A study about consumer brands and the emotional connection they make with the public has identified three brands -- Zoom Video Communications (NASDAQ:ZM), Purell (part of privately held Gojo Industries), and Netflix (NASDAQ:NFLX) -- that saw the biggest increase in usage during the COVID-19 pandemic.
Branding agency MBLM (pronounced "Emblem") has begun releasing results from its 2020 Brand Intimacy COVID Study, which it calls "a study of brands based on emotions during the pandemic." According to the report, "Brand Intimacy is the emotional science behind the bonds we form with the brands we use and love." The full study will be published next week.
Here's a sneak peek at some of the data that MBLM found.
Zoom Video Communications comes into focus
Given the social distancing and the big move to remote work that transpired in the early days of the pandemic, it's easy to see why Zoom would experience the widest adoption among companies mentioned in the study. When conducting meetings in person stopped, Zoom's easy-to-use, industry-leading video solutions became the next best thing to being there.
Don't take my word for it. Late last year, Zoom was named a "Leader" in the 2019 "Magic Quadrant for Meeting Solutions." That marked the fifth time Zoom made the list and its fourth consecutive time as a leader.
Mario Natarelli, managing partner at MBLM, said, "Not surprisingly, Zoom has become part of our lexicon, like [Alphabet's] Google," he said. "Its uses are broad and varied, from virtual weddings to court proceedings. Fifty-two percent of Zoom customers surveyed said they'd been using the brand for a year or less, suggesting they got acquainted with the brand during [the COVID-19 pandemic]."
Consumers' wholesale adoption of Zoom translated into blockbuster results for the company. Second-quarter revenue of $664 million soared 355% year over year, while diluted earnings per share of $0.63 soared 31-fold.
Customer metrics were equally robust. The number of customers with more than 10 employees grew to over 370,000, up 458% year over year, while those contributing more than 100,000 in trailing-12-month revenue climbed to 988, a 112% increase. In addition, the net dollar expansion rate, which measures increasing spending by existing customers, topped 130% for the ninth consecutive quarter.
By empowering both businesses and families to meet digitally, Zoom made the pandemic just a little more bearable. That has driven its stock price up nearly 600% so far this year.
Purell cleans up
As fear of contracting the virus escalated during the dark days of March, some of the lessons we learned as children came back to the forefront: Wash your hands. In those cases where soap and water weren't readily available, hand sanitizer became to go-to, and Purell is among the most widely recognized brands.
Natarelli put the demand in context: "Purell came in No. 2 for increased usage during [COVID-19]," he said. "Need and desire for Purell and other hand sanitizers reached a boiling point for many when they were sold out everywhere. These products become hoarded and in demand. Fifty-eight percent of users said they used Purell daily."
The fact that Purell helped keep people and families safe no doubt added to the brand's emotional connection with customers. As a part of privately held brand Gojo Industries, the company has financial results that are equally private. However, the company's move to increase production capacity throughout the pandemic is a pretty good indicator of strong demand.
All eyes were on Netflix
The one-two punch of high unemployment and remote work left many people hunkering down at home with extra time on their hands. What to do with all those additional hours? In a throwback to simpler times, many families gathered around the television, and Netflix was the viewing choice of many consumers.
Netflix is a brand Natarelli and MBLM are familiar with, as it makes frequent appearances among the Top 10 list of most intimate brands. "Already a strong intimate brand prior to [COVID-19], consumers use the brand more during the pandemic," he said. "With increased time at home and a need to escape, streaming entertainment brands become a desired distraction. Fifty-six percent of customers said they use the brand daily."
All that love translated into robust financial results for the tech giant. Netflix reported second-quarter revenue of $6.1 billion up 25% year over year, while earnings per share of $1.59 jumped 165%. The company also generated positive cash flow for the second consecutive quarter, something it hasn't done in years.
The headline was the 27% subscriber growth during the period. In fact, during the first six months of 2020, Netflix added 25.9 million subscribers, nearly as many as the 28 million it added in all of 2019.
These metrics have helped drive Netflix's stock up 54% so far in 2020.
Why it matters
MBLM's research shows that when consumers connect with brands on an emotional level, it often develops into a strong sense of loyalty for those brands. Customers often form emotional attachments to the companies behind those brands, which can result in repeat business and long-lasting relationships with those customers.
That can in turn lead to stronger revenue growth, fewer customer defections, and greater stock performance.
Can you feel the love?