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The novel coronavirus (or COVID-19) needs no introduction; it is a pandemic that the entire world is facing. In this case, businesses in Canada face a variety of economic challenges, and the impact of coronavirus can be felt throughout since it has affected all sectors of industries. Hence, it is now time for businesses to prepare for the long haul and ride out the storm. This can be done by working smarter, and by being ready to tackle the new challenges.
The global economy was already preparing for the overdue recession, but with coronavirus now coming into the picture, things have changed. All the departments are facing the impact of coronavirus directly. Many experts suggest that the pandemic will cost the global economy a sum of $2.7 trillion in the coming months. This has led to a lot of uncertainty as the businesses and marketers brace themselves for the downturn in the coming months — having no idea what the world is up against, and how long it is going to last. This has all the businesses on edge.
Due to the pandemic, all the sectors are taking a hit, but this article will focus on the impact of coronavirus as felt by the marketing teams of the businesses. So let’s look at the several impacts of coronavirus on the marketing plans and strategies of companies in Canada.
Decline in Web Traffic, and its Effect on Ad Revenue
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Experts around the world are speculating that the global ad spend is likely to take a hit. The CEO of the New York Times, Mark Thompson, reported that they had seen a slowdown in digital ad bookings in the first quarter; the news publication’s digital ad revenue has seen a drastic drop of 10% in the past few weeks.
Why is this happening? Well, because most of the businesses are losing online traffic on their websites. Their customers are no longer in need of nonessential services, hence, they are less likely to visit the sites. Due to this, the companies are forced to cut down their ad budget significantly because of the decline in the number of web audiences they have. For example, the travel industry, that has taken the worst hit, has reported a drop of 15% in ad revenue in the first quarter, and they will continue to see a decline of 20% in the second quarter. Experts suggest that because of this, the pandemic is going to cost the travel industry close to $820 million. Similarly, other sectors have too cut down their ad spend. This drastic decline in the ad spend is consistent in most industries, especially the luxury sector.
According to Rob Sanderson of Loop Capital Markets, the prediction holds that both Google and Facebook — the two big players in digital advertising — will see a severe impact by the decrease in ad spend because of this, especially by the travel industry. And according to Needham analysts, Laura Martin and Dan Medina, this drop in the ad spend can set back companies like Facebook by 30-40% of their total ad revenue, which is a lot. This is a clear indication that marketers in Canada have to prepare for the same decline. They will see a significant drop in the demand for ad campaigns for their companies and clients.
Cancellation of Marketing Events and Conferences
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Another impact of coronavirus, much to the dismay of loyal customers, is that most major marketing events and conferences have either been postponed or cancelled. Examples include Adobe Summit, Google Cloud Next, and Facebook F8 Developer Conference. Recently, Apple also announced and launched its new products without a launch event, which is quite unprecedented in the brand’s history. On top of that, major events like the NFL, where marketers invest a chunk of revenue in reaching their audience, have been cancelled.
This adds up to a severe impact of coronavirus on the marketers as many major businesses rely on such events and conferences to make a chunk of their revenue, and attract significant customer leads. For this, they usually pour a lot of money and resources into such events to market their brand and products. With such events being cancelled, these companies have to now move to the internet for the same, which does not have the same impact as a conference.
Just a couple of weeks ago, according to Amy Barone of Splash, marketers chose to divert their focus from such significant investments and into local events that can easily be scaled up or down. The idea was that they are less heavy on the budget, and they also encourage a more meaningful personal connection with the audience. But as the country inches towards lockdown due to the pandemic, this solution seems no longer applicable, and hence, remains uncertain.
Hence, the only choice that likely remains with marketers in the face of event and conference cancellations is to move to the internet. Sure, it has many advantages, it is not as expensive, and it does not require extensive planning. Nonetheless, it lacks the same impact as a major event. These events provided the brands to reach out to their clients and customers at a single point, but now, they have to take a multi-pronged approach to try and gain the same impact. The marketing strategies, hence, have to change drastically if they want to incur the same number of leads.
Changing Supply and Demand Cycles
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The supply chain, in the last few weeks, has been drastically affected by the pandemic. Many companies’ production has completely halted, and many are approaching the same fate in the coming weeks. This is especially true for those companies that have their production based in China (and India for the coming weeks). Because of this lack of supply, the inventory is running out for the same companies.
