Coronavirus Business Impacts: How Should Ad Agencies Respond?

Coronavirus Business Impacts: How Should Ad Agencies Respond?

We’ve been thinking a lot about the Steven Soderburgh 2012 film, “Contagion,” while watching the coronavirus crisis develop. The director said after making the film that he could never again look at a bowl of M&Ms on someone’s table the same way again. By the way, our appetite for real-life scary stuff is running true to form—Buzzfeed reports “Contagion” is now Warner Bros.’ second most-watched film in their catalogue for 2020, and is a top film across many streaming services. It’s a fascinating film, and a reminder that fear is part of the spread of contagious diseases.

Facing a global pandemic is no picnic. Businesses are starting to realize just how disruptive the coronavirus (COVID-19) is going to be. One of the world’s largest trading partners and manufacturing hubs, China, has virtually closed down, leaving global partners to deal with broken supply chains and unshipped products. Economic concerns are rattling world stock markets, and international travel will likely be heavily altered. How will the growing pandemic affect the ad agency business and our clients? (We feel guilty worrying about the ad biz when the world is facing a massive health crisis…)

Advertising Impacts Are Mounting

Cancellation announcements for conferences and festivals are rapidly piling up, with the Mobile World Congress, Facebook’s F8 event, and Adobe’s Las Vegas summit all gone. Advertising Week Europe is now debating if their event will happen. The Austin, TX-based SXSW festival was cancelled on March 6, after thousands of Austin residents signed a petition asking the event be postponed, and in the wake of cancelled tie-in events around SXSW aand withdrawal of sponsors including Amazon, TikTok and Twitter. This is the first time in the festival's 34-year history that it had to be cancelled; the cost to Austin in lost tourism dollars is estimated at around $350 million+. 

The impact on B2B businesses could be huge, as many B2Bs depend on in-person events to drive conversions and develop new customer relationships. Forty-one percent of marketers told Demand Gen they planned to increase their event marketing budgets for 2020; that’s now moot. Many of those prospects and customers are cancelling travel plans and adopting the same policies for their employees. As trade events cancel or scale back, marketers and agencies must think about lost networking and prospecting opportunities. And that’s just event planning and exhibits.

Other ad venues that may suffer are in-theater marketing, as people stay home from the movies in droves; out-of-home, because people simply aren’t out of their homes; and point-of-purchase, since many people will take advantage of online shopping and home delivery services. Print may be the most challenged, as people reduce non-essential expenditures, and marketers cut traditional media budgets even further. 

As the costs of the virus’ business impacts mount, we know what will follow—cuts to marketing budgets. That means many agencies may face reduced budgets and opportunities, client losses and a greatly altered new business environment.

Agencies should start belt-tightening now to ensure they are well positioned for the near future.

More critically, double down on account management to ensure your best clients are bonded to your services and expertise. Agencies may also want to conduct client reviews and hold strategic, what’s-going-on meetings with any clients you perceive to be already at risk. Agency principals should directly contact high-level client contacts and work to strengthen client connections.

Ad Channels/Tactics That Might Benefit

Internet-based commerce actually could be boosted by a pandemic as people around the globe self-isolate or just cut back on going to bricks and mortar retailers. That may also mean advertisers should re-evaluate marketing efforts to apportion higher budgets to online marketing.

Mobile will become ever more important, but new data privacy requirements could reduce mobile effectiveness for marketers. Reassess budgets based on client goals and objectives, and adjust plans accordingly.

Video conferencing and live-streamed events, already seen as valuable marketing tools, may be a perfect tactic for this moment. Consider how your clients might take advantage of online video and streaming aimed at home-bound captive audiences, or prospects who don’t want to risk face-to-face meetings or travel.

Television and radio may see improved ratings as people increasingly turn to familiar programming for comfort and solace. Brands and marketers may also want to alter the tone of their marketing, as people will be seeking comforting messaging.

Direct mail could be the answer for many businesses. (The virus is unlikely to travel via mail or shipping.) Well-crafted, even personalized direct mail pieces of packages can create the personal connection needed to make or keep relationships, especially when combined with email and phone contact. Agencies should consider this old-school tactic to help clients reach self-isolated prospects and customers.

Brands Should Steer Clear of Profiteering

Few brands are moving to build advertising around the coronavirus. No one wants to be accused of profiteering. Meanwhile, “sanitizer speculation” became a thing this week as people stock-piled hand sanitizer and disinfectants, causing insane high-demand price spikes; online retailers had to crack down on price gougers. Amazon claims it removed 1 million products falsely advertising protection from the coronavirus; and Ebay blocked sellers from listing goods with coronavirus-related keywords. Shortages in disinfectants, surgical masks, gloves and in some markets, even toilet paper are being reported. 

Brands should stand clear of the fray. Unless you can help spread common sense and accurate information, stay out of the pandemic marketing business. 

How Can Agencies Help Clients?

Agencies need to pay particular attention to measurement and accountability in every project, to ensure clients can see results and feel reassured about continued investment. It’s also important to let clients know that continuing marketing through a downturn offers competitive advantages; businesses that keep marketing historically emerge from recessions and downturns in a stronger position than companies that cut marketing.

Review client marketing plans and proactively suggest areas where the client may want to scale back or reapportion marketing spending. By doing so, you present your agency as in your client’s corner, as well as demonstrating that you’re playing the long game and keeping an eye on the client’s plans and objectives.

Many businesses, especially many of the smaller clients our independent agency members serve, may need help developing a plan to cope with the impacts of a pandemic. Your agency could assemble and brand a “toolkit” including a crisis audit, important tasks, plans for work outages, internal and public communications templates, etc. The end result would be a plan the business can execute based on key “trigger” events – e.g., an employee is exposed to someone with the coronavirus; an employee becomes sick with the virus; and percentage of employees are taken ill, etc.

Yes, a pandemic is serious stuff. The people and organizations that take it seriously are most likely to come through the crisis with little harm done. Businesses should not wait until their people are already sick to create a response plan. (That’s what our government did, and look at where we are…)

Work out your agency’s plan first, and use that to “clone” your toolkit for clients.

Pitch this service carefully. You don’t want to be seen as profiting from the crisis. Instead, reach out directly to ask if clients need help with pandemic planning, and let them know you may be able to provide guidance and support.

How Can Agencies Help Themselves? 

All crises present opportunities—remember Baron de Rothschild’s statement about blood running in the streets. Keep an eagle eye peeled for business opportunities, suddenly free-floating new business prospects, and ways to strategically boost your own profile and reputation. 

Stay healthy, but be alert to opportunity. And avoid those bowls of communal M&Ms…

Refer to the CDC’s coronavirus pages for advice and advisories. 

Additional reading on business planning around the coronavirus, or any disruptive situation:

At Strategy+Business:

Seven Key Actions Business Can Take to Mitigate the Effects of COVID-19

At EMarketer, thoughts on event cancellations impacting B2B companies:

How Marketers Can Adapt to Event Cancellations Brought on by Coronavirus

From PR News Online, falling back on basic PR best practices:

Five Ways PR Pros Can Deal with Coronavirus Fallout

PR Online is also maintaining a running Coronavirus Update feed.


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