The Wall Street Journal - USA (2020-12-02)

© 2020 Dow Jones & Company. All Rights Reserved. **** THE WALL STREET JOURNAL. Wednesday, December 2, 2020 |B1

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OPEC and allies face

risks no matter how

they choose to cut

outputB12

TECHNOLOGY: AMAZON BEEFS UP CLOUD CALL-CENTER TOOLS B4

S&P3662.45À1.13% S&PFINÀ1.57% S&PITÀ1.41% DJ TRANSÀ0.35% WSJ$IDXg0.68% LIBOR3M 0.232 NIKKEI (Midday)26756.37g0.12% See more at WSJ.com/Markets

BUSINESS & FINANCE

search firm Comvergence. Its

clients include Ford Motor Co.,

Unilever and Google.

Three years ago, digital ads

accounted for just one-third of

all U.S. ad spending, GroupM

said—about the same size as

newspapers, radio, magazines

and local TV combined. As of

2020, these latter four catego-

ries’ combined share of the

U.S. advertising market has

shrunk to 21%.

When the pandemic hit the

U.S. in March, many compa-

nies slashed their ad spending

as businesses around the

world were shut to restrict the

virus’s spread. Homebound

consumers started doing more

of their shopping online, caus-

ing small and large companies

to place more emphasis on

digital ads, said Brian Wieser,

GroupM’s president of global

intelligence.

Digital advertising is domi-

Please turn to page B2

lysts say they also believe that

the recent rally has legs that

could extend beyond Novem-

ber, even as rising Covid-19

cases threaten to overrun hos-

pitals again.

“We’re bullish,” said A.J.

Rice, a health-care services an-

alyst at Credit Suisse, which

has an “outperform” rating on

Tenet, Universal Health and

HCA. “Absent a national lock-

Please turn to page B11

On its face, the recent out-

performance of hospital stocks

could be perceived as one of

the beneficiaries of the latest

round of bargain hunting by

investors—after all, hospital

chains such as Tenet andUni-

versal Health ServicesInc.

are both still trading 11% or

more below their respective

2020 highs after plunging dur-

ing the market rout.

Yet some investors and ana-

dential election. Both events

helped push major U.S. stock

indexes to records as traders

scrambled to scoop up invest-

ments that have been beaten-

down this year. In addition to

hospital stocks, shares of re-

tailers, restaurants, energy

stocks and cruise liners also

jumped. Elsewhere across fi-

nancial markets, crude oil,

junk bonds and metals such as

copper and platinum rallied.

tors includingTenet Health-

careCorp. andHCA Health-

careInc. both jumping at least

21%. That is far better than

the S&P 500’s 11% monthly

gain and the 7.8% rise for the

index’s health-care sector.

November sent the U.S.

stock market on yet another

wild ride, driven by a string of

positive Covid-19 vaccine re-

sults and a quicker-than-ex-

pected resolution of the presi-

Coronavirus hospitaliza-
tions have soared to record
highs, threatening to strain
health-care facilities across
the U.S. again. But this time,
investors are less concerned.
Shares of several publicly
traded hospital systems fin-
ished November with their
best performances in months,
with national hospital opera-

Hewlett Packard Enter-

priseCo.—a descendant of the

firm that Bill Hewlett and Dave

Packard famously started in a

Palo Alto, Calif., garage—is

moving its headquarters to the

Houston area, the latest sign of

how the pandemic is reshaping

the way Silicon Valley compa-

nies operate.

HPE disclosed its plan to re-

locate as it posted fourth-quar-

ter earnings after a difficult

year that generated a full-year

loss, highlighting its need to

lower costs. The departure of a

company so closely linked to

Silicon Valley’s origin story is a

striking example of how the

area once synonymous with

tech innovation may be losing

some of its luster.

Startup chief executives and

employees have fled the San

Francisco Bay Area for cheaper

locales since the pandemic has

led to remote working condi-

tions. But the loss of an off-

spring of one of Silicon Valley’s

forefathers is a more somber

indication that the region no

longer has the gravitational

pull for both large and small

tech companies it once

boasted.

Texas, and particularly Aus-

tin, has attracted more tech-

nology companies and startup

development in recent years,

offering lower taxes and less

regulation than California and

more affordable real estate.

Silicon Valley electric-car

maker Tesla Inc., for example,

is opening a factory in Austin

next year.

HPE said it would see cost

savings primarily due to

cheaper real estate in Texas.

Hiring is also generally

cheaper and less competitive

than in California.

“I think what we are seeing

here is a company that needs

to seek cost savings wherever

it can find them,” said Charles

King, president and principal

analyst at Pund-IT Inc., an in-

Please turn to page B2

BYHEATHERSOMERVILLE

ANDMARIAARMENTAL

HP

Enterprise

Is Moving

To Texas

For the first time, more than
half of U.S. advertising spend-
ing is set to go to digital plat-
forms such as Google and
Facebook, the world’s largest
ad buyer said, a reflection of
marketers’ strategy shift as the
coronavirus pandemic pum-
meled the industry this year.
The milestone is just the
latest proof of digital advertis-
ing’s meteoric rise, which has
concentrated ad spending with
several tech giants at the ex-
pense of other platforms, in-
cluding newspapers, local tele-
vision and magazines.
Online ads can be cheaper
than those placed on other
media platforms and they al-
low marketers to better target
and measure the performance
of their ads. These advantages
have become ever more im-
portant during the pandemic
as businesses cut ad budgets
and consumers spend more of
their time and dollars online.
“Digital advertising has
been a remarkable bright spot
in an otherwise dark year for
the advertising industry,”
GroupM, a unit ofWPPPLC,
said in a new report.
GroupM expects marketers
to spend $110.1 billion on digi-
tal ads this year, or 51% of the
total $214.6 billion total U.S.
advertising-spending forecast,
excluding political ad outlays.
Next year, it expects U.S. ad
spending to grow 12% to $240
billion, and digital advertising
to account for $130 billion, or
54% of the total. The largest
ad buyer in the world, GroupM
is responsible for purchasing
an estimated $63 billion in ads
each year, according to re-

