Coachella Postponed, SXSW Cancelled — How Brands Are Scrambling to Change Festival Strategies in the Wake of Coronavirus

Now that the coronavirus has spread to more than 100 countries around the world, major precautions are taking effect — from full-on city lockdowns to store closures. In the U.S., where there have been at least 1,000 confirmed cases, major live events across the music, film and fashion industries have resorted to cancellations and postponements.

On Tuesday, California’s Coachella and Stagecoach Music Festivals, which had been scheduled for April, confirmed their move to October due to concerns over the coronavirus outbreak. The news follows the cancellation of Miami’s Ultra Music Festival and South by Southwest in Austin, Texas.

Since these mega events are known to stimulate local economies, it goes without saying that cancellations and postponement could have significant economic impact on host cities, local businesses and the brands that spend thousands on pop-ups, activations and events. In 2019, for example, the SXSW festival reportedly generated more than $300 million in revenues for the Austin, Texas, area.

“Businesses are going to absolutely be affected by this,” said digital strategist Shane Barker. “Many don’t have that working capital to [risk more cancellations]. I would be absolutely shocked if Coachella went forward. Sponsors and people that come in there for the exposure will start pulling out. And, if I was a brand, I would say, ‘Let’s stop any kind of activation, especially at live events, until there is a better evaluation of what’s going on and what’s going to happen in the future.’ It’s only the beginning stages of this thing.”

Brands, including Revolve, Adidas and Moschino, which have held events in the past at Coachella, were expected to do so again in April. And while these large brands — with extensive marketing budgets and consumer awareness — are better equipped than their smaller counterparts to shoulder some losses, experts say these firms are not immune to the setbacks that accompany unexpected strategic shifts.

“When you don’t get that 100,000 people, or whatever it is, in one spot over a condensed amount of time, it hits you really big just simply because you don’t get that exposure,” explained Vera Fischer, president and CEO of brand marketing agency 97 Degrees West. “There are people sitting in conference rooms right now, saying ‘OK, what are we doing now?’ Some of the money has already been spent. You’re not going to get that money back necessarily. So how much budget do you have left? Most don’t even have a Plan B because this is really unprecedented.”

Fischer, whose firm is based in Austin, Texas, is seeing the effects firsthand and noted that smaller and emerging companies are experiencing the most damage.

“You’ve got a lot of small businesses that are being hurt because this is their big push for their entire year. If it’s a well-known brand, you’re going to be able to save face more than a startup [would],” she said. “Those indie brands where their whole strategy is built on events or festivals — now, all of a sudden, their main marketing communications venue is gone.”

Product sales will also take a hit, insiders suggest. Even though Coachella, which is a major platform for fashion brands’ influencer marketing strategies, is expected to take place at a later date, many labels push their see-now, buy-now styles to coincide with the spring season. With the loss of the crucial spring and summer events, those collections are unlikely to see the same boost.

“You have to really look at it on a case-by-case basis,” added Fischer. “Brands have to get a little bit more creative about how they get that product out and how they get that product to those influencers. Nobody saw this coming.”

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