The COVID-19 outbreak, declared as a pandemic by the World Health Organization (WHO) last week, has heightened worries over the Indian economy. The crash of stock markets across the globe and travel restrictions have caught the Media, Marketing and Advertising industry in a turmoil.
The challenged economic and sectoral landscape, along with the imposed change in the way companies have to work their way out and deliver for their existing businesses, will surely be a turning point for the industry.
HOW THE TURF IS LIKELY TO SHIFT
For countries around the world, many aspects of life and business are likely to be altered, at least for the short term. Some of these evidently are less travel, cancellation of public meetings and entertainment, reduced retail sales. Media consumption at home will rise, so will e-commerce sales.
Reliance on China for supply chains will have to be compromised. “Given the absence of near-term sales to be realized, advertiser willingness to spend may fall despite higher audience levels for some media (which, as we have noted previously are not generally correlated with ad spending within media). However, if the volume of available budgets for spending on advertising weakens in any given country, it is difficult to anticipate which specific media will be most impacted.
It does seem safe to say that the aforementioned supply chain issues with China – and the timing with which Chinese manufacturing returns back to normal – will disproportionately impact global media owners whose ad revenues depend on Chinese manufacturers,” says Brian Wieser, Global President, Business Intelligence, GroupM in a post on the company website.
As the general public is forced to stay at home thanks to the COVID-19 threat, media consumption, especially TV and mobile gaming, is likely to see a rise. The Outdoor medium, on the other hand, is likely to suffer as people avoid going out.
“There is a silver lining in the cloud for Print and Radio companies as the Central Government is back at advertising in these mediums through awareness and educative campaigns related to the virus.
But if the situation escalates, this benefit could be neutralized by the fact that there could be further cut-down on national advertising,” says Rohit Dokania, Senior Vice President, Research, IDFC Securities Limited.
“Retail businesses which have significant online delivery will have lesser impact. As we have highlighted, all retailers, especially multiplexes amusement parks, are at risk in near-term, and eventually all retailers.
We continue to prefer consumer staples names like Hindustan Unilever, Asian Paints, Godrej Consumer Products, Dabur which will either (1) get benefit because of higher demand due to Corona (sanitisers, soaps, Chyawanprash, cough syrup) or (2) higher margins due to fall in crude-related direct/indirect raw materials,” says an Edelweiss update on the retail sector.
PERSONAL HYGIENE BRANDS PREVAIL
Personal hygiene brands have actively been promoting precautionary tips through awareness campaigns across media. Hindustan Unilever’s Lifebuoy released a public service print ad urging people to wash hands frequently. It was lauded for its messaging as it also mentioned its key competitors such as Lux, Dettol, Santoor and Godrej No 1 in the campaign.
Other hygiene brands such as Reckitt Benckiser (India) Ltd-owned Dettol, Godrej Protekt and Dabur have also been running awareness campaigns across media. Even non-hygiene brands such as Amul, Netflix, Zomato, among others, have been releasing topical creatives on social media.
Companies are sharing how they safeguard their customers and employees against the virus. Some companies are going out of the way to ensure that they reach out to customers and help them in the time of crisis.
For example, almost all airlines have offered to waive cancellation and rescheduling charges. Food delivery companies are offering contactless food delivery as a precautionary measure to address COVID-19.
SHIFT IN WORK PATTERN
With government directives to close down malls, multiplexes, gyms, swimming pools, etc., and to avoid travel as much as possible, most companies are shifting to the work-from-home model, and catching up technically to make this shift by ensuring a long chain of operational measures.
Clearly, importance of video will rise with meetings, sales calls and interviews to be done online with no handshakes and on-site/off-site teamwork. Many companies have worked on action plans for their teams to be location-independent, to enable a smooth transition to remote work and ensure the safety of employees.
The focus is on encouraging teams to set clear goals, build trust, and ensure transparency in communication. Human Resource departments of companies will have to come up with out-of-the-box ideas to keep employees connected.
Some upskilling is in order, especially beefing up IT infrastructure and training people to use it as they operate from different locations. Over and above all these is the absolute necessity for companies and people to be socially responsible.
