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Agency — March 17, 2020

Global coronavirus pandemic and the marketing industry: 8 thoughts and tips

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Daniel Ackermann Co-Founder & CEO

The current global pandemic has already started to impact the economy. Unfortunately, the spread, as well as the aftermath of the COVID-19 virus will have great repercussions for us all, without exception. There is a great deal of uncertainty regarding what will happen next and the situation is changing by the hour, but more and more companies are preparing for the worst-case scenarios. Of course, the overall health of the global population is everyone’s greatest concern, but there’s something to be said about the implications of the pandemic and consequent recession in the marketing industry.

Everyone is facing the same troubles and it’s hard to pinpoint the right path to take. However, until everything gets a bit clearer, I tried to gather some important information and advice on how to manage a business during these difficult times. Since Degordian gained most of its experience in digital marketing, most of these remarks are concerned with the field of digital, though not exclusively. 

Corona is the main topic of interest these days. A vast amount of content users consume is related to this subject in particular. That’s exactly why current communication and marketing should be attuned to these new circumstances. Croatian streaming service PickBox is a very good example of this, as is Pornhub with its newest move on the Italian market. Both of these services gave users the option to watch content for free during the crisis, which is a good way of showing they care, while also gaining a great deal of positive PR. They have also gained an acquisition channel, since some of the users who try their service for free probably will end up being paying subscribers.

I would not recommend cutting marketing investments in this situation, except in the case of tourism, transport and events that are postponed during the coronavirus outbreak. As for everyone else, the consequences and impact aren’t clear yet, but good marketing and sales have always been the best antidote against revenue drops and unprofitability. Regarding this topic, you can read this article about defensive and offensive business approaches during recession.

Advertising tends to get cheaper during crises
. For example, Google, Facebook and similar platforms function like auctions, and real-time prices mirror the current state of demand. Advertising has already reduced in scale, which consequently lowered demand and decreased CPC and CPM. We can see prices are dropping in most segments, even over 20% in some cases. When all this settles down, it’s quite possible that the demand stays lower, as well as prices. However, it’s also possible that businesses try to compensate, which in turn will increase demand and prices.

Available info shows that not all industries are impacted negatively, and some even experienced positive effects. This refers to grocery retail (and some other retail segments), pharmaceutics, a part of FMCG and some others. The demand for products in these categories is high, which can be good for pushing that interest toward your product/business.

The crisis just began, but it will probably last for quite some time. Marketing budgets tend to drop in these situations ((e.g. in Croatia, they dropped 40% during the financial crisis of 2008). However, digital prospered during that same period. In difficult times, brands lean towards change and trying out new things (digital), but also want efficiency and measurable results (also digital). That same period of a 40% marketing drop also saw a 2.5x increase in digital budgets. I expect to see that same trend this time. For more info about yearly budget changes, check out HURA’s AdEx research.

The biggest part of the budget is in most cases channelled into advertising, and a smaller amount goes into optimization. However, in moments like these, it’s advisable to focus more on optimization, especially with performance-oriented clients. For example, if a monthly advertising budget is 20.000 euros, with good Conversion Rate Optimization the conversions can grow from 0.1% to 0.2%. In that case, one can get the same result for half the budget (10.000 euros). Besides that, it’s wise to consider focusing on SEO that generates traffic for free.

During isolation, physical contact is obviously out of the question, which is why more buyers visit websites to inform themselves about certain products, and eventually buy them. Some webshops we keep in touch registered a 5x increase in sales, and Amazon hired 10.000 workers in order to cope with a sudden surge in online shopping. Investing in online advertising and digital assets like a website or an online shop is now a more cost-effective move than before.

In Croatia, TV advertising still gets the biggest cut of the budget of an average marketing mix, and it indeed has numerous advantages, but it’s not always best in terms of targeting and efficiency. YouTube and Facebook are two of the biggest video platforms online, they offer superior targeting models, better charging models, as well as more advanced analytics. If there is pressure to downsize the overall budget, it’s always good to consider raising budgets on these platforms, as to compensate for the results.

I’ll continue sharing new info with all of you, and I hope these thoughts and tips end up being of help to you. Write to us if you have any questions or comments!