How corona virus is affecting the digital marketing industries?

The disruption has been created by corona virus thus becoming a cause of uncertainity for the digital industries. Indeed, uncertainty and fear are having a real-world impact. That in turn is affecting the digital ecosystem. How that will play out in the short and longer-term is a question we put to a range of digital marketers. Their responses are diverse but share some themes: the cancellation of conferences, how e-commerce may benefit, the impact on the supply chain and logistics, working remotely and how specific verticals will suffer more than others. The news cycle has been dominated by discussion and speculation about the coronavirus or COVID-19. That’s also true in the tech press, as most of the industry events cancel and companies such as Uber, Apple and Facebook say revenues will likely take a hit because of supply chain issues or declining consumer demand. Thus conducting severe threat against the society and the severe crisis of the people on the earth.

Online publishers have indicated that COVID-19 is starting to impact ad revenues. In particular, the NY Times made a filing in which it said (via Axios) that ad revenue would be down about 10% this quarter. The company attributed that to “uncertainty and anxiety about the virus.” Analysts said they expect to see Facebook’s ad business take a hit in the near-term (it would follow Google’s could as well).

As the coronavirus continues to spread, China's status as the epicenter of major supply chains is causing significant changes to businesses and consumer behavior. This is not only to put a strain on multiple industries within the country, but multinationals operating out of and thus doing business in China are feeling the effects as well.

Global tourism and retail have been hiting particularly hard, as Chinese tourists provide a major source of income for many markets. Between January 23 and February 13, daily departures and arrivals for domestic and international flights in China dwindled from an average of 15,071 to 2,004, according to data from Flightradar24. Additionally, several retailers have temporarily closed locations, and Apple announced that it won’t meet its Q1 revenue guidance due to disruptions happening across its supply chains in China.

Here are just some of the ways local and global businesses have been altered and ever since the coronavirus outbreak, and areas where companies can find opportunities to explore and measure new technologies.

Traditional Retail and Ecommerce Face Shifts and Challenges

Brick-and-mortar retailers and restaurants are dealing with the harsh realities of cities across China being placed under lockdown, as local governments enforce quarantine measures and restrict trips outdoors. Major retailers like Starbucks, Uniqlo, Nike and Apple had temporarily shuttered their stores, while small and medium-size retailers are being hit particularly hard as foot traffic dwindles. (Some brands like Apple and lululemon athletica have begun to reopen their stores, signaling a potentially improved outlook.)

For retail ecommerce, supply and shipping challenges abound, as Alibaba’s CEO Daniel Zhang has warned. According to a February Re-Hub survey, consumers in cities including Beijing, Shanghai and Guangzhou expect the current situation to last at least another 4 months. Additionally, six in 10 said they are likely to spend the same amount or more on consumer products in the next three months compared with the same period last year.

In December, we forecast that retail ecommerce sales in China would total $2.328 trillion in 2020, but this will likely change substantially.

Online Grocery Sales Multiply, Food Delivery Apps Innovate

Housebound consumers in China are turning to online groceries for their daily food supply. According to French retailer Carrefour, vegetable deliveries increased by 600% year over year during the Lunar New Year period. Chinese online retailer JD.com reported that its online grocery sales grew 215% year over year to 15,000 tons during a 10-day period between late January and early dates of February.

Concerns about food delivery due to possible food contamination have spurred recent innovation in contactless pickup and delivery services. Companies like McDonald’s and Starbucks are increasing delivery services that limit human-to-human contact, and orders are packaged to keep them free of contamination.

Time Spent Online and with TV Increasing as Consumers Fight Boredom at Home

Places of entertainment like movie theaters and theme parks have been shut down to prevent the spread of the virus, which has already altered online behavior for China's consumers. According to QuestMobile, daily time spent with mobile internet rose from 6.1 hours in early January to 6.8 hours during Lunar New Year. It rose even further to 7.3 hours after the holidays, when workers were placed in self-quarantine.

Aside from increases in mobile internet usage, traditional media is getting a boost, too. Stats from Nielsen-CCData show that TV viewership grew after Lunar New Year—when there would normally be a dip.

Travel Dragged Down by Outbreak

Overnight, the travel industry in China nearly came to a halt: The government placed major cities across the country on lockdown, and airlines canceled flights in and outside of China. This will potentially create a big ripple effect across the world, as Chinese travelers account for roughly 10% of international tourists and are a huge source of income for local tourism and retail.

Between January 20 and February 23, occupancy and daily aircraft usage nearly halved, according to China’s state-owned Assets Supervision and Administration Commission (SASAC) of the State Council. Lunar New Year holiday-related travel dropped 50% to its lowest point in 20 years. According to the International Air Transport Association (IATA), airlines in Asia-Pacific could stand to lose $27.80 billion in revenues from the outbreak.

