Covid-19’s impact on the live events industry

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C4 Events

11 min readMar 25, 2020

Context: Wrote this a memo to some students that I mentor. May be of use to others and thus publishing it here.

Hi! I don’t need to spill ink on what’s happening around us. However as part of the live-events industry, I was compelled to think about this — after all, the future is at stake. I read whatever “sane” literature is available, talked to a few colleagues that I could reach out to and then made some guesses on how could things play out. And what would it mean to an event manager in a post-Covid-19 world!

Please note that all these are my best guesstimates. I really hope that I am wrong on all counts and we recover faster. I just believe in what Andy Grove famously said — Only The Paranoid Survive. Oh, and a large part of it is from the perspective of a corporate events manager.

So, first things first. What is a typical value chain for an events agency?

Here…

Lemme talk about the impact of Covid-19 on each

Clients. Whenever life goes back to “normal” (more on this normal in a bit), work and life as we know it would’ve changed. Lemme call that time, not so distant in the future, the “new normal”.

How? Well, by the time we are back in full-steam, the clients would have lost revenue in the last few quarters. The input costs would have increased and the profit margins would’ve shrunk. And thus, any spending would now be required to show a solid ROI, more so in the marketing function.

And even though things like live events are not really revenue-making opportunities, they have almost zero ROI possibility, they would be expected to pay for themselves! Clients demanding tangible ROI from events would’ve thus become the new normal.

To make matters worse for the industry, most large corporates that spend on events are from Fashion, FMCD, Insurance, Pharma, Automobiles and most of these are non-essential products/services. And thus their customers coming back from a recessionary shock may not want to spend. And thus the volumes and margins for clients would reduce further.

So, in one line, the events industry, as a derivative of the general business environment, would be under pressure!

Oh, and since events business is like no other in terms of client-people-agency relationship, this new normal would test those relationships. If an agency is dying, does the owner have enough clout to get the client to create a project for them? If the client is forced to show a quick turnaround, can he implore his friends at an agency to come up with something great with limited resources and time?

Agency. This will be the longest and I will come to this in the end when I look at scenarios.

Attendees. These are the people that are typically “arranged” for by the client. Sales team, Marketing team, Dealers, Channel Partners, etc.

Most times these people don’t really pay any money — everything is arranged for them (travel, hotel, food, entertainment and even casino chips in some cases). So these should be similar in numbers (except a few scared ones that would choose to stay indoors even after the aftereffects are long past).

In one line, nothing changes for them!

Subcontractors. This includes everyone from venues (hotels, conventions centers, and others) to event-tech suppliers (equipment rental companies, fabrication vendors, technology and others), to third-party contractors (printers, transporters, and others), to people (celebrities, artists, performers, crew, unskilled workers, etc.) and I don’t even know who all! A million people are required to make an event come to life!

So, here’s a prediction. This set of people would get hurt the most! Why? Read on…

