Advertising Tips for Black Friday and Cyber Monday Campaigns
Get tips on how to get the most out of your Cyber Monday and Black Friday campaigns this holiday season including a list of dos and don'ts.
Q1 of 2020 turned out to be a complete surprise (and not in a good way), due to the unprecedented COVID-19 pandemic that upended the global economy within just a few weeks. For many consumer segments and brands, Q1 has a sad story to tell, reflected in some of the dismal earnings reports that recently came to light.
For other companies, Q1 results are unexpectedly better than forecast, and in some cases, even very good. Let’s take a walk among the Q1 financials of some of the big-name companies, how the “new normal” of the pandemic has affected their performance, and what that might mean for the future of brands.
The beleaguered meal kit company started off 2020 in a difficult position. Sales in 2019 were down 50% compared to 2017, and the company considered closing its doors. One of the early success stories in the meal kit home delivery market, Blue Apron was struggling as the novelty of meal kits wore off and consumer preference returned to dining out or restaurant takeaway. When the coronavirus hit, the company stock was at an all-time low, and Blue Apron was valued at just $40M.
It so happens that Blue Apron is ideally positioned to stage a comeback, as it offers the perfect product for the new #StayHome world. By late March, the stock price had jumped 400%. In Q1 2020, net revenue increased by 8% and the number of customers increased 7% compared to the previous quarter. Yet despite this good news, the brand has yet to show a profit. Although performance was up compared to the last quarter, Q1 showed a 28% year-over-year decrease of net revenue, and a net loss of $20.1 million. Moreover, the number of meal kit orders in Q1 2020 was 1.8 million, far lower than the 2.5 million orders recorded in Q1 2019.
The future of the company is far from certain. Blue Apron, however, is optimistic, hiring new staff, and increasing marketing activities in an attempt to maintain the surge in demand created by the pandemic. But without a solid path to profitability, a simple increase in customers is not necessarily going to create the sales bump needed to save the day.
Lesson learned: Growth by itself is not enough. Brands must carve out a solid strategy to profitability that can withstand market fluctuations.
For more on how to create an effective digital strategy:
The entertainment giant has been hard hit by the coronavirus, reporting a loss of $1.4 billion in Q1 2020. This is mostly due to the lockdowns, which led to the shuttering of all Disney theme parks and cruises, first in Asia, and then in other parts of the world. The company recorded a 91% drop in earnings so far this year, down to $475 million compared to $5.4 billion in the corresponding period of 2019. The market responded swiftly to the Q1 earnings report — within hours of its release, Disney shares dropped by 3%.
However, there’s a bright spot in all this for the iconic brand, and it comes from its direct-to-consumer (D2C) offerings. Subscriptions to the Disney+ streaming service are sky-high, reaching 54.4 million at the close of Q1. The Disney-owned Hulu and ESPN streaming brands have also seen surges in demand, with Hulu reporting 32.1 million subscribers, a 27% increase since last year, and ESPN+ growing to 7.9 million subscribers, an increase of 20%. Revenue from Disney’s D2C activities has grown from $1.1 billion in Q1 2019 to $4.1 billion in Q1 2020.
These numbers give solid validation — if it was ever needed — to CEO Bob Chapek’s statement that D2C is now Disney’s “top priority and key to growth”.
Lesson learned: D2C is definitely the winner of 2020 so far, and even the world’s most traditional veteran brands are looking for ways to boost their D2C presence.
Here's how challenger brands are taking over:
It’s no surprise that during an uncertain period of social distancing, people are reluctant to take rideshares — and that’s not good news for the D2C rideshare king, Uber. In early May, Uber reported a Q1 loss of nearly $3 billion, and cost-cutting measures designed to save $1 billion, including reducing its workforce by 14%. In another move that’s surely good PR as well as good accounting, CEO Dara Khosrowshahi is forfeiting his salary and will not be paid till the end of the year. “Days like this are brutal,” he wrote in the email to employees notifying of the layoffs.
In the new reality of the pandemic, however, Uber found itself in a fortunate position to be able to rapidly pivot the company and seek revenues elsewhere, and it did so with its Uber Eats food delivery service. Although overall ride bookings were down 80% in April, total bookings were down only 40%, and that’s thanks to the surge in demand for Uber Eats service during the lockdown. In the meantime, the brand is already starting to see glimmers of recovery, with rides in Hong Kong up 70% in April as restrictions ease. Small upticks are being seen in other regions too, signaling the gradual decline in social distancing norms in the post-COVID period.
Lesson learned: Brands that are flexible enough to pivot when necessary are more able to withstand market difficulties and disturbances.