Since there is a lack of supply, there is a lack of income. Due to this, the companies have opted to cut down their marketing budget by up to 40-50% in the last week or two, across all marketing channels, as the strategist Amanda Martin had predicted. This ties back to the loss of ad revenue, as mentioned above. Additionally, some of the companies that have been hit the hardest have entirely shut down their ad spend, and full stop to their digital ad marketing budget.
But the decline of ad spend due to depleting inventory is forcing companies to shut down their marketing initiatives, but on the other hand, the falling demands are making the companies fearful of carrying out their marketing strategies. This is the other end of the muzzle. That is, people are reducing travel and delaying major expenditures; they are hoarding essentials and putting a halt on their other demands. On the same lines, they have almost stopped visiting gyms, restaurants, bars, and malls. This means that there is a fall in demand for the products.
On the other hand, people are spending most of their time, or even all of their time in the hotshots, indoors. Hence, they are consuming more internet by spending most of their time online. The demand has shifted from offline to online, and thus, many companies like Netflix, Hulu, Skype, and LogMeIn see a spike in activity. As Michael Olson of Piper Sandler predicts, subscription for Netflix is projected to rise from 1.6% to 3.8% in the Canadian market as more and more people are forced to stay indoors.
So what does this mean for marketers? Well, first, looking at the leads and sales that are declining for the companies, performance marketing is going to underperform in the current conditions of the market. There is a lack of demand (as well as supply), so the businesses are failing to convert the leads. Here, marketers of various companies have taken two radical types of approaches. Some are cutting down on their ad spend since they do not have leads, and some, on the contrary, have raised their digital ad spend to make up for the lost leads here. The results of both approaches are expected to surface in the coming weeks.
As for the pay-per-click ads (PPC ads), the data suggest that the cost has not changed — even for the travel industry. Yes, people looking up things and products have gone down drastically, and so has the online traffic, but the PPC ad prices are still the same. What this means is that the cost per conversion for businesses has gone up by a considerable margin. Let’s say, a single lead-conversion before the pandemic cost the company $0.5 can now cost the company upwards of $2. This is for online advertisements.
Meanwhile, TV and streaming platforms are seeing a benefit from people staying home. Hence, many marketers are now moving to market their products on TV and streaming platforms by focussing on more viewership. Some optimism is seen here, but all in all, traditional marketing forms have taken a hit. The digital advertising and out-of-home advertising budget have been drastically reduced by the company. But on the flip side, social media marketing is seeing growth. According to the Global Web Index, social media activity across all the demographics has gone up exponentially. For Gen Z, it has gone up by 27%, for Millennials, it has gone up by 30%; and for Boomers, it has gone up by 15%. So apart from TV ads, social media advertising is also set to increase by 22.2%, according to The Drum, in the coming weeks.
Delayed Advertising Campaigns
In the face of decreased web traffic, cancelled conferences, or a shift in demand and supply cycles, many companies are unable to focus their marketing efforts elsewhere. For them, shifting their focus is not viable. This is especially true for luxury brands or those companies that sell nonessential services that people will not consume or buy. According to the COVID-19 Business Impact Survey of 887 UK based brands conducted by Marketing Week, nearly 55% of the companies have delayed their campaigns, 39% of which have cited the falling demands as the reason; and 61% of all the companies are preparing for the demand to drop even further in the next quarter.
So it is clear that the impact of coronavirus has put previous strategies on hold to avoid further financial loss. Here, some of the biggest advertising projects have also fallen victim to this, for example, the campaigns that were supposed to kick-off during the NFL season. Due to this, most major marketing investments have been put on hold for now. As mentioned above, due to the overdue recession and the elections in the USA already had the marketers of such companies on the brink of uncertainty. The pandemic has only made it worse.
Move from Short Term to Long Term Strategies
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The market is scared, and there is no denying that. On top of that, many companies are confronted with up to 50% cut in their marketing budgets. Hence, all the major marketers and advertising firms are preparing their companies for the long haul so they can come out of this pandemic with minimal losses. They are now keeping the long term goals in mind and focusing on them by changing their short term goals, so they align well. How they are doing that is by coming up with smarter brand building strategies online, especially on social media.
