending, although more cautiously.
- The reality of the longevity of working from home and home-schooling fueled purchases of electronics, office décor, and educational items including monitors, headsets, webcams, desks, chairs, and online learning subscriptions.
- In Germany, governments lowered the Value-Added Tax to stimulate sales and affiliate sales increase 39% YOY.
- The Home & Business Services sector purchases, such as internet, mobile, web hosting and other productivity tools, increased 53% YOY as people prepared for the foreseeable future.
- In the US, travel ceased and consumers began seeking in-home entertainment options, while also embracing new hobbies and activities. This drove increased sales of athletic wear, art supplies, grocery items, kitchen tools, running shoes, and self-care products.
- Towards the end of April, European governments gradually lifted the stay-at-home restrictions, and consumers optimistically began to plan for their summer holidays. By late June, travel bookings by European holiday-makers increase 50% compared to the prior month.
Regional variance in COVID-19 infection rates drove different responses in each market. Within the US, after Memorial Day many states began to see a renewed increase in COVID-19 cases leading to stricter closures while many locations within Europe and Asia began to see recovery. Across the world, consumer behaviour remained largely digital with some in-store options gaining popularity as markets reopened. Examples of consumer shifts include:
- As people remain close to home, athletic gear, health care items, and home electronics continue to garner a greater share of household spend. An interest in self-care drives Beauty sales up 50% YOY.
- For much of the world, travelling regionally/locally has replaced longer domestic and international trips with 'staycations' increasing in popularity.
- Delays in school openings in many US regions resulted in a shift of purchases of children’s apparel and school supplies from mid-August to mid-September. Purchases of computers and electronics in late summer increase 83% YOY due to many schools adopting at-home school schedules.
- Historically low interest rates in the US market drove high demand in home refinancing, personal loans and more, even amidst stricter lending requirements.
- While most schools across Europe reopened by September, many retailers offered significant Back to School discounts creating competition for share of spend.
- Overall, a greater share of purchasing occurs and remains online now as consumers fully appreciate the convenience, cost and safety associated with online orders. Affiliate retail sales on average have increased 30% YOY.
The pandemic has exposed both strengths and risks, with companies who were able to quickly shift to meet digital demand fairing the best. The experience also created a ground shift in consumer shopping behaviour - data from IBM’s Retail Index has indicated that the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years. This historical period in 2020 reconfirmed that the affiliate channel:
- Functions as a safe harbour for marketing investments with its cost-effective and risk-free pay-for-performance model.
- Remains adaptive and agile to shifting consumer demand, preference, supply and accessibility.
- Reaches unique audiences via authentic and trusted third parties.
- Offers consumers opportunities in nearly every online purchase category with varying incentives to buy.
- Supports regional differences by offering targeted reach to consumers in different states of need.
- Facilitates scalable, cost-effective growth through its reach to high-value shoppers.