Covid-19 comes from the Coronaviruses (CoV), which is a large family of viruses that cause illness ranging from the common cold to more severe diseases and have the hardest effect on the elderly or already sick individuals. Following an outbreak in northern China, it has spread around the world, killing almost 3,000 people (by February 27, 2020) and continues to spread.
What this means for global business
The planet’s supply chain is interlinked and in large parts of it is dependent on raw material, components or finished products made in China (such as your iPhone). So, a disruption of the work force in that country affects the global economy. Here’s one example to put things in context: one day’s delay in making an iPhone component results in a five-day delay in the final product reaching the store.
The region’s business ties to China
The region has over time built a robust trading relationship with China, which has in the past year extended to Chinese tourism into the UAE and most recently Saudi Arabia. Chinese tourists were one of the top five nationalities to in numbers to visit Dubai last year, and in 2020 China will have the biggest pavilion at Expo 2020 and hopefully double its number of visitors to the emirate.
Covid-19’s effect on Dubai
The 300,000-plus Chinese residents in the UAE, along with another 900,000 tourists from China who visited Dubai in 2019 are contributing to the economic cycle of the city through spending on shopping, entertainment and hotel stays. The virus and its preconceptions have kept those residents indoors and are delaying travel and vacation plans, which cannot be good for the economy in the long run.
Is there an upside?
The only upside I can think of is a sales and marketing opportunity for products like face masks, sanitisers, and medicines that can protect or guard from such a disease. Oh, and of course all the delivery companies in the UAE have seen a spike in orders for food and groceries.
The next step
The next milestone will be post-Ramadan, when we need to see a recovery in spending by consumers and advertisers to know we are on the right path to complete a year that started quite positively for agencies specifically.
Mitigation strategies
Agencies that front-loaded their revenue plans for the year need to re-asses targets and initial budget estimates. Big multinational and regional clients might hold off on committed budget spends if the situation continues to worsen across the region in terms of infection numbers. Otherwise, with eyeballs constrained indoors there’s a refreshed opportunity for mediums such as TV where advertising can work in unison with digital (particularly e-commerce platforms) to engage and convince customers who are increasingly worried about going out to public places and malls to make a purchase at from their homes.