There is a spike in social media activity as more people spend their time online. Hence, Samantha Barnes of Bounteous believes that the short term impact of coronavirus will mean a downturn for marketers and companies, but this is not the time for budget-cutting. Many companies share the same view. Barnes, and the said companies, are seeing this as a chance to foster long term relationships with their audience and customers as a preparation for the next upswing in the market. So while ad revenue and online traffic drop, companies are now shifting their focus on positive PR via social media. Barnes asserts that the right message at the right time can have a positive result in the future as the audience will associate the brand with meaningful insights instead of predatory marketing.
On the same lines, some companies have instead gone overboard with such strategies by flooding their customers with COVID-19 emails that include things like their shift in employee and customer policy, pandemic updates, and various tips to prevent infection. Most of these companies are not even remotely related to the medical field, yet they are sharing their two cents on how to deal with the pandemic. This is being done to maintain relationships with their customers and to avoid getting lost in the online ramble of information.
In answer to this, many customers and critics have raised questions about such predatory tactics, and such emails have now become memes on the internet. Many peoples are openly ridiculing such strategies. But according to Hillary Fussell Sisco, the Chair of Strategic Communication at Quinnipiac University in Hamden, Connecticut, this strategy seems to be working in the companies’ favour. She asserts that this is one of the essential elements of crisis communication, that is, the brand must say something, instead of saying nothing. Though the brand risks ridicule, if done correctly, this can help with reputation management, as well as keeping the brand relevant during such dire situations.
On the far side, there are many companies that are trying to exploit the situation. They are misunderstanding the entire principle of staying relevant, and instead, they are incorporating the pandemic in their marketing strategies to promote their products and services blatantly. In such times, making the wrong move online can get your brand cancelled, as what happened with Gillette a couple of years ago. Hence, brands that are implementing these strategies are facing a risk of not just ridicule, but a rash callout from their audience. Such practices can severely harm their reputation online, and this can lead to the loss of a significant chunk of the audience.
Lastly, there are brands that have completely gone offline. These companies face the most significant risk as they are no longer executing any kind of marketing strategy, regardless of ethics or ideology. Neither do they have running ad campaigns, social media ad campaigns and nor do they have any PR marketing campaigns like newsletters and mailers. Such companies are losing their edge to their competitors, who, despite having questionable strategies, are still relevant in the audience’s minds. Going offline is making the audience forget such companies. And once the pandemic is over, such companies will face the challenge of making their brands accessible and relevant again.
Such is the importance of implementing a long term marketing strategy during the pandemic. Doing so will reduce the impact of coronavirus on the companies’ relevance and reputation, so when the time comes to resurface, they won’t have to work harder to advertise their products. They will be in the minds of their customers. In the best-case scenario, if they manage to execute their long term strategy well, they may even see a rise in leads as they will gain new customers who will equate the brand with meaningful business practices.
What Does the Future Hold?
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According to WARC, data projects an increase of 7.1% in the annual budget in global media this year. Surprisingly, this is based on the expectations of experts and analysts that the marketers and companies will simply move their marketing budgets from the first half of the year to the second half. It is quite possible that marketing budget allocation will, in fact, follow this pattern. How? Well, once the pandemic is over, the companies will have to swing their marketing strategies to the fullest to regain the lost customers, leads and sales, and to overcome the impact of coronavirus pandemic. Hence, they will pour more resources into their ad campaigns and marketing plans, across all platforms, from out-of-home ads to social media ad campaigns, and from PR mailers to marketing events.
But all of this is mere speculations. As Sheryl Sandberg, the COO of Facebook noted, no one knows how significant the impact of coronavirus will be on the marketing industry. To quote, ” this is not going to be business as usual, and the marketing industry is certainly going to see a real impact. I don’t think anyone knows how big. So we’re going to watch and look.” In the past weeks, shares of Facebook have gone down by 28.86% year-to-date.
So the best thing marketers and companies can do right now, is to brace themselves for the impact of coronavirus, and implement smarter strategies that can help them come out of the pandemic. No doubt, there is a lot of uncertainty. This is the impact of coronavirus on the marketing business plans, and thus, the industry is now scattering to try and figure out the best way to get out of this pandemic without incurring further losses to their investments and brands.