Dependence. They are dependent on event agencies to give them the work. The agencies, in turn, depend on clients to give them work. And at each stage of sub-contracting, a large chunk of money gets cut off. So, the sub-contractors would get a very limited subset of already limited spending that clients would make when things are back to normal.
Payment Cycles. They typically get paid at least 30 days after the event is over or after the agency is paid. Whichever is later. They thus will have to put in a lot of working capital in the system (if they have capital left after all the weeks of joblessness). Oh, and agencies will negotiate a longer payment cycle with these subcontractors — after all, whoever is higher up the food chain calls the shots!
Capital. Both for big agencies and subcontractors — if they are big, they will probably tide through this — they’d have large enough cash reserves to weather out the disruption in their business. The smaller ones (the mom and pop operations) will have to shut shop.
Loans. A lot of these have big loans and open outstanding credit accounts. I expect some of those to go unpaid. And thus tighter liquidity for the industry as a whole. Plus, with the recent drama around Yes Bank and the general state of the world economy, liquidity will anyway be crunched.
I foresee mass layoffs. This means that agencies that have high fixed costs (employees, EMIs, etc) will have to take harsh decisions. There is no other way. The in-demand technicians would sit tight and wait for the market to open up. The unskilled, contractual workers would have left for their hometowns and would be a task to get them back.
The hotel industry is anyway facing its worst next few months. See this video by the CEO of Marriott!
Most celebrities would be ok. Live events ARE a large chunk of their revenue model but they would not become jobless. I mean there is a pan-masala brand somewhere in the country that would happily pay for a Page 3 types to do an Instagram live or something.
Celebrity Management Agencies would have a tough time. In some cases, they have minimum guarantees committed to their talent. They would have to renegotiate their contracts. Agencies that are merely booking agents would have to think hard about how they operate. This may lead to some online talent agencies coming up. This could be an opportunity in the new normal.
Event Insurance becomes a reality in India. From tiny murmurs in the hallways of large agencies to everyone getting insurance, we’d come a long way.
Travel would not remain as easy. It was tougher anyway for an Indian passport holder. It would get tougher. From visas to border checks to change in policies. The agents that liaison for this stand to make more money! The event agencies would get more hassles. The clients would get hassles. The attendees would be ok.
The world would’ve learned how to do video conferencing. This means most events that require expensive travel would be frowned upon and get crunched. So, the corporate event agency market may actually shrink! And anyway, people like Alibaba are slowly killing the exhibitions and trade fairs market.

All looks so gloomy! I hope I am wrong :(

So, Scenarios and the answer

What happens to agencies? This largely depends on when things go back to normal. You know, the new normal?

And when is that? Well, anyone’s guess. But assuming that India does not get to the community transmission stage, as per the experts, we should be back to normal by July. And I hope there is no second wave of fresh hits, once travel restrictions are lifted.

So, here are some scenarios that I could think of and how they plan out…

Recovery in 3 months

Apart from people maintaining social distancing, we would be more or less ok. The industry is back in action before anyone knows it.

Some small agencies will suffer.
Bigger agencies will force their top management to take a pay cut in April itself. But they are more or less ok.
Plus once the market opens up again in June / July, these bigger agencies would consolidate and grab more clients. So, in two words, more competition.
The costs of doing events would go up. Input costs would’ve risen, talent would be tougher to find, etc, etc.

Recovery in 6 months

Most smaller agencies will be forced to shut shops. They don’t have clients and that means they can not afford to continue to pay their employees and debtors. And thus they are forced to shut. The way out? As Aditya! says, go to the mattresses. Find other smaller agencies, partner with them, combine resources and cut the flab.
Bigger agencies would have to let go of most of their middle management. They would continue to struggle but since the work has started to come back, things start looking up for them.
Clients would realize that bigger agencies are inundated with work and the quality of work is suffering. They would demand more but because agencies don’t have talent, they cant service. The entire circus of one senior person from an agency quitting to start their agency and poaching the client would restart!

Recovery in 9 months

Most small agencies are gone. Even with their close relationships with clients.
Some large agencies start feeling the heat. I predict one of the larger agencies will fold.
Clients would have diverted a lot of their spending to digital and other mediums by now. Events would become even more distant than an adopted child in a large, joint family. Only mission-critical events are organized. The grandeur that we are used to creating (in terms of scale, design, and lavishness) gets muted to a point that even the domestic events start to feel like international ones (templated setups, inventory from venues, standardized material for a client to choose from).

Recovery in 12 months

I don’t know. I don’t want to know. I don’t want to think about it. I love the live events business way too much and I don’t want to think what would happen to it if things take that long to recover.
And since the glamour would be, sort of, taken away from the events people wanting to get into events will reduce. The number of students, interns, etc will go down. And the future “supply” of talent may get crunched!

