Wait and See. A Position Most Marketers May Find Hard to Embrace

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Anyone accustomed to managing major events, whether warring armies or mega entertainment events, will confess that despite the best formed contingencies, more often than not the first casualty of a plan is the plan itself. One such mega event is rumored to be teetering on cancellation due to a worldwide outbreak of the Coronavirus. The 2020 Tokyo Summer Olympics may just become the prominent victim of the virus that originated in China and is now spreading across the globe, interfering with normal product distribution chains and posing significant disruption of hospitality and transportation providers. While public health and safety concerns trump any consideration of market activities, the potential impact of those disruptions poses serious concerns for the public economy. The outbreak is motivating marketers and markets to devise contingencies, should the virus expand its impact on societies around the globe.

“As travel is curtailed and supply chains are impacted, [and] if you can’t get your products to market, what do you do? You stop marketing,” says Bruce Biegel​​, Winterberry Group’s senior managing partner. “Short-term marketing dollars can be wasted, so you watch people start to pull back a little bit.” The failure of one popular sporting event would have relatively little impact on well-constructed marketing strategies, but the Summer and Winter Olympics, which only come around every four years, are hugely popular and generate considerable attention from fans and sponsors alike.

The International Olympic Committee (IOC) has considerable responsibility and nearly sole rights to making the decision to cancel or postpone the Games, but the decision will have economic repercussions not only for Tokyo but for sponsors and marketers across the globe.  Perhaps the IOC’s current position of tamping down cancellation speculation is reflective of that reality. Any decision to move the games back would impact international broadcasters, who would have considerable influence over any final decision. The IOC is dependent upon broadcast rights for 73% of its $5.7 billion income in a four-year Olympic cycle. In the modern era of the Olympics, the Games have been canceled only three times, all during wartime.

As with all situations, there are losers and winners. It is difficult to shower praise and attention on those who benefit from something that will negatively impact so many, but online retailers may be one of those channels of distribution to see their fortunes improve, even if it is short lived.  “We could see an acceleration of a shift out of store and into e-commerce,” says Biege. “That means those people who are in the e-commerce space for marketing — and think of channels like affiliate [marketing] — they might not see the same level of an impact unless it got very severe. If you’re a smart marketer or a supplier right now, you will start thinking about: ‘What’s our contingency plan?’. You don’t change what you’re doing, but you start to make sure that you’re doing the right scenario modelling.” When the outbreak first arose in China, it initiated a sustained increase of e-commerce activity as shoppers stayed home and shifted purchases to online channels.

So, what market segments will be the biggest benefactors of shifting consumer habits? “We predict it will be highly dependent on the type of product categories the company manufactures, such as toys, baby-care items, personal care, household cleaning, which are often disproportionately manufactured in China,” said Jonathan Treiber, CEO of eCommerce-focused ad tech vendor RevTrax. “This compares to the huge swathe of food-based consumer goods manufacturers, which typically manufacture their products within a broader set of geographies.” Such fortunes though are not cast forever. As the virus multiplies its territory and the economic impact increases, the fate of individual market segments will likely change with time. The ability to be agile in face of these changes will determine the ultimate impact on all players.

The IOC may have several months before making a final decision on this summer’s Games. The coming of warmer temperatures may just be the “Hail Mary” play that saves the committee from having to take evasive action on cancellation or postponement. According to their contracts with the Games host and sponsors, the IOC has 60 days in advance of the opening ceremonies to give their notification of their intentions.

A recent report by WARC, which focused on marketing reallocation, predicted that global advertising would increase by 7.1 percent to $660 billion this year. “We are yet to amend our forecasts in light of the COVID-19 situation, as we would expect — if the crisis is contained — displaced spend to be reallocated later in the year,” said James McDonald, WARC Data’s managing editor. “Advertising’s relationship with GDP is strong, but a slowdown in economic output as a result of the virus will not necessarily translate into reduced advertising investment.”

The current fallback position of marketing professionals may just be one most of them find difficult to exercise: Wait and see. At least for now.

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