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Coronavirus has slowed down the economy worldwide. Shops are closing, stocks are falling… Nobody knows how long this will last. Is it time for marketers to start panicking? Or is it an opportunity?
Let’s start pessimistically. First of all, let’s look at what the stock markets were like when WHO declared coronavirus a pandemic. The stock markets are the indicators of what the general mood is in society right now. All indexes are falling, even cryptocurrencies have fallen rather drastically. Stock markets went to panic mode quickly…
This is the fall of S&P 500 index in the last month.
It’s not only about stock markets. Many businesses had to stop production and started to reduce costs. Together with this, marketing budgets are also being cut all around the world. You can clearly see this when looking at the data from Asia which is one month ahead of us. All media costs are decreasing. (Source WARC)
It seems logical. Marketers and businesses don’t know what’s going to happen. That’s why they are holding back their costs and plans, just to be sure. Many businesses have already started to create various strategies according to the estimated economic impact.
But does it really make sense to pause marketing activities?
Let’s take a look at this from a different perspective. Data from Asia are showing us another very important thing that we’ve already intuitively noticed.
Daily TV consumption (and consumption of online channels) increased rapidly.
Who isn’t watching more TV news right now than before? Who isn’t letting their kids watch movies when they’re at home? Who isn’t spending more time with online communication? Who hasn’t already searched Netflix back and forth for new or yet undiscovered shows?
TV broadcasters are noticing a growth in viewers, competitor’s campaigns are moved to an indefinite time. Getting a bigger reach is now a lot easier than it used to be.
Online and some other channels are growing
Selling has been limited to groceries, products of personal hygiene, medicine. And these channels are growing.
According to the data provided by Chinese e-shop Tmall (the second-largest e-commerce website in the world), sales of face masks have risen to 107.2m (compared to 587,177 last year), antibacterial products have risen by 3271% and vitamins by 3171%. This tells us a lot about the shift of current needs but also about the fact that pharmacies are on the rise. (Source: YIMIAN)
Sales of luxury products are falling but when people are buying, they’re buying to stock up. This is an opportunity for FMCG brands.
E-shops are on the rise
Tesco is struggling with meeting the demand for deliveries (so is Amazon) and delivery services are becoming overwhelmed. When looking at historic data, during the MERS epidemic in South Korea in 2015, e-commerce saw a massive increase (E-mart +63.1% and Home Plus +48.1%). And that was five years ago. Today, the whole e-commerce industry is much bigger. Brands that already have online distribution in place, have opportunities for growth. (Source: WARC and YIMIAN).
And how do motorcyclists fit into this?
When you’re driving a car and see an obstacle in front of you, the typical reaction is to brake immediately. We hope that the ABS system will work and if not, the only hope is to trust in the safety of our car. This is how companies react to a crisis, traditionally. They usually reduce spending, cut costs and hope that they have a sufficient amount of resources to survive.
Motorcyclists, on the other hand, know that they cannot react this way. They go fast, don’t have airbags and if someone crashes into them, they have a much bigger problem than car drivers. So, they know that the best thing to do here is to go around the obstacle. Ideally, instead of slowing down, you should accelerate and avoid the danger. Speed won’t kill you, but heavy braking will.
Yes, we could say that motorcyclists are irresponsible and they drive dangerously. But companies work on the same principle. They try to go as fast as possible, as none of them will survive when stopping completely.
I think that companies should behave more like motorcyclists. To avoid danger, we cannot afford to brake heavily. We have to go around it and accelerate. Take a look at companies that immediately started sewing face masks or producing hand sanitizers.
The typical behaviour of car drivers leads towards traffic jams (and in economics, it leads to a crisis). Sometimes even a completely unnecessary traffic jam. It’s enough if the first car starts to brake, another one will brake even more heavily, the one after that even more and this way the road will be blocked for a long time.
What would motorcyclists advise marketers to do right now:
- Media has a bigger reach now (TV and online) – it’s worth to put your money there
- Your competitors are cutting budgets – to win your customers’ attention is now cheaper
- Some segments are growing – communication makes sense especially for FMCG, hygiene products and medications
- Online channels are growing – it’s worth to invest in online advertising and e-commerce
- OOH doesn’t make sense, since a lot of people are in a lockdown
- Adjust your business model – you need to avoid the obstacle in a creative way (e.g. taxi drivers delivering groceries)
- Review your campaigns – don’t launch campaigns that were planned just because they’re planned
- Don’t look too much at the current situation but focus on the future, the period when you will need to speed up again (a lot of traffic jams are created because people from the passing cars want to take a look at the car crash)
- Prepare different strategies – always have an avoiding manoeuvre at the ready
Of course, everything will slow down.
Big events like UEFA Euro 2020 are postponed, the Olympic games are postponed and that will bring huge cuts for marketing budgets. Many manufacturers are closing factories, the automobile industry is slowing down.
Many businesses will suffer huge losses caused by coronavirus pandemic. Our clients will be hit by closed offices, stores, shops, restaurants and bars and the travel industry will also suffer a lot.
On the other hand, it all brings a lot of opportunities. You cannot get out of a crisis unless you keep moving.