The Coronavirus Pandemic Versus The Digital Economy: The Pitfalls And The Opportunities
While the coronavirus pandemic presents business risks in some areas, it also offers opportunities in others. The key is to acknowledge the potential threats while exploring the possibilities.
With businesses closing their doors and governments urging their citizens to stay home, the coronavirus has had a profound global impact. At MRM, the company I work for, we have shifted to working from home, and so far, we are still delivering on our projects, and keeping our promises to our clients. However, we can’t deny that companies, particularly those dependent on marketing and advertising, are experiencing some of the biggest challenges. Several high-profile marketing events, including Mobile World Congress Barcelona, Facebook's Global Marketing Summit, F8 conferences, SXSW, Salesforce Dubai Basecamp and others have been canceled or postponed due to coronavirus concerns. Unfortunately, many businesses won’t see that money back. But even in the wake of a pandemic, there could still be a silver lining for marketers.
The shift to digital
According to analysts, Google will likely see a 15% decline year over year in travel ad revenue in the first quarter, and a 20% drop in the second quarter due to the coronavirus epidemic. Despite that, there is still good news. Not everyone sees budget-cutting as the answer. Tim Jensen, campaign manager at Clix Marketing, offered his insights on Search Engine Land, “As the tradeshow circuit dwindles, some exhibitors are looking for other ways to fill their sales pipelines. I just talked with one client who is seeing several tradeshows get canceled, and wants to put more into digital to make up for the lost leads they usually pick up at events.”
Another marketing shift is toward virtual events. Even Microsoft decided to turn its biggest event of the year, the Build developer conference, into a virtual event. This trend presents an opportunity for virtual events startups like Hopin, which combines Twitch-style live streams of keynotes, Zoom-style video conferencing for groups, and one-to-one conversations. Even the banking industry is turning to digital. One example is South Africa's Nedbank. Nedbank plans to accelerate the rollout of its digital strategy across Africa as customers avoid face-to-face banking to reduce the risk of coronavirus. Its long-term target is for 75% of sales to be through digital channels, and for 70% of all its clients to be digitally active.
But the shift to digital will only become stronger, as Stuart Mackay, General Manager at Reprise Dubai, puts it, “This is the most significant health-related crisis that has fortunately happened in a truly digital age. During dark and uncertain times like these, it’s imperative that organizations adapt quickly and seek out new growth opportunities. The realities of changing consumer behavior in the digital age presents a huge opportunity for retailers. The optimization and simplification of product lines, business models, customer engagement, and sales channels can all be achieved through the introduction of digital technologies and e-commerce. Better utilization of data and technology to drive more individualized consumer experiences is where this battle will be won or lost.”
The e-commerce opportunity
In parts of China, major retailers like Starbucks, Nike, and Apple have temporarily shuttered their stores, while smaller retailers are being hit hard as foot traffic declines. Across the globe, the reduced in-store activity is driving increased e-commerce activity. For example, consumers in China are turning to online grocery shopping. According to French retailer Carrefour, vegetable deliveries increased by 600% year over year during the Lunar New Year period. JD.com, China’s largest online retailer, has seen sales of everyday household items quadruple over the same period last year. As more consumers continue avoiding crowded public places, they’ll increasingly turn to online shopping to get their essentials.
Of course, this could still bring strain to businesses who need to deal with potentially delayed deliveries or out-of-stock items because of increased demand. If you sell products on Amazon, for example, it is imperative not to run out of items to avoid being punished by Amazon's organic search and advertising algorithms. If a product is out of stock for over 30 days, it will be treated as if it has no sales history once it comes back in stock. This means that the product's ranking for its most important keywords will drop significantly and show up much lower in search results. The key thing for business owners is to keep products in stock, and be transparent with consumers if there are going to be any delays.
E-sports to fill the gap
With experts urging social distancing to combat the virus, one of the most obvious areas to be affected are sporting events. This represents a big blow to marketers and advertisers in terms of lost ticket sales and ad revenue. In the space of one day, every major sports league in the U.S. suspended operations for the next several weeks in response to the growing pandemic. Even esports are being affected with the League of Legends Champions Korea (LCK) being canceled as more cases of coronavirus were confirmed in South Korea.
The flip side may be that esports could also step in and help fill the gap. For example, the start of the 2020 F1 season has been pushed back in the wake of the coronavirus outbreak, with the Australian Grand Prix canceled late last week, and the Bahrain and Vietnam races postponed shortly afterward. But that didn’t stop F1 driver Lando Norris from taking part in esports to satisfy the void. Norris, footballer Thibaut Courtois, and Formula E driver Stoffel Vandoorne competed against esports professionals and YouTube stars in a virtual Australian Grand Prix.
Joe Zoghbi, an esports expert who’s the founder of Divine Vendetta, says, “Esports was born digitally, and while it was paving its way in 2020 to more on-ground events, it is a step back for sure, none the less the consumption of online gaming and esports events viewership will dramatically increase now, as we noticed in the current PUBG Mobile PMCO event. Currently, esports events are realistically the only source of live entertainment out there, new crowds will jump to take part of the action, and one way or another, brands will take notice even more and realize sooner rather than later than it’s a must to be part of this ecosystem.” Unlike soccer or rugby, the billion-dollar world of esports doesn’t require social gathering. With more live sporting events being suspended, there may be an opportunity for esports to attract a new audience.
Less competition = more market share
During an economic downturn, you’ll find that you will have less competition. In some cases, this means you’ll be able to get deals- like a potential reduction in pay-per-click advertising. If the market continues to decline, many companies will struggle to pay off their debt, which means they could go bankrupt, get bought out, or get bailed out by the government. If you have cash on hand, this could be the best time to buy out other businesses- especially media companies. Because the more traffic you control, the more power you will hold in the future. Look at Neil Patel, co-founder of Neil Patel Digital. When he bought the KISSmetrics website for US$500,000, they had over a million unique visitors a month. The moment he merged it into the NeilPatel.com site, he increased his lead count by 19%, and recuperated his investment in less than a year. In other words, now is your opportunity to capture market share.
While the coronavirus pandemic presents business risks in some areas, it also offers opportunities in others. As a marketer or entrepreneur, the key is to acknowledge the potential threats while exploring the possibilities.