S T U D I O 1 2 : Special Edition: Coronavirus Impacts the Industry

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First Things First

March 4, 2020

By Jameson Fleming

Coronavirus Updates: TikTok, Intel and Mashable abandon SXSW plans; more major conferences and summits are canceled

With the coronavirus that causes COVID-19 finding a foothold in the United States, Europe, Asia and the Middle East, Adweek is dedicating the majority of today's First Things First to how the coronavirus is affecting brands and advertisers.

The coronavirus has infected more than 90,000 people worldwide with over 100 diagnosed cases in the United States, leading to more than 3,000 deaths globally and at least nine deaths in U.S. As a result, companies are rapidly responding to keep their employees safe and try to delay the spread of the virus. Businesses began putting limits on travel late last week, but those travel restrictions accelerated Monday and Tuesday as agency holding companies and myriad brands cut non-essential business travel, especially to areas where the virus has circulated.

On Tuesday, Intel, Mashable and TikTok joined Facebook and Twitter in pulling out of South by Southwest, which is facing growing calls to cancel the event. Over 40,000 people have signed a petition to cancel the event to protect the people of Austin, Texas from travelers who could potentially spread the illness.

Elsewhere, Salesforce suspended non-essential travel overseas for its more than 50,000 employees, while Google canceled its I/O developer conference. Fox News, which was planning its first-ever Upfront event later this month, decided to cancel its event. As of now, the broadcast TV upfront presentations are still planned for the week of May 11.

Travel Uncertainty Leaves Agencies in Wait-and-See Mode on Booking for Cannes Lions

Normally, ad agencies, ad-tech vendors and brands would be spending March deciding whether to book a yacht in the south of France or which hotel they want to stay in on the Palais for Cannes Lions. This year, they've been left in limbo wondering whether the event will happen as planned. For now, Cannes Lions and its parent company Ascential "remain firmly open for business." With nearly 12,000 attendees, the festival has a lot at stake. Unlike other award shows that generate much of their revenue through entry fees, the financial success of Cannes Lions and SXSW depends on turnout by sponsors and attendees given the large amount of revenue they derive from on-site activations.

Agencies and brands that normally attend Cannes have been forced into a holding pattern over whether to book travel and accommodations for Cannes. One agency told Adweek that it has already completed most of its bookings for housing, purchased passes and put down deposits at venues. About half of its travel is booked, and the company said it is monitoring the situation daily and will reassess each week to determine if changes need to be made.

The problem Cannes and SXSW attendees face? Few, if any, refunds will be issued if the events are canceled. Cannes has a policy in place that includes "widespread illness" as one of several factors that could require the schedule to change, but not the issuing of refunds. Given that it costs upwards of five figures to send someone to Cannes, agencies and brands, which are working on ever-tighter budgets, face difficult decisions in the coming weeks.

Force majeure clauses give events the option to not provide compensation if they're canceled (or an attendee or exhibitor backs out) because of circumstances that prevent them from fulfilling a contract, such as communicable diseases like COVID-19, travel-related problems or terrorism. These force majeure clauses allowed Mobile World Congress to cancel without refunds, while SXSW and Cannes have similar clauses. Even with those insurance policies, attendees should inquire about receiving future credit to events (like the New York City Marathon did following Superstorm Sandy).

All is not lost, however. While events may not refund passes, many hotels and airlines have policies in place that make refunds or credits feasible. American Airlines, Alaska Airlines and JetBlue have introduced "peace of mind" travel policies, which waive ticket change and cancellation fees for travelers who change plans for certain dates and destinations because of coronavirus.

How Coronavirus Concerns May Impact Agency New Business Pitches

In addition to travel restrictions, generally uncertainty about the economy is leading to brands restricting new pitches. "Every client that I know is basically hitting the brakes right now," Avi Dan, founder and CEO of marketing consulting firm Avidan Strategies, told Adweek. During the 2008 financial crisis, the amount of new RFPs decreased, not because of fears over travel, but because agencies and clients needed to cut travel costs to help stay afloat. According to one source, a client conducted pitches via video-conferencing because the company's coronavirus policies have temporarily banned outside guests.

For existing pitches, it's still business as usual, although one source noted there's some urgency to complete reviews before travel restrictions become even tighter. Any changes that do occur will likely be short-lived, according to Dan, who sees agencies and clients returning to the status quo once the situation improves.

Factories in China Are Slowly Returning to Production

Factories in China are coming back online after long layoffs from the Chinese New Year and coronavirus; however, if even a single employee in a factory is diagnosed with COVID-19, the factor will be shut down and quarantined. Brands are facing increasingly tight timelines to be able to get their products shipped on schedule in time for summer and fall collections. For example, DTC travel brand Beis has products a month behind delivery, forcing the company to delay the release of its summer collection until July. Any more delays and the financial downturn will become harder to cope with.

See More of Our Coverage of the Coronavirus's Impacts:

In senior editor Robert Klara's look at the impact on disinfecting products, experts recommend brands do not mention the coronavirus in their marketing, as that leads brands to "marketing fear." Klara also found that Clorox has upped production to meet demand. Additionally, the FDA sent a warning to GoJo, which makes Purell, for claiming its hand sanitizer "may be effective against viruses." Even that anodyne wording, it seems, got too close to a health-related claim that was, the FDA said, unsupported by recognized clinical studies. Read the story here.
Publishing editor Sara Jerde found that like brands and agencies, media companies have restricted non-essential travel. Media organizations are grappling with how to cover the virus effectively, as many top publications have created new products dedicated to the coronavirus like newsletters, podcasts and live update pages. The New York Times also revealed that its bracing for a 10% decrease in ad revenue. Read the story here.
Racism has bubbled up toward Asian Americans as people spread myths that they must automatically be carriers of the virus. With racist incidents increasing, Philadelphia anchor and reporter Nydia Han wrote an editorial calling out those who have discriminated against Asian Americans since the outbreak began. Read the story on TV Spy here.

Below, you'll find a rundown of the rest of Adweek's top stories that aren't related to coronavirus.

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