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The Effects of Quarantine on Marketing

September 2, 2020
September 2, 2020 Guest Blogger

The Effects of Quarantine on Marketing

Online advertising and marketing budgets will increase in the future to accommodate changed consumer behavior.

When governments across the globe began shutting their borders and economies in March 2020 in response to the COVID-19 crisis, little did everyone know what the long-term effects would be on marketing. People and businesses are still in a state of shock, wondering how or whether economies will recover.

As with other global disasters, some businesses have benefitted while others have seen sharp declines in profits. Marketing has been one of the worst-hit industries during this time, leading businesses scrambling to reinvent themselves. So, what is the current situation, and what does the future hold for marketing?

Entertainment and travel vs. eCommerce

For one, the status of certain industries has seen a major decline in profits. Companies like Expedia that focus on travel, and Disney that concentrates on entertainment have seen a sharp decline in profits. In contrast, eCommerce businesses such as Amazon and Netflix profits have climbed as people have been forced to stay indoors.

Along with marketing and advertising for big and small businesses, influencer marketing trends in 2020 have also experienced changes. Big brands are following up with this marketing form as essential goods and services remain a part of market demand.

Retail sales have dropped for other companies due to a lack of traffic in brick and mortar stores. Essential household sales for items such as food and miscellaneous and necessities have remained relatively stable. Non-essential services during the shutdown have been the hardest hit, such as travel and luxury sales.

Because people have lost their jobs, spending has declined considerably, forcing many small businesses to close their doors temporarily or permanently. Due to major changes in the economy, marketing spend has been placed on the back-burner, as businesses battle with recovery processes.

Marketing and advertising on pause mode

Many marketing and advertising campaigns have been placed in pause mode, waiting for signs of a global recovery. Non-essential services such as private schooling for all ages has taken a knock as community gatherings were banned. People continue to be cautious about travel as they’re afraid to be exposed to COVID-19.

Retail products have been slow-moving while prices for fresh produce in supermarkets has increased significantly. Certain businesses have survived the shutdown but have been faced with challenges to get through each day. Others have not been so lucky, such as the hospitality industry.

Businesses have delayed their marketing and advertising for these reasons. Not knowing how long the shutdown will last or how long its negative impacts will be felt, has created caution in the marketing environment. Large advertising projects have been delayed, with budgets being shuffled around to survive this economic disaster.

Supply chain lag

Just as the impact of COVID-19 has taken a while for its full impact to be experienced, recovery will also undergo a lag. If the 5-month period to feel some of the worst effects is anything to go by, recovery will hopefully not take any longer as markets begin to pick up.

As country manufacturing and production processes are picking up once again, the question remains as to how long it will take for products to be made available to shoppers. How long will it take for companies to become profitable once again, prompting the need to transfer money to marketing and advertising budgets?

Another question on everyone’s minds is how much disposable income is available to purchase products following enormous job losses. Country economies also question how production across the globe will affect supply and demand.

Altered consumer purchasing behavior

A finance and economics research writer for an essay writer service says that consumers have changed their shopping habits because of COVID-19. Despite constraints, many spent large amounts of money purchasing non-essential items online during the lockdown. Shoppers also maintain that traditional shopping is not as pleasant as it was prior to the lockdown. Consumers add that they have no intention of curbing their Christmas shopping habits as December approaches.

COVID-19 has changed personal and shopping behaviors. While advertising spend on traditional methods has declined, the opposite is also true. Social media platforms have seen a rise in advertising with surveys claiming that a 10% increase is evident on these platforms.

With more purchases having been made online during the lockdown, it made sense to focus advertising initiatives on these media platforms. Everyone naturally turned to technology for comfort and entertainment to get them through the quarantine period.

Traditional vs. online advertising spend

Companies that focus on traditional advertising such as TV experienced an advertising decline of 43% from March 2020. Manufacturing has, however, improved since April, which is reflected in TVs ad spend climbing to 23% in July. Advertising spend increases are attributed to a similar increase in consumer spending.

Favored categories for ad budgets comprise vehicles, home furniture, consumer goods, retail, and increases in broadcasting and publishing spend. Also, government advertising and charity advertising budgets have grown to 74% in July after experiencing sharp declines in earlier months. Advertising and marketing for airline travel and vacations understandably decreased by 97% from March.

A light at the end of the tunnel

Most companies are beginning to resume production, which will improve their marketing and advertising budgets in the months ahead. Caution remains high, though, as the lag in the effects of the March 2020 shutdown are being more severely felt 5 months later. 

Forecasts suggest that it will take at least 2 years for economic recovery to occur as employment opportunities once again become available. Higher employment will increase disposable income, generating further marketing and advertising expenditure.

Every downturn is inevitably followed by an upswing. Innovation and government support will aid economic recovery across the world, driving marketing and advertising recovery. Online advertising and marketing budgets will increase in the future to accommodate changed consumer behavior. The focus will favor online marketing as opposed to traditional campaigns as people take a while to begin to trust the outdoors again. 

 

Freelance contribution especially written for Find Your Influence by John Peterson.