BYSUZANNEVRANICA

Digital Takes Lion’s Share of Ads

underwrite and distribute our

products,” Bestow Chief Exec-

utive Melbourne O’Banion

said. “As an agent, you are en-

tirely dependent on your car-

rier partners’ business priori-

ties and appetite for risk.”

To verify information and

determine risk, the companies

are using such things as third-

party data for prescription-

drug histories, electronic

health records, motor-vehicle

records, property records and

a life-insurance clearinghouse

with data from consumers’

past applications.

Applicants must provide

permission for the information

Please turn to page B4

overcome the hurdles of low

profitability and regulation

that have kept them out of the

life-insurance-carrier business

in the past.

Until now, life-insurance

startups have largely collabo-

rated with traditional carriers

rather than competed with

them.

Many functioned as online

agents to attract customers, or

used algorithms that draw on

third-party databases to help

insurers more speedily assess

the risk of applicants and set

their premiums.

Becoming a carrier “gives

us greater autonomy to inno-

vate how we develop, price,

Each company said it would

maintain competitive premium

rates and typically issue poli-

cies within minutes.

The budding life insurers

face a difficult market envi-

ronment.

Among the obstacles, regu-

lators require life insurers to

hold large amounts of capital

to protect policyholders de-

cades into the future, money

they mostly invest in bonds.

Bond yields are low and will

likely remain low in the long

term, cutting into investment

profits.

The moves by Bestow and

Dayforward signal that start-

ups are confident they can

a year earlier on Black Friday,

while online shoppers on that

day rose 8% and topped 100

million, the survey said. On

Thanksgiving Day itself, in-

store shoppers declined 55%.

Many stores were closed on

Thanksgiving Day this year, in

contrast to past years.

NRF President and Chief Ex-

ecutive Matthew Shay attri-

buted the spending decline to

consumers starting their shop-

ping earlier. More than half of

holiday shoppers indicated they

had participated in early sales,

he said.

“We knew the pandemic

was going to impact in-store

foot traffic and we anticipated

that consumers would shift

some of their shopping behav-

ior online and we certainly saw

that,” Mr. Shay said on a call

Tuesday to discuss the results.

Shoppers spent $10.8 billion

on Cyber Monday, up just over

15% from a year earlier, Adobe

Analytics reported, adding

that it was the biggest day for

online shopping in U.S. his-

tory.

A total of 186.4 million peo-

ple shopped either online or in

stores over the weekend, down

from 189.6 million a year ear-

lier. However, the number of

shoppers in 2020 was higher

than 2018, when total shop-

pers for the weekend were

165.8 million.

This year’s Black Friday

was set against an unprece-

Please turn to page B6

U.S. shoppers spent signifi-

cantly less than last year over

a five-day holiday-weekend

stretch that included Black

Friday and Cyber Monday, as

gains in online customers

were offset by far fewer peo-

ple visiting stores during the

coronavirus pandemic.

People spent an average of

just under $312 on holiday-re-

lated purchases from Thanks-

giving to Cyber Monday, down

14% from 2019 though on par

with 2018, according to a sur-

vey by the National Retail Fed-

eration and Prosper Insights &

Analytics.

The number of in-store

shoppers was down 37% from

BYALLISONPRANG

Shifts in Holiday Shopping

Make for a Lackluster Start

INSIDE

Technology startups are
ready to challenge traditional
life insurers head on.
Bestow Inc.andDayfor-
wardInc. are making the leap
to become life-insurance carri-
ers, a move away from a
model where startups sell only
traditional insurers’ policies.
The companies are banking
on their versions of online
technology for sizing up the
risk of insurance applicants to
provide cost efficiencies for
expanding profit margins be-
yond those of traditional in-
surers.

BYLESLIESCISM
ANDALEXANDRABRUELL

Life-Insurance Firms Spring From Startups

People waited in line at the Lincoln Road Mall in Miami Beach, Fla., on Black Friday.

SCOTT MCINTYRE FOR THE WALL STREET JOURNAL

2000 '05 '10 '15 '20

0

50

100

150

$200 billion

$250billion

TV

Radio

Newspapers

Magazines

Other

Digital

Digitaladspendingisexpectedtoaccountfor

themajorityofU.S.adspendingthisyear

EstimatedU.S.adspending

bycategory

EstimatedU.S.digitaladrevenuemarketsharein2020

Sources: eMarketer (market share); GroupM (ad spendimg)

Google

298%

Facebook

235%

Amazon

102%

Microsoft3.6%

Others

329%

BYCAITLINMCCABE

Hospital Stocks Rise, Along With Covid-19

BUSINESS NEWS

Sephora plans to

switch partners to

Kohl’s from J.C. Penney

beginning in 2023 B3

SCOTT OLSON/GETTY IMAGES