Even though I am VERY small as an event agency, thankfully I do have some credit lines that would allow me to stay afloat for about a year. Post that, I would have to wrap things. And even though I have initiated other ventures that are not dependent on events, I would be forced to look for a way out.

Recovery in 18 months

Burn this laptop that I am writing on and chop my fingers off.
There is no number 2.

To sum things up,

In the post-covid-19, new normal world, events as a business would have changed. Here are some opportunities (or the light at the end of the tunnel, as they say) that would be available to us…

Post-Diwali, event managers can expect a BUMPER season. Things would’ve gotten back to normal and everyone who wanted to spend on events would use this time to do so. Plus the world would be in a celebratory, year-ending reverie and thus there would be work,
Event-tech would have arrived. From something that people would typically shrug off with all the nonchalance, some interesting event-tech companies would emerge. That would be an interesting place to be at!
A lot of opportunities would open up in the universe of content — films, podcasts, text and all the new formats that would come up. Maybe think about those? At C4, we definitely are!

So, these were all the scenarios that I could think of. Most likely we would be back in 3–6 months. I hope it is sooner.

Since I was not very sure, I asked some other event managers that I could speak with. I have removed their names.

ABC, freelance Event Manager based out of Chennai says, “This will end in a month or two and everyone will try to go back to normal life but it will take time”.

DEF, founder of a large events agency says, “FAT GAYI, in big bold caps. Nothing is coming back. We will be back to where we were 5 years ago. I don’t see any recovery before a year”.

GHI, an event manager based out of Goa says, “Goa anyway has a hard time in the monsoon season. But due to this situation, the bigger players will get stronger and the smaller ones will have to go home!”

JKL, a marketing manager who’s job is to commissions events at a large corporate says, “I see a glut in work for at least a year. The budgets would be severely limited and that would mean I would not have any money for any event!”

Are you from the events industry? Do you have an opinion? Do share that with me.

And as I end this,

Thing is, if you are in the events business, life does not look rosy for the next 3–6 months. And when events like THE Olympics get pushed to the next year, you can imagine the fate of the others!

And you are not alone. Think about airlines, hotels and our other cousins.

I believe that us humans are as resilient as any other living thing. We would survive. And we would come out all guns blazing. Till then, keep calm and carry on!

That’s about it!

Over the next few days, I will post what other stakeholders think about Covid-19’s impact on the live events industry.

Thanks again for reading. Please do let me know if you agree/disagree with these.

Regards,

Saurabh Garg (twitter, Linkedin)

PS: I am thinking I will do a follow-up post about the opportunities that I see in the new normal. Do let me know if you’d want to see it.

Appendix / Disclaimers

Appendix A. These are my best guesstimates.

It could be widely off the mark. I hope I am! I hope things come back to normal fast! I mean I am not even considering other structural issues in the Indian economy right now. Need someone to talk to me about it! Connect me with someone reliable?

Appendix B. There are three kinds of events broadly

Commissioned (by corporates, political parties, religious organizations, industry associations, etc.). Basically, someone else pays the event manager. An example could be an annual conference, a doctor’s meeting or a trade fair.
Owned. Or IP. An event manager comes up with an idea and then gets people to buy a ticket to attend. There are sponsors that support event managers in putting these together. An example could be pop-up shows, Fashion Weeks, Music Festivals, etc.
Personal. Weddings, anniversaries, etc.

I write from the perspective of a corporate event’s agency that works with large companies on commissioned work. I am most knowledgable about those. I AM working on putting a couple of IPs but I am still far from those.

Appendix C. Further Reads

If you are interested in how others are thinking about how things would pan out, here are some opinions — EEMA, thoughts of leaders in the Indian industry. For non-events inputs, some brilliant pieces worth reading are: Sequoia Caps, Matrix Partners, Stellar VP, Ogilvy, Aditya!’ post, this piece on NY and Yuval Noah Harari’s opinion.

That’s about it! Thanks again for reading. Please do let me know if you agree/disagree with these.