We never thought we would have had to write an article on our blog about an epidemic, but we are pushed to do so because the psychosis that has affected the continental population in recent days has obviously also had an effect on online browsing and consumption habits.
Let’s understand the impact which the Coronavirus epidemic in Europe is causing companies’ digital marketing strategies. and let’s try to understand what mechanism was triggered in the second half of February.
Many of our customers are asking us what is happening and why “there is a drastic drop in transactions from all channels” but unfortunately the explanation is not easy and not even to be found on Google Analytics or in the various CRM. It is a fact that, in the last few days, many (not basic) services and goods have been registered with a drop in the general interest, as a consequence of sales.
Let’s solve some concepts coming straight from consumer psychology, that always represents a good excuse to review the Maslow Pyramid:
Given the current situation, the data available and those that are pushed obsessively by the media, the current situation can be seen in this way:
- Every day new cases occur;
- The red zone could be unfortunately extended/activated in other places as well;
- The epidemic is much more psychotic in level and numbers than real but the exact opposite is perceived by the population (of course, it cannot be ruled out that it is a disease and, therefore, all the rules and warnings from the authorities must be given due importance).
Does the Coronavirus affect Digital Marketing?
As we’re witnessing in Italy, where the situation has become critical, the real emergency situation has obviously changed people’s habits. The normal enjoyment of social and economic life has contracted to such an extent that it can be said that the population is momentarily focused on what are considered “primary needs”.
Italians are therefore in a real emergency situation, the normal enjoyment of social and economic life has contracted to such an extent that it can be said that the population is momentarily focused on what are considered “primary needs”:
- Physiological (for example, food)
- Safety (e.g. the masks and hygiene products, Amuchina in the case of the Italian market)
Considering the panic happening inside and outside Italian supermarkets – which media, to be fair, pushed in a rather alarmist way – it’s easy to suppose that a normal “monthly shopping cart” has been messed up. And that let us remember how in recent years monthly food shopping has weighed just under 20% of total consumption (Source: Istat).
Although we are not aware of the values of the average expenditure during the first days of the epidemic, we can realize that the monthly figure for the month of February will be higher and will inevitably hit the other sectors.
In support of this forecast, comes from the 3 major food delivery services (and not) that have publicly admitted that they are struggling to meet the demands and in some cases are suspending the service on Milan; we are talking about Esselunga, Pam and Amazon Prime.
As Netcomm president Roberto Liscia points out about the growth in demand for eCommerce in conjunction with the diffusion of the COVID-19:
“In an emergency situation like the one Italy is facing in the last few hours, particularly in the Northeast area due to the spread of the coronavirus, it is clear that the demand for individual consumption, in every sector, is increasing significantly. People, in fact, tend to avoid closed and crowded places and tend to apply the so-called ‘social distancing’, avoiding going to department stores, supermarkets, public transport, theatres, museums, cinemas. This self-isolation, voluntary or forced, undoubtedly leads people, especially in the most sensitive areas, to look for the digital answer to the needs of supply and entertainment, through online purchases of primary goods (but not only) and the use, for example, of video on demand. Many operators in the e-commerce chain are experiencing a disproportionate growth in demand, even from less frequent consumers, usually reluctant to buy and pay online. The entire logistics and delivery system, in collaboration with institutions in the areas most affected by the virus, will have to deal with this emergency and guarantee a punctual and efficient service to all people”.
Basically what we are dealing with is an indirect “competitor” that has come into play in a disruptive way, contracting first of all the attention of users that have been diverted to something else, just look at the surge had on Youtube videos related to the Coronavirus or web searches for protective masks. In essence, therefore, the attention, then the time, dedicated by users have shifted to the virus and its consequences more than secondary needs, self-esteem, realization, etc.. In short, people spend their free time looking for information and basic necessities rather than language courses, cosmetics and clothing.
What could happen?
Finding data is not easy, it all happened a few days ago and is still in full swing, probably has not yet reached the media “peak” as politics is beginning to come into play with a heavy foot, so we do not exclude a polemical revival from all sides.
Trying to be cautious, referring exclusively to consumer trends and Digital (as we absolutely don’t want to get into political or medical issues) here is what could happen in the short, medium and long term:
Short period – As long as there is media pressure
- Activities that reflect the first two steps of the Maslow pyramid will have a chance of expansion. Food, Disinfectants, Masks, etc..
