How to Survive & Thrive in Your Online Business During the 2020 Pandemic Recession
What Are The Hot Markets, Where Are The Opportunities And How To Survive According to A Serial Entrepreneur & Internet Marketer
I’ve seen a lot of life in my 35 years. I’ve…
- Lived Bangkok in 2011 during the worst flood this century.
- Was in Buenos Aires in 2015 when a former special. prosecutor was assassinated (the sitting president at the time was widely suspected to be behind it). I still remember the people honking their horns all day in protest.
- Lived through the 9/11 terrorist attack.
- Lived in Mexico 2013-2014 while there were raging drug wars (there still are).
- Did a stint in Istanbul while there were terrorist attacks — one of which happened a few blocks from my apartment days after I left.
- Flew around the world while there was an Ebola outbreak.
- Was a finance student & became an entrepreneur during the 2008/2009 financial meltdown.
- Started 8 businesses, and brought one of them public.
But this is my first full fledge pandemic-led recession. So I’ve spent much of the last two weeks learning, reading and talking to the smartest people I know about what is happening in their businesses. All so I can do my absolute best to steer my startup through these times.
The following is a breakdown of what I’ve learned, realized and thought for online businesses, including my own.
What I am seeing inside Vidalytics
We’re doing a record number of plays each month right now. Which means our users as a collective are continuing to thrive.
So first off, we’re still seeing strong amounts of traffic and video plays. Which makes sense, people are at home, on their computers.
In fact, the EU asked YouTube & Netflix to deliver videos in standard definition to ease the strain on their internet infrastructure.
Interestingly, while most people are at home, on their computers, and evidently watching videos, our free trials are down a bit. Which I believe is because people may be distracted to take on more involved projects.
When you think about it — signing up (and setting up) Vidalytics entails a bit more work than just hitting the checkout button that is fueling our users’ plays.
Thus, the smaller the commitment you’re asking for, the easier it will be to get it, which is generally true but especially right now.
And not only are they distracted — I think a lot of people are waiting to see what happens, which further diminishes response on larger asks.
The takeaway — it may be easier to get smaller commitments, like email opt-ins or low ticket items, than bigger commitments right now.
Ryan Diess of Digital Marketer had similar thoughts in this interesting video.
Who’s Surviving And Who’s Thriving
I’ve reached out to a lot of friends & Vidalytics users and most have not had their businesses affected by the situation — at least yet.
Except one friend who shut down his business. He was importing items from China. And anything coming from China is facing massive delays and challenges right now.
In fact, he said his supplier’s factory is shut down right now, they don’t know when they will open, and when they do, it will be 3 months before he’ll get any inventory. Yikes!
But to be clear, his business wasn’t doing well before all this started — so this is more of a nail in the coffin situation.
At least 2 other friends — who are in wildly different markets, the health and craft hobby space — are on track to have their biggest months ever right now.
And another one just did an $800k launch.
In the markets that I think will thrive are the following…
Health supplements seem like will continue to be a great market. I started my first supplement company in 2010, so right as the last recession was coming to an end, so I did some digging.
With this recession fueled by an actual pandemic, the health space could do exceptionally well, as long as these businesses can maintain supply chains.
But that is just the thing… The supply chains.
One of my biggest users has already ran out of inventory and has everything on pause. I certainly expect to see more of this happen in the coming months.
In fact, this may surprise you, but a lot of health supplement raw ingredients come from China or other places overseas, even if the product is made in the USA.
This effect will only be worse if the virus-led disruption lasts longer than expected.
I think the clear winner will be health info products, especially things like home workout trainings, while everyone is locked in their houses and we’re still in the first quarter, so people haven’t totally abandoned their New Year’s resolutions.
I personally started doing virtual yoga since being quarantined in Denver, as I could no longer go the studio half a block from my place…
… And you know what? I may just stick with it when this is all over. It is less expensive, on demand, so more convenient, and now I know how easy it is.
I am sure I am not the only one thinking this either (my wife independently came to the same conclusion). Especially as people look to tighten their belts when the recession kicks into high gear.
The survival space is already one of the hottest markets right now. The owner of one of the bigger businesses in this space told me last year his business was dramatically down since Trump took office (in case you’re wondering why, this space is largely driven by conservatives’ pessimism).
But now, some of these businesses are up by 20x, which makes sense. Now certainly seems like the time to have a bunch of canned food and a bomb shelter.
Another natural winner (if you can call it that in this whole mess) are digital products — things like tech products, online educations, training, etc.
Clearly they don’t have the same supply chain issues, and people are online, probably more than ever, to use them.
Finally, I’m told by friends in the space that BizOp (business opportunity) will be hot. Especially lower end (< $200) and as people lose their jobs and look to work online. And at least some of them will have a few extra bucks when that stimulus money hits everyone’s mailbox in a month or two.
