Effects of the Coronavirus on Marketing May Be Incalculable

As the pandemic spreads, so do the economic implications. Here’s what’s happening

By Matthew Schwartz

Times Square in New York City sits mostly empty in late March during the city’s efforts to keep people home to avoid spreading the novel coronavirus. Such orders have helped slow the spread, giving medical facilities time to prepare, but it’s come at a cost to the global economy. Spencer Platt, Staff/Getty Images

"The key is to move quickly," says Tim Calkins, clinical professor of marketing at the Kellogg School of Management at Northwestern University, when discussing what marketers need to do in response to the novel coronavirus. "The worst thing you can do is sit back and watch events. Marketers need to be proactive regarding the company's response and get in front of senior management."

Indeed, the next several months will be a stress test for marketers. They need to help communicate to customers how the virus is affecting their operations, of course, but also must quickly adapt to an environment where social distancing is encouraged, face-to-face meetings have moved online, and words and phrases used for marketing campaigns have to be selected a lot more carefully than they were just a few weeks ago.

"CMOs have to step forward and play a leadership role in the company because every brand has to figure out what to say and how to respond to a changed world — which is the sweet spot for CMOs," he says.

Marketers will also have to reassess their ad creative, which may have been perfectly fine pre-coronavirus but no longer. "The tonality may not hit the right note," Calkins says.

He points to the Cheetos ad that premiered during the 2020 Super Bowl as an example. The ad features the M. C. Hammer tune, "U Can't Touch This." "All of a sudden that ad changes significantly," Calkins says. "It varies a lot by company and industry — the travel and hospitality space is severely impacted — but for some companies, it's going to be important to make changes."

Soon after the outbreak the Hershey Co. pulled two spots that featured people handing out Hershey bars to strangers — along with hugs and handshakes — and replaced them with product-driven ads featuring only chocolate bars, text, and voice overs.

Similarly, Ford yanked all national ads plugging its vehicles and replaced them with a new campaign explaining how the automotive brand is responding to the crisis, including giving Ford Credit customers some payment relief.

Brands whose products can help combat the virus will probably have to redouble their efforts and face heightened scrutiny. "We are providing educational information on our website and responding to people on social media regarding prevention tips," says Stacey Grier, SVP and CMO at the Clorox Co., which has several of its cleaning products on the U.S. Environmental Protection Agency's list of disinfectants that can kill the virus. "We're focused on ensuring our employees and consumers are aware of guidelines on prevention. What we don't do is market to fear."

Key takeaway: CMOs and marketers must get in front of the crisis and keep pace with an extremely fluid situation. In addition to assuaging their customers' concerns, marketers are quickly reassessing their ad campaigns to ensure the message reflects the current climate.


An Economy in Flux

The virus has sent shockwaves throughout the marketing field. Business travel has been curtailed, if not banned altogether. The big broadcast networks, including CBS, Fox, and NBC, canceled their presentations for the annual upfront ad-sales market. The sports world and all of its accompanying marketing vehicles have shut down.

The rapid spread of the virus has taken a major toll on the economy, with global markets hammered and supply chains stretched. After stocks plunged for several days the Dow Jones Industrial Average fell into a bear market in early March, with the U.S. seemingly headed toward a recession.

"It's gut-check time for a lot of brands and agencies," says Ted Birkhahn, co-founder and president of Hot Paper Lantern, a marketing and PR agency specializing in B2B marketing, which has worked with such companies as AIG, EY, and Facebook.

He says the firm's clients are taking action to protect the health of their employees and mitigate a significant disruption in their business, including allowing employees to work from home, social distancing training for people working in an office, and providing mental health resources.

On March 25, the U.S. Senate unanimously approved a historic $2 trillion stimulus plan to bolster the economy and stem the crisis, including relief for small business loans, expanding unemployment benefits, and direct payments to households.

Key takeaway: With the U.S. economy paralyzed by the virus, both brands and agencies will have to do more with less in the months ahead and adapt to a business environment in which marketers travel less and spend much more time working from home.


Reevaluating Marketing Spending

If they haven't happened already, budget cuts are likely not far off for many marketing departments due to the economic turmoil sparked by the virus. Calkins says CMOs will have to take a particularly close look at their out-of-home advertising and events spending, what with business travel coming to an abrupt halt and people spending more and more time at home.

Marketing events have ceased. Advertising Week Europe, South by Southwest, MWC Barcelona, and countless other conferences have been canceled or postponed, with billions of dollars of generated revenue in jeopardy. More cancelations are sure to follow, as the Centers for Disease Control and Prevention recommended that no mass gatherings with 10 people or more be held in the U.S. through mid-May.

"The coronavirus epidemic has led domestic and global marketers to overhaul their messaging to consumers while accelerating their transformation to digital and virtual platforms," says ANA CEO Bob Liodice. "As such, we expect that virtual events will become an increasingly important ingredient in marketers' media strategies. At the ANA, we recognize these changes — and have accelerated our own virtual efforts to give our members easy access to our resources, experiences, and expertise on any device, from anywhere, at any time."

Virtual events have been hovering on the margins for years, of course. But now they will shift to center stage. Stacy Nawrocki, head of product marketing at IBM Watson Media, which provides a technology suite designed around producing video and virtual events, says inquiries from clients and potential clients have increased tenfold since the outbreak.

"It's been crazy," says Nawrocki, referring to the surge in calls she's getting from both event organizers and event sponsors. "We're working with folks and figuring out what they need to do to make sure their virtual experience is just as exciting as an in-person event, and they get the same quality leads."

Nawrocki adds, "You can't 100 percent replicate in-person events online but there are certain ways you can control the experience if you have a studio environment, with cameras and lights." In less than two weeks, IBM repurposed its Fast Start sales enablement conference, which was supposed to take place in Singapore, into a streaming event.

Nawrocki says that to lend more sophistication to their virtual events, some companies are starting to deploy a broadcast-news model, featuring roving "correspondents" who provide commentary and analysis of the event's programming and keynote speeches.

As virtual events expand in the marketing field, enabling attendees to network among themselves may be the next frontier. "There are all sorts of best practices for keynote speakers and how to engage with audiences and get questions," Nawrocki says. "But there's a lot less technology to allow viewers participating to engage with each other. It's how to combine a cocktail hour with a virtual connection point. There's a lot of talk about how to make that happen."

Alan Miller, owner of marketing agency Collide, says that once the virus diminishes there will be ample business lessons resulting from the crisis. "We'll need to ask whether sitting in meetings all day is the wisest use of people's time and whether people are more productive working at home," he says. "Shaking hands may not be the best thing we can do, and are there different ways of greeting people. And now we'll know that when someone has a bad case of the flu, from a company perspective, that person needs to stay home."

Key takeaway: As companies reduce their travel budgets, virtual events will move to the core of brand marketing. Look for both event organizers and sponsors to enhance the experience of attending virtual events and develop new ways for attendees to interact with another.



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