ADOPTING A HYBRID EVENT MODEL
Events across the world have been impacted the most as a contagious health catastrophe like this leads to fear of going to large gatherings and affects travel and tourism in a big way (see box on events cancelled and postponed).
For example, the Advertising Club and the Advertising Agencies Association of India, the two leading industry bodies that curate and host the prestigious advertising festival Goafest, together with the Abby Awards, have unanimously decided to postpone the 2020 edition of the festival until further notice.
However, the Abby Awards – for which entries have already been received - will still be conducted jointly by them.
Now, it’s critical to focus on how event organisers can leverage technology to come out of this sea of cancellations.
Challenging times force people to innovate, and the events industry is reportedly facing adversity head-on through the hybrid event model and going completely virtual. For events with a high percentage of international audiences from around the world, using customised live-streaming and broadcasting solutions can take a physical event to a virtual venue, hosted on the cloud, according to experts.
For events with a mix of local and international speakers and audiences, enabling a hybrid model during conferences and expos, organisers can open a new channel to drive participation - for example, during a live conference, besides delegates onsite, allowing virtual participation, along with online-offline networking features.
PIVOT TO LOOK AT NEW OPPORTUNITIES
At this time, marketers need to continuously assess the market for opportunities and be mindful of shifts in media and consumption behaviour.
It may require the company to shift gears and assess their long term horizons and relevance of mediums for marketing and creative messaging. “We emphasize that marketers should continually assess the relevance of a given medium for a given marketing strategy and creative message. They can also continually look for ways to add value to the consumers they service, the media owners they buy from and the societies in which they operate.
A crisis such as this one will have many unfortunate consequences, but the changes in behaviours that will follow from it could create new opportunities for marketers to engage with all relevant stakeholders.
If the choices they make resonate while the world works through the current environment, they and the world will hopefully come through it better positioned to thrive in the future,” says Brian Wieser.
HOW SECTORS ARE IMPACTED
Consumer durables and mobile handsets: According to a CRISIL report, India imports 45% of completely built units of consumer durables from China. In addition, India also imports bulk of consumer durables components from it.
“Players have already stocked inventory, so impact will be felt only towards the end of Q4 FY20. Product prices could rise next month,” says the report. In fact, all large electronic goods manufacturers have reportedly decided to increase prices by 3-5% across models to tide over the crisis.
A multinational consumer durables brand called off its ad campaign for the upcoming summer season as a majority of its parts are supplied from China. “Essentially, there are businesses that rely heavily on imports from China.
And then there are businesses that depend on inflow of people like tourism, restaurants, malls, etc. These have been impacted due to the pandemic, at least till now. One major impact that we’ve felt is a multinational durables giant had to call off their campaign indefinitely as their components come from China.
The campaign was planned for the summer season ahead. And that’s probably not going to be the only instance. Many agencies will have clients that depend on imports from China,” says Satbir Singh, Founder & CCO, Thinkstr.
“We are closely monitoring the situation. Regarding supply chain, as we manufacture in India, we have sufficient stock; also the peak season will set in from April. We are confident that the situation will improve and there won’t be any major impact on business,” says Vijay Babu, VP-Home Appliances, LG Electronics India.
About 67% of electronic components - including mobile handsets – in India are imported from China, according to CRISIL. Naturally, this is expected to have a significant impact on the industry.
In the aftermath of the COVID-19 outbreak, mobile handset makers Xiaomi and Realme called off their new product launches, and took them online instead.
“The extended shutdown in China is likely to have an impact on our supply chain and there is a risk of impact on overall quantum of component supplies. While we are working to explore alternative supply channels for components and raw materials, the immediate impact is that the short supply might cause some negative pressure on prices of these components.
This has led to the increase in the price of the product temporarily. We apologise for the inconvenience,” says a Xiaomi spokesperson. The company has hiked the price of Redmi Note 8 (4GB + 64GB) variant temporarily because of the impact.
Auto companies: As per the CRISIL report, 18% of automobile component imports and ~30% of tyre imports come