Smartphone Sales Will Likely Lag

Due to supply-chain issues and lack of foot traffic to physical retailers during the lockdown, smartphone sales are expected to decline by over 20% in China for Q1 2020, compared with a 5% drop globally, according to Counterpoint Research. Apple recently warned investors that it might not meet its revenue guidance for Q1, citing weak foot traffic to its stores and disruptions to its supply chains across Asia.

Service Robot Usage to Curb Human-to-Human Contact

To minimize human-to-human contact in ecommerce delivery, companies such as JD.com and Meituan are experimenting with end-to-end “contactless” solutions using unmanned vehicles and drones. Some hospitals are also using robots to guide patrons or transport medical supplies within their facilities. This could potentially be an area of opportunity for companies looking to develop technology that could automate tasks in a public setting.

Jonathan Kagan, MARC USA

In my mind, a few things will happen, and it all comes down to the vertical. Travel especially international will likely plummet in spend, as advertisers work to prevent spending on what is likely just trip cancellations. We saw something similar in 2016 with Zika. Any advertiser driving traffic for brick and mortar locations will likely see a decline in effort, as confidence to go outside may even decline. I do however believe we’ll see an uptick in CPG efforts, grocery delivery, food ordering and all similar efforts, as folks’ ability to avoid panic buying will likely begin to fall. If this leads into an economic downturn, then I see automotive/luxury goods taking a hit on their investments (similar to 2007-2008). However, whenever there is economic downturn or widespread fear of health, pharma/healthcare and vices (i.e. alcohol) seem to thrive and grow.

Amy Barone, Splash

Even before the current risk with coronavirus, we’ve noticed event marketers choosing to invest in repeatable, local events rather than just one or two larger annual events. Local events are faster and easier to scale up (and down), encouraging more meaningful personal connection, attracting a broader group of attendees, including those who can’t or won’t travel. In just the past few days, we’re seeing many more companies quickly shift to this approach in the face of many large event cancellations.

Tony Rindsberg, Thankful

The wave of trade show and conference cancellations or delays like Shoptalk are significantly altering our spend allocation. I plan to leverage digital channels more aggressively, but strategically and with a watchful eye on the CV spread. If the current trend continues, I would have to seriously consider shutting down some campaigns until brands are ready to discuss implementing new products again.

Samantha Barnes, bounteous

The short-term impact of the new coronavirus will probably result in a downturn for many industries, but we’ll see a spike in audience reach with the frequency of online touchpoints. Measurement strategies and goals should be adjusted for uncertain times and it’s a chance to build long-term relationships for the next upswing. I also see that shady advertisers, bots and content sites are sprouting up to take advantage of peoples’ fears, so the right message at the right time will be even more meaningful now. As for the long-term, I have no doubt that marketers and analysts will innovate with considerations that customer journeys can be filled with stressors and experience to acknowledge and be mindful of.

Eric Enge, Perficient Digital

The primary impact will be as a result of the fear that it causes. We have already seen that with an over 1,000 point drop in the Dow, companies canceling major conferences, and companies reporting it as an earnings risk, and these will extend to digital marketing companies (though it may benefit entities such as Zoom, LogMeIn, Skype). As for the long term, it’s hard to say, as that depends on just how widely it spreads.

Dana Tan, Under Armour

We were scheduled to meet with a vendor who was traveling over from the UK to meet with us in person. There was some question whether or not we could proceed with meeting as there was a corporate policy stating we shouldn’t meet with anyone coming over from outside the U.S. unless they had been in the country for at least 14 days. So, there is definitely an impact on face to face meetings. I am also wondering what the conference scene will look like for the rest of the year. I imagine attendance may be down.

And what does coronavirus mean for e-comm new product line releases and supply chain? I don’t think we know the answer to that one yet. While there is certainly diversity in the industry, the coronavirus is no longer isolated to a few countries.

I am very happy that as a digital marketer I can do my job from home. Grocery store clerks, food service workers and many other people don’t have this luxury. They also often don’t have any paid time off, meaning they have to go to work to get paid, which in turn means they often go to work sick because otherwise, they won’t be able to pay rent or provide for their kids. Maybe if any good can come out of this epidemic it might be that we re-examine some of these issues.

Natalie Barreda, T-Mobile

In the short term, I think the uncertainty about how to move forward is going to cause marketers to spend a lot of time doing contingency planning. On a similar note, consumer behavior is different right now than it would normally be; we’re already hearing about the impacts to the travel and hospitality industry. I think these industries are going to have to find ways to encourage consumers to think past this current situation, into a hopefully COVID-19 free world.

In terms of long-term impact, we’re already starting to see how this is affecting the economy from a stock market perspective. And if this continues, it’s going to trickle down to employees and will impact how people purchase and engage with brands. Marketers will need to have very honest conversations about the likelihood of hitting goals and the value of their investments. It might be a time to dial things back and do some spring cleaning. Additionally, brands should also start thinking about how they can leverage their marketing to address issues caused by COVID-19, such as store closures. Having a great customer service and e-commerce experience is imperative during times like this.