Takeaway — the above categories should be some of the hotter ones.
The Silver Linings (aka Opportunities)
In my opinion, one of the biggest positives to this situation for internet marketers is the ad cost.
I am a huge fan of paid media, having spent $1 million of my own money on it.
And right now ad costs are down. The friend of mine in the craft hobby space said his CPCs are down 50-70%.
Companies are pulling their ads. And all the major platforms, like Facebook & Google, work off of a ‘reverse auction’, which means their costs are purely driven by demand.
The less demand, then the lower the costs (Side note — It will be very interesting to see Facebook’s and Google’s earning report for Q1 and beyond).
The takeaway — Buying ads is a huge opportunity. Even if your conversions get cut in half, which they haven’t from what I’m hearing, the effect would be net neutral as if everything is business as usual.
All this reminds me of the Warren Buffet quote: “be fearful when others are greedy and greedy when others are fearful”.
Taking this advice to heart, I’m gearing up for paid media campaigns (nothing new here, though).
I’ll be leading with education and keep a sharp eye on our day one metrics — ROAS (return on ad spend), CPA (cost per acquisition) and CPA payback period.
I am not looking to do a long lead cycle campaign.
Personally, I am not trusting any LTV (lifetime customer value) numbers right now, because there are too many fundamental shifts to rely on these historical numbers.
I will also be monitoring our paid to trial conversion rate a lot as an early warning signal that this mess is creeping into our users’ market more.
And for those of you that don’t do trials, I’d recommend keeping an eye on your leads-to-customer conversion rate. Especially if you go lead-gen heavy.
How long will this last and how bad will it get?
I have no idea. Except, it is obvious, we’re going into a gnarly recession.
The thing I’ve been thinking about is how most non-essential businesses have sent their employees home. And if they can’t work remote, that means these people were fired.
But all this is due to the virus. So if we can return to normal, a lot of these people can return to work.
This is exactly why smarter people than me are saying we’re going to have a huge, fast and short economic contraction. Which, hopefully we’ll rebound just as quickly as we beat back the virus.
My cousin, who founded and runs a very successful management consulting firm thinks the panic will subside quickly. And we’ll recover fast.
Similarly, my finance professor from Regis University, thinks the same thing. And this guy’s day job is auditing 9-figure loans that go belly up for a large bank.
So, yes, the weakest and most exposed companies will die.
There is no doubt these are turbulent, even scary times. But it also reminds me of the Winston Churchill quote, “Never waste a good crisis”.
I personally started my very first business in June of 2009, smack dab in the middle of the Great Recession. It was in the staffing & recruiting industry, during a time when most companies were doing a lot more firing than hiring.
This was after being fired twice in the previous 7 months. I actually turned down a job offer with a steady paycheck and commission plan to do this.
My family thought I was crazy, but I ran the numbers and made a calculated risk.
And I am not alone, these enduring companies were all started during a recession:
- Fortune magazine (ninety days after the market crash of 1929)
- FedEx (oil crisis of 1973)
- UPS (Panic of 1907)
- Walt Disney Company (After eleven months of smooth operation, the twelfth was the market crash of 1929.)
- Hewlett-Packard (Great Depression, 1935)
- Charles Schwab (market crash of 1974–75)
- Standard Oil (Rockefeller bought out his partners in what became Standard Oil and took over in February 1865, the final year of the Civil War.)
- Coors (Depression of 1873)
- Costco (recession in the late 1970s)
- Revlon (Great Depression, 1932)
- General Motors (Panic of 1907)
- Proctor & Gamble (Panic of 1837)
- United Airlines (1929)
- Microsoft (recession in 1973–75)
- LinkedIn (2002, post–dot-com bubble)*
People still want great relationships, optimal health, thriving businesses and they always want more money.
You may just need to pivot, adapt and navigate some treacherous times to make it happen. But it is doable.
I certainly don’t know what is happening next, but I hope this info helps a little bit.
While things may be rough, I don’t think most of the people reading this will be homeless or actually suffer excessively. I certainly hope not.
And if that is the case, what are we really scared of?
All this has brought new meaning to me for the famous FDR quote — “the only thing we have to fear is fear itself”.
I remember as I watched the markets crash in 2008, my dad, a long time stock broker and trader, saying “Pat, you’re watching history”.
As we all are now. These are historic times. Our grandchildren will surely ask about these days.
So, with that mind, I hope you make the most of it. And more importantly, I hope you and yours are safe, healthy and have plenty of toilet paper 🙂
Founder @ Vidalytics -Patrick Stiles
March 28, 2020
PS — I would love to hear your thoughts on any of these topics I touched on by emailing me here.
Specifically, I’d love hear…
What are you seeing?
What do you think will happen?
How is your business doing?
What are you doing to survive and thrive in these times?
*Excerpt from The Obstacle is the Way — a great book — especially for right now).