- In order to make up for the lack of social contact (bars and other places of aggregation have seen their revenue decrease) the on-demand market will have growth opportunities
- For all sales of leisure (no luxury) and non-primary goods, there will be a market restriction.
- E-commerce: Prepare for possible delays in delivery and therefore provide extra effort on customer service.
Medium Period – When media pressure will decrease
- Households’ expenditure on basic necessities could lengthen the average time needed to replenish primary goods, so that in the coming month households could have an extra budget to devote to secondary needs and to resume normal spending habits.
- Due to the drop in Chinese production, we are already experiencing some supply problems in the short term, in the short term, with the resumption of consumption there could be further problems arising from the demand for clothing, household goods, various products, etc..
Long Term – Back to normal
- Many of the users who in the short term have dedicated part of their budget to online spending services, entertainment services, etc., have been able to spend some of their budgets in the short term. They may continue to use them by reducing their spending budget for other things.
- Countries could go into a negative percentage of GDP. There is talk of -0.2% for Italy, although the figures are obviously not confirmed and are only suppositions. This could, however, affect consumption again and trigger another negative spiral.
So what to do with our marketing strategies?
Although in some cases the temptation to exploit the fear for the Coronavirus in campaigns and promotions is strong, we will never recommend it to our customers because of our professional ethics, we don’t want to contribute even for a moment to the bloodbath that is taking place against our country.
- Acceptance of the situation: it seems a trivial and unproductive suggestion, but what we are facing is a completely unusual and unprecedented situation. Complaining about the fact that we are underperforming, compared to the previous year or compared to turnover forecasts, makes no logical sense and leads to interventions dictated by generalized panic. The most proactive thing that can be done now is to accept this period of decline and think about how to recover in the coming months, not in the next few hours.
For a few days, we suggest a reduction in advertising budgets with a view to saving money and monitoring the situation. The saved budget will then be used as soon as the first media outcry is over. But careful: slowing down does not mean shutting down campaigns or suspending activities, which would cause a loss of historical evaluation of the platforms and then compromise the bidding algorithms of the same.
- Be active as ever on Social Media with reassuring and positive messages, a channel that could fill the sense of isolation. We take advantage of the period of widespread negativity to be positive by studying well how to communicate with our target.
- Work on a direct relationship with customers, we use CRM to create promotions for loyal customers and generally use the email marketing channel. If you have a Broadcast on WhatsApp, it’s time to focus your attention there.
- Work on the price leverage, the budget for non-primary expenditures has shrunk a lot so the price leverage will be much more important in the short & medium term.
- For E-commerce businesses, work on Lead Generation and enrichment of their database rather than the spasmodic search to keep ROAS as if nothing was happening. Where you compress revenue you use the period to enrich your database. Be careful, you need ideas and not simply sending users to the newsletter subscription page.
- Work on Brand Awareness to be remembered when users think again about secondary goods purchases and in the meantime create new audiences.
What to avoid:
- Exploiting the fear of the Coronavirus as a topic for marketing campaigns, I don’t think there is any need to explain this point.
- Continuing to think as if nothing had happened where all sectors have suffered as never before, positively and negatively, this attitude leads to negativity, emergency strategic adjustments, haste and approximation in strategic decisions. There may be negative consequences in the medium term.
- Total suspension of campaigns and activities, we suggest slowing down where, to the exclusion of other variables, you notice a decrease not resulting from Digital activity. Not to stop completely or even reverse, let’s save budget for the next weeks/months and spend it at the moment in line with the contraction in revenue.
- Enter a pessimistic loop by lending your side to justifications from internal and external collaborators.
A final consideration
Still today, unfortunately, when we hear talking about Digital Marketing we sometimes acknowledge a discussion about a faraway world, where time and space do not exist. While instead, as the complete opposite, we talk to people who live moments, have feelings, have both relationships and feelings, and which are the same people reached by newspapers, television and offline advertising.
We invest time to speak to people’s hearts and brains, we provide dreams and solutions, we gnaw this time from the pathology, this really serious for the economy, the search for tools for a magical and immediate solution.