Much has been written about the impact of Coronavirus (COVID-19) on various industries. What about its impact on publishing? Given the global impact of the epidemic, I am deviating from the normal topics of this blog for this one piece.
How long will it take for the Coronavirus to abate? No one seems to know. Information coming out of China continues to be piecemeal and social media posts - true or fake, are only adding to the confusion. The big news yesterday was of Apple announcing that it may not meet quarterly revenue forecasts due to delays in production and lower demand in China. Delays in production because Chinese manufacturing plants are closed and lower demand in China because China has quarantined large chunks of its population. Apple is not the only one affected. According to CNBC, "Dun & Bradstreet researchers found that at least 51,000 companies worldwide, 163 of which are in the Fortune 1000, have one or more direct or "tier 1" suppliers in the impacted region". Meanwhile, there is also news that factories have started reopening on a limited scale.
Today the bulk of the world's manufacturing happens in China. As manufacturing and supply chain logistics get affected in China and as international travel gets curtailed, it is going to have a big impact on publishers of all kinds.
Conferences and award shows are going to be the worst hit with companies and individuals restricting non-essential travel. Smaller events may still happen in other geographical regions. Speaker travel may still be an issue and any reduction in conference budgets of sponsors will impact the publisher's revenue.
With production of almost everything, from medicines to machinery being affected, expect sales targets and associated promotional budgets to be cut. Obviously, this will have a direct impact on publisher's top lines and bottom lines.
If sellers don't have products to sell, then there is no point in spending on Affiliate marketing, right? Expect ecommerce lead affiliate revenues to take a dip. This impact will be varied across sectors, with those doing tech communities to be the worst affected, while those in books and similar sectors may be less impacted.
If affiliate revenue is affected, can leadgen revenue escape unscathed? Obviously not. Expect a hit on leadgen revenues also, in similar patterns to affiliate revenues.
And then there is that all ingredient powerful called sentiment! If the market sentiment is generally down, then the propensity to spend gets reduced and everyone follows the trend, cutting spends further.
Publishers who are in or near the epicenter of the epidemic, either geographically, or in terms of markets will obviously be more affected than those further way. Sectors like military and legal services would be less affected while those like technology and financial services could be more affected.
At the beginning of the year, all industry analysis and reports pointed to optimism amongst publishers. In the wake of the coronavirus outbreak, it will be prudent to revisit some of those projections and perhaps reduce the expectations. Expect these cuts to last at least for a full quarter, if not two. The good news here is that once the worst is over, there could be a ramp up of spending and everyone would benefit from that.
Years back, there was this big debate about total cost of ownership (TCO). This was about software. The argument was that you considered initial costs when choosing software. But the total cost over years of maintaining it is much higher! The debate at that time was on which software had the cheapest lifetime costs. That debate died down after some time and everything settled back to normal. But it brought awareness that software costs much more than its one-time cost. Today, no one writes their own CRM or ERP systems. Most software has moved to a licensed model. This makes the lifetime cost...