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How does the Corona Virus influence Marketing? 

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The spread of the severe lung disease SARS-CoV-2, also known as Corona Virus or 2019-nCoV, now paralyzes public and economic life in many Western countries. Several business sectors such as event organizers, travel providers and airlines are already experiencing slumps in sales, others fear this due to declining consumption and, on the supply side, due to production losses and globally interrupted supply chains. The spread of the virus represents both a negative supply shock and a negative demand shock across the economy at large.

That’s the stuff a marketer’s nightmares are made of, because such prospects often cause companies to cut spending where it is quickest and supposedly hurts the least in the short term, such as advertising. So if the media continues to incite unrest in the population, many companies might keep an eye on their variable costs and therefore postpone or even cancel planned campaigns. The consequences of the corona virus for the economy, consumption and advertisers are unpredictable to many. 

But how do experts assess the current corona virus situation and its effects in the future?

According to the ZAW (the German Advertising Federation), it is currently not possible to make exact forecasts for the development of the advertising market given the current facts. However, they describe the fact that the spread of the corona virus in Germany is now compared with the financial market crisis in 2008 and 2009 as “clearly exaggerated and inappropriate”. The causes and real backgrounds are “simply too different”.

Nevertheless, the ZAW does not believe that the advertising market will get off lightly. Given the fact that many trade fairs and congresses have already been cancelled, the live communication and event sector is currently suffering the most. The production area is also affected. Larger productions, especially abroad or with international participation, are being partially suspended or, where possible, relocated.

The next few weeks will be decisive for the advertising market. If the situation does not stabilize, more and more advertising customers will no longer be able to produce goods. For this reason, some marketers expect their campaign bookings to decrease.

What to do now regarding corona virus?

From a more optimistic view, the advertising industry is (and always has been) a creative and highly dynamic industry that is able to adapt quickly to changing circumstances. Also, every marketing expert knows that brand maintenance is a long-term project that should not be jeopardized by blind, hectic actionism. So, how can marketing measures be adjusted to this exceptional situation?

The keyword here is ‘digital engagement’. This will be the difference-maker in maintaining economic success and a good brand reputation within organizations. 

As people are trying to avoid stores or other public places, e-commerce will experience a huge boost and digital marketers will find themselves in the situation of competition for the purchase of consumers who are not frequent online shoppers. By choosing the right strategy focused on the most relevant audience groups and devices, organizations could take advantage of this new environment and potentially excel even more. As more and more trade fairs are being cancelled, the importance of creating online experiences that make people feel as connected as offline experiences increases drastically.

Source: February 2020 Coresight Research report “Corona virus Briefing: Flash Report.” n=1,121

Since we are experiencing changes in behaviour (staying and working from home, avoidance of public places…) there are a few industries that naturally profit from the changed circumstances and others that have to fight new challenges. Nearly half (47.2%) of European internet users polled by Coresight Research last month said they are currently avoiding shopping centres and malls (Source: eMarketer March 2020) Here we want to give some examples:

Online Retail:

Due to the massive decline in physical store visits as a protective measure, sales of online stores are increasing. However, other factors must also be taken into account:

  • Companies that have their production facilities abroad, especially in Asia, could experience supply bottlenecks
  • The degree of the company’s digital distribution network must be capable of absorbing the short term additional expenditure in online trading 
  • Furthermore, this also depends on the company’s stock levels and how easily these can be reordered or cancelled

Software / Gaming / VOD / Entertainment:

As people currently tend to avoid social gatherings and public event locations, they are now moving to virtual platforms to communicate and be entertained.

Health & Pharmaceuticals:

Quite the obvious though… But here are some numbers to show a strong rise in demand for certain groups of products in this area:

Source: Nielsen; March 2, 2020

In general, one could say issues that are particularly relevant for a large part of society are ultimately the optimal stage for giving brands in these sectors a more conscious perception.

Also, there is a need for marketers to do some plain-talking: questions about the likelihood of hitting goals and the value of their investment should be discussed honestly. In addition to that, brands should start preventing customer related issues caused by the corona virus, such as store closures or delivery bottlenecks. In order to have great customer service and online experience, businesses should think about how they can leverage their marketing to address those issues and stay competitive.

So how can we put this together?

Certainly, there is no general answer at this point to the question of what strategy marketing departments can use to adapt to the new situation and how to deal with it.

Nevertheless, a few rules of thumb can be set up to deal with the changed everyday conditions and customer expectations:

Advertising Channels:

There are advertising channels that are currently less successful and less seen than others, resulting in extremely low view rates. OOH (Out of home/billboards) and any physical advertising such as in-store displays, public screens or bus and transit advertising and cross-media-advertising will now decline significantly. Also, digital advertising using geolocations and placed in downtown areas or in and around large business parks will lose its impact in the coming weeks.

The big winners will be digital advertising (in general), TV and radio advertising. Social media attendance is bursting at the moment, channels like Twitter and Facebook to be directly informed and stay ahead of any governmental/official announcements are seeing high user activity at the moment. Because of the high interest in reading articles containing information about the virus and the current public situation, programmatic PPC ads placed on these sites are flourishing. Nearly all public events and meetings are cancelled, many companies decide to close their offices for several weeks, schools and universities stop teaching indefinitely – all this leads to a strong shift to home office, people staying at home as a protective measure and thus turning to their screens.  

This will lead to a significant increase in media use within households, which is different from the way we consume media on the road or at work. 

Audiences:

Shifting the way you target and communicate with your audience is crucial in these times to keep them informed and engaged but also to manage expectations. Many of the customers, especially for companies in the real economy sectors (production of physical products, direct customer contact in the service sector) now want to be as well informed as possible about the impact of the virus on their specific services, what countermeasures they plan to take and what they can expect in the coming weeks. There will be a positive perception of brands that now clearly communicate the effects, measures and limitations of their services and use the channels mentioned under 1. More communication can, therefore, have a very positive effect on the current perception of your brand. 

Conclusion / Take-away:

Considering the above, take into account your specific industry-related issues, market position and degree of (distribution-) digitalization to find a tailored way to respond to the given situation. After all, it’s comparable to a minor economic recession – and taking anti-cyclical action could be your advantage while competing with other companies!

For more information about the current situation of advertising in different industries get in touch with our specialist team today to discuss optimising your ad spend / ad strategy and avoid wasteful campaigns as well as find a tailored solution to navigate through this intransparent times!

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