What is Coronavirus Disease 2019 or COVID-19?
In brief, COVID-19 is a respiratory disease which is caused by novel corona family virus and can spread from person to person. The first case of this disease was emerged in December 2019 in the Wuhan city of China. With rising death toll worldwide, it has been declared as a pandemic. Learn more here[i].
Economic Impacts of COVID-19
The confirmed cases of the novel coronavirus have raised to 681,706[ii] as of March 29 and this number is increasing continuously. In February 2020 over two-third of the total confirmed cases were in mainland china.
According to newly researched data, the majority of new cases have been reported from outside China since February 25. In which the United States of America is at the highest position where more than one lakh confirmed cases have been recorded till now. And Italy is on second position where approx. 95000 confirmed cases have been recorded till 29th Of March 2020. Currently situation of new confirmed cases is under control in China as it has not reported any new case for a long time. The number of cases is at a standstill with approx. 82000 confirmed cases.
The COVID-19 is emerging as a global crisis which is now hitting the Global Economy, and it is due to the fact that almost every sector has affected. According to various surveys, most of the countries are observing lockdown with no clue since March 2020 due to which businesses and retail markets have slowed-down.
COVID-19 has also impacted the Chinese economy. The Wuhan city of China was placed under state-imposed lockdown on January 23 wherein all flights, trains and buses were cancelled and highway entrances were blocked. Soon similar restrictions imposed in other cities of Hubei province.
According to surveys report of China’s manufacturing and services sector plunged to record lows in February. Automobile sales sank a record 80%, and China’s exports fell 17.2 % in January and February. Read more here on Global Economic impacts of COVID-19[iii].
This crisis is visible in every sector, Hollywood to Bollywood and businessman to shopkeepers are suffering from this pandemic. People are in panic and locked in their homes. Exports and imports have been stopped in countries. Most of the businesses have been shut down or would be shut down in coming days if situation doesn’t come under control.
Let’s see how COVID-19 crisis has affected the digital marketing agencies?
We live in a digitally driven world. Digital marketing is one of the most important factors of business success today. According to digital marketing industry report, digital marketing agencies had grown an average of 15% Y/Y in 2018 and digital spending should continue to grow 10-15% Y/Y through 2021.
Out of the box, brands and entrepreneur are spending a large percentage of their budget in digital marketing strategies for generating revenues. Digital marketing spend is also expected to grow at an 11% CAGR (Compound Annual Growth Rate) from 2016-2021. Paid search and email marketing are expected to grow at a slow rate of 8% CAGRs while online video and display advertising expected to grow quickly at 18% and 13% CAGRs respectively. The percentage of CMO’s budgets spent on digital marketing is expected to grow from the low 40% to the high 40% by the end of 2021. This rising tide provides a strong tailwind to agencies.
In the current scenario, the world is fighting with COVID-19 for protecting people from this pandemic. Countries have taken big steps such as lockdown because any medicine/vaccine has not been developed yet to beat this virus, so social distance and self-precautions are the only ways, till the time vaccine is developed.
The lockdown has impacted the business because shops, malls and market places are shut down due to which most of the brands have also stopped their digital marketing activities and relationship with digital agencies, giving a big blow to the digital marketing agencies employees. Some has been lost their jobs because agencies not have work.
Yesterday I was talking to one of my friends who also works in a digital marketing company, he told me that some employee of his company have been sacked from their job because company’s business deal has been cancelled with most of the clients, and this has been done in the wake of cost cutting.
Some agencies have got shut down for this lockdown period, because they were not able to arrange the basic equipments for employees to work from home due to sudden lockdown in the countries.
Some other Impacts of COVID-19 on Digital Marketing and Business
1. Budget reduction in Market
Transaction of Money has been stopped in the market due to which corporates are staggering financially. Entrepreneurs are facing problems to supply goods in other suburbs due to sealing of border in this Lockdown, so they will reduce their budget in other business growth activities like Digital Marketing and advertising etc. Government is also spending more money to fight against COVID-19 and that is one of the reasons for reduction of budget in the market.
2. New projects will be kept on hold
The fresh projects will be directly affected by this Covid-19 because to run projects two things are important Manpower and Money. Both these resources are not available properly so the new projects cannot be started and have to be kept on hold until this crisis ends.
3. Slow Speed of new Startups
New startups needs investment to grow fast, but when markets will not have money then new startups growth will go slow and new startups will become less.
4. Demoralized new entrepreneurs
Due to closing of startup new entrepreneurs will get demoralized. This demoralizing effect will lead to drop in innovation and new developments in the market. Good startups will lose hope in future and entrepreneurs will start thinking of not continuing with the field anymore. Therefore it would lead to a big loss in technological advancement.
5. Unemployment will generate and develop low morale of workforce
One of the biggest challenges in front of government is unemployment. Unemployment rate is going up due to financial crisis faced by corporates because of this pandemic disease. COVID-19 spread is increasing day by day and corporates are forced to reduce manpower to overcome the financial situation. Loss of jobs leading to demoralize employees who are still part of the corporates. The employees start thinking what would happen to their jobs they will feel insecure and stressed. Government needs to take steps keeping all these in mind to tackle and come out with flying colors against the deadly COVID-19 Corona virus.
And finally, while resting my fingers on the keyboard, all I would request everyone out there to maintain social distancing, follow your own precautions and do not get panic. Let’s beat this corona crisis together!