Coronavirus & Digital Marketing

Covid-19, aka the Coronavirus has impacted almost every aspect of our lives; from stock piling toilet roll (not cool!) and shortages of hand sanitiser, to the mass cancelling of outdoor events and self-isolation within our own homes. In February alone, data shows that “concerns about the coronavirus led to a 500% surge in cancellations and postponements of significant events”[1]. It is of no surprise that Covid-19 is wreaking havoc on the advertising industry.

As a Digital Marketing agency, we are seeing first- hand the effect Covid-19 is having on businesses. In fact “advertising has long been the canary in the mineshaft for the economic outlook, and in the last week alone, thanks to COVID-19, it’s gone from chirping a happy tune to picking up a very nasty wheeze”[2].

Businesses in the main have applied the brakes to their online advertising in a scramble to pare back costs. If we cannot control or influence demand, we can at least control our cost base, so goes the thinking. For many businesses, the current circumstances are especially challenging and the future viability of companies is on the line. However for other companies, a crisis requires imaginative thinking and can present an opportunity to build market share inexpensively. We know that it is often very difficult to look beyond the immediate, but those that do will be well placed to rebound quicker and build stronger businesses as a result.

The latest research suggests that the scale of advertising drop-off is unprecedented. China’s biggest search engine Baidu predicted sales from advertising could fall by up to 18% in the first quarter[3].

Likely Impact:

In a Search Engine Land article, Loop Capital Markets predicts that Google and Facebook’s ad revenue will be severely impacted.  Google could see a 15% drop in year-on-year ad revenue during Q1 from lower spending in the travel sector as customers hold off from booking holidays until the outbreak has passed. This drop could increase to 20% by the end of Q2 depending on the duration and scale of the outbreak in key markets around the world[4].

Shelley E Kohan writing for Forbes commented that “categories more prone to increase during times of physical retraction of a population are health and beauty, grocery, and consumer product goods.” As a result, she predicts that “spending on fashion merchandise may decline while Americans look to make sure needed goods are well-stocked in their homes”[5].

With consumers staying home and avoiding public places, it makes sense that some ecommerce retailers will see an upsurge in traffic. In a survey of more than 2,200 marketers this week (conducted by Econsultancy and Marketing Week), 71% of UK marketers predicted that there will be an increase in ecommerce usage as a result of coronavirus. However, ecommerce consultant Dan Barker highlights the difference in impact across different retail categories (e.g. garden furniture and crafting is doing well, fashion is experiencing a dip)[6].

The lasting impact of the epidemic will be even once things return to (relative) normal, there will be a lasting change from this abrupt digitalisation, as consumers become used to using digital services and forming new habits.

It is highly possible that the advertising market will revert to normal in the second half of the year, and in fact, advertisers are expected to ramp up their budgets in the second half of the year to make up for the impact in the first half. It is also known that “a majority of ad spend takes place in the latter half of the year anyway, due to holiday campaigns and product rollouts”[7].

 

Cancel or Double Down:

As mentioned above, here at Sing! we are seeing the effects Covid-19 has had on digital advertising spend. We are seeing many campaigns cancel with spend deferred till the expected later in the year pick-up. However, if you’re looking for proof that digital marketing can fulfil a role during this crisis, the below might provide some food for thought. The data comes from those clients who have  continued to spend since March 13th;

  • E-commerce Lift-off: We are seeing a pronounced e-commerce uplift across our base of clients who have online transactional capabilities. A lot of this stems from the natural flow of physical world sales to online. By comparing the last 10 days with the 10 days immediately preceding it, we can see some interesting comparisons;
    • Number of Sales (ad spend adjusted) are up 84%
    • Conversion rate is up a whopping 129% showing much greater intent amongst site visitors
    • ROI is up by an incredible 106%

 

  • Supply & Demand Impacting Media Cost: In the middle of a crisis lies opportunity. There are far fewer brands advertising online currently. As a consequence media costs are declining. Here at Sing!, we have seen media costs decline by over 31% over the comparison period. That is like having 31% more budget. At the same time, people are spending longer online communicating, shopping, browsing and streaming. Therefore unchanged budgets are likely to result in more ads being shown, greater reach and exposure and a higher share of voice. Advertisers who already enjoy a profitable return from their online advertising should consider further investment as there are much greater advertising returns to be had now.

 

  • A Focusing of the Shopper Mindset – consumers are sharpening their purchasing intentions. Couples are spending more time together and have more time to discuss important purchase considerations. Increasingly flexible working conditions are giving people more time to consider what they need and what they don’t. As a result and despite the fact that people are buying less, they are being more considered and therefore more purposeful in terms of what they buy. Buying a summer holiday is not something we can conceive of at the moment. However buying a barbecue (for those lucky enough to have a garden) makes sense and we can picture ourselves “cocooning” happily in our back yards.

 

  • Authentic, supportive messaging – we have seen a strong trend in the messaging brands are using. There are less noisy ads about. Brands are keen to portray themselves as supportive and feeling. There might be an inclination to hard sell but we would encourage advertisers be magnanimous, paint powerful pictures, give hope, offer reassurance, show solidarity and empathy. You should forego the opportunity to hawk a keen price, instead reassure people that deliveries will be made and customer service levels will be maintained. Advertisers should concentrate on their brand’s stature in the face of these incredible headwinds. Show respect for your audience. Remember class is permanent.

 

At Sing!, we are here to help and support our clients. If you have any questions at all, please don’t hesitate to get in touch. Two of our favourite Irish seanfhocails have never conveyed such meaning as they do now;
“Ni neart go cur le cheile” and “Is ar scath a cheile a mhaireann na doaine”

Stay well.

 

References:
[1] https://www.clickz.com/b2b-turns-to-digital-marketing-in-the-wake-of-coronavirus-outbreak/260893/
[2] https://www.businesscloud.co.uk/opinion/coronavirus-shows-up-online-advertising-limitations
[3] https://www.reuters.com/article/us-health-coronavirus-advertising/advertisers-stare-into-the-coronavirus-abyss-idUSKBN2162CB
[4] https://econsultancy.com/how-is-coronavirus-impacting-the-retail-industry/
[5] https://econsultancy.com/how-is-coronavirus-impacting-the-retail-industry/
[6] https://econsultancy.com/how-is-coronavirus-impacting-the-retail-industry/
[7] https://wwd.com/business-news/media/coronavirus-update-financial-impact-on-advertising-media-industry-1203538982/