For additional reading on how brands are pivoting:
Homewares and home decor retailer Bed Bath and Beyond had somewhat surprising results for Q1 2020, despite the shuttering of its retail stores nationwide during the COVID-19 lockdowns. Sales were higher than anticipated for the quarter, at $3.1 billion, yet the company concedes that its overall earnings for 2020 will likely be heavily impacted by the coronavirus “in ways that are difficult to predict today.”
Even so, it was an impressive first quarter under challenging circumstances for the retailer. Part of the success can be attributed to the natural increase in demand for homewares as people are confined to their homes. Spikes have been recorded in sales of several product categories, including sheet sets and bed pillows, each with growth rates of over 100%. But it’s not just thanks to consumer interest — the company had already shifted its focus to the digital arena, with online purchases covering 20% of sales in Q4 of 2019. Now, the coronavirus has only accelerated this shift, with the brand investing $250 million in its digital services, such as BOPUS (buy online, pick up instore) and curbside pickup, which will soon be available at 750 locations, over half of all the chain’s stores.
Lesson learned: E-commerce is the new normal, even for big-box retailers. Brands must look for ways to increase and improve e-commerce offerings and services.
There have been some success stories despite the pandemic, or in some instances, because of it. Spotify is a case in point, with the music streaming company posting impressive Q1 results — it beat its quarterly forecast with revenue of $2 billion, a jump in 22%, reaching 130 million paid subscribers.
This wasn’t an overnight phenomenon. In February, the company noted a slowdown in usage in areas hard-hit by the virus, such as Italy and Spain, but that was followed by significant recovery as the situation stabilized. The quarter overall saw a 31% rise in monthly active users, the brand’s key metric.
Spotify’s success during the pandemic can be attributed to the changing behavior and daily habits of consumers. According to the company, “every day is like the weekend” as more people are out of work and consumers turn to activities they can do at home.
Lesson learned: Yes, sometimes sheer luck plays a big role in business. Brands whose product or service was ideal for the COVID-19 period are the natural winners in a difficult time.
On how to maintain success after COVID-19:
While car sales plummeted during the Great Lockdown, with an expected global drop of 22%, car sales online have seen incredible growth, led by Carvana, the online used car trader that is disrupting the auto sales industry with its “contactless” car purchases. While late March and early April saw a dive in Carvana sales, there has been a promising resurgence as virtual car shopping has boomed.
This may be due to the simple fact that potential buyers are unable to visit used car lots or showrooms during the lockdowns. With no other options at hand, more consumers are opening up to the idea of online car trading, financing, and next-day, touchless home or office delivery of the car purchase.
Or it could signify a broader shift in consumer behavior that will forever change the auto industry. Either way, Carvana is currently winning. Despite a Q1 loss of $184 million, share prices surged after the company announced it is expanding its next-day touchless delivery service in 24 states.
Lesson learned: In the COVID-19 era, “disruption” is taking on a whole new meaning. Brands should work towards satisfying consumers as they alter some of their fundamental shopping behaviors.
While the auto market, in general, has been suffering, one brand reported modest success with a Q1 profit of $16 million. That would be Tesla, the brand that has outperformed competitors to become the electric car and clean energy leader.
Q1 represents the third consecutive quarter in which the company turned a profit, in spite of the difficulties of the pandemic. In February, the company suspended manufacturing operations in Shanghai for more than a week, followed by winding down production in its U.S.-based plants to a minimum in March, in compliance with local shutdown restrictions. Despite this, the Tesla Model 3 accounted for 21% of sales of all new small and midsize luxury cars in the U.S. in Q1.
While profits were slim in Q1, the longer-term repercussions for 2020 are still very unclear. If the depressed auto market continues after production ramps up again, Tesla may well find itself sitting on inventory later in the year. So far, this concern has not affected the stock price, which puts Tesla in the number one place for performance in the NASDAQ 100 so far this year.
Lesson learned: A profit — even a small one — is clearly better than a loss, but brands must be patient and keep a finger on the pulse. The full effect of the pandemic won’t be known for at least a year, if not more.
Something huge has been happening in the global consumer market, all while the masses have been sheltering in place at home. This roundup of Q1 2020 financials reflects just how much has changed in such a short time span, and there’s still a long way to go.
The next quarter of this strange year will bring more challenges — both foreseen and unexpected — to brands and markets of every type and size. While the future of brands may yet be unclear, one thing is for certain: D2C is on the rise, with large traditional brands pivoting to a more direct, digital sales model. This shines a spotlight on the incredible opportunities for D2Cs in a rapidly changing marketplace, during a game-changing year.
Last updated on August 16th, 2022.