The outbreak is having a major marketing and production effect on a year that was forecast to see greater media investments, and highlights realities unique to the digital age.
The Coronavirus is spreading at an alarming rate around the globe, unsettling the stock market and causing operational disruptions to industries spanning retail to travel and hospitality. In a year where analysts expect to see an uptick in media investments from marketers eager to capitalize on events like the 2020 Tokyo Olympics.
“As travel is curtailed and supply chains are impacted, [and] if you can’t get your products to market, what do you do? You stop marketing,” Bruce Biegel, Winterberry Group’s senior managing partner. “Short-term marketing dollars can be wasted, so you watch people start to pull back a little bit.”
Advertising reverberations of Coronavirus — which causes the illness COVID-19 — are already evident on platforms like Amazon, where many merchants rely on Chinese suppliers. Some sellers spent 6% less on Amazon advertising in the last two weeks versus that period in 2019, according to a Quartile Digital analysis cited in Bloomberg. Tech giants like Microsoft and Apple have begun to issue warnings that Coronavirus could impact their sales outlook for 2020, and Facebook on announced the cancellation of its closely watched F8 conference.
As bad news accumulates, some analysts remain cautious in adjusting their advertising forecasts, especially as the status of events will depend on whether the worst of Coronavirus burns off with the summer season. One thing to keep in mind, Biegel said, is how the particulars of today’s unprecedented digital connection impact marketing.
“We’ve never been through this type of GDP slowdown or crisis environment in this type of e-commerce market, with so much direct-to-consumer and so much focus on ordering and shipping” Biegel said.
Potential safeguards — barring things don’t get ‘severe’
Agility is one aspect of digital marketing that could act as a safeguard against some of the consequences of Coronavirus. Businesses feeling a pinch to profit margins might freeze variables like marketing budgets as a reactive strategy in the near term, per Biegel. But that doesn’t mean those dollars disappear forever.
“I’m sure ad spend will be impacted if opportunities dwindle, but they could also just get reallocated,” Dipanjan Chatterjee, VP and principal analyst at Forrester, said. “Other than that, many will question their China dependency, which will probably have more of a sourcing impact and opportunities for smaller countries like Bangladesh and Vietnam.”
A focus on marketing reallocation was echoed in a report by WARC on Thursday. The group expects global advertising spend will rise 7.1% to $660 billion this year, supported by strong growth of 13.2% in internet investments.
“We are yet to amend our forecasts in light of the COVID-19 situation, as we would expect — if the crisis is contained — displaced spend to be reallocated later in the year,” James McDonald, WARC Data’s managing editor, wrote in statement. “Advertising’s relationship with GDP is strong, but a slowdown in economic output as a result of the virus will not necessarily translate into reduced advertising investment.”
This too will pass
Does this situation suck? big time, is it the first time (or the last time) in history a global epidemic has or will threaten the lives and livelihoods of millions, not a chance…
People are creative in solutions as well as vigor, we will band together, beat Coronavirus and be stronger for it!
This too shall pass!
Kas is an award winning marketer, hitting record sales targets for large entities such as Revolut , Cakebox, and Gladfish. Kas’s unique approach towards email marketing has allowed him to achieve an additional 300% revenue return for his happy clients.
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