Disclaimer: I’m not a meteorologist or have any expertise in oil spills or environmental disasters. But, I can read. Because the story is still evolving, the truth is clear. Video doesn’t lie. Even BP admits to pretty much what the environmentalists say.
Every day, the impact hits me a little bit harder, but it’s cumulative. It seeps into my daily business thoughts. I’ve been calling this an economic disaster since the day it happened. Ground Zero: April 20, 2010.
Estimated Oil Spill as of 4/22/10
An acquaintance and client, Jerry White from the Landmine Survivor Network (now Survivor Network), calls landmines ‘weapons of mass destruction, one at a time’. The BP calamity falls into the same category. Most Americans can’t see it, touch it, watch it, or even imagine it. Less than 10% of the population has direct access but 100% of us are going to feel it. It will reverberate and seep into the economy in an insidious way starting with Wall Street and, then, onto Main Street.
Estimated Oil Disaster as of 6/9/10; grey arrows indicate loop and currents leading to the Florida Straits.
Sparing most of the torturous details, the best-case scenarios for the Gulf Coast (Texas, Mississippi, Louisiana, Florida, Alabama) are a sick paradox: 1) the spill gets capped tomorrow morning and the combination of controlled burns, oil capture, no hurricanes, Army Corps of Engineers, BP’s own experts, and luck minimizes the damage; 2) the oil catches the Gulf stream waters and the Loop Current and moves around the Florida panhandle and southern tip of Florida and travels Northeast. The Gulf gets spared (?) from its worst effects but the Northeast gets its own brute force impact. Every coastal state would be impacted. That’s 13 states and 36% of the population. But, whether the oil slick moves in the direction geologists are considering is irrelevant. The facts are what they are. The damage is done. It’s just a question of degree.
The industries who are already dealing with it and will be confronting it this summer and, potentially for years to come, include the obvious like restaurants, hotels, resort travel, fishing, shipping, hunting, boating, swimming, and even scuba diving. There’s no doubt that those who sell directly to consumers and business in each of these industries will see a negative impact due to lost jobs, lack of access, marine life reduction, and danger. And, I’m just focused on businesses that have ecommerce.
Let’s look at a simple view of revenues with a low negative 2.5% impact. As a reasonable estimate, let’s assume $5 Billion in aggregate sales across a variety of companies and 40%, or $2 Billion, in ecommerce sales.
($5B total sales * 40% ecommerce) * – (2.5% economic impact) = $50 million
Breathtaking. Even if I’m wrong by 50%, that’s still a $25 million in revenue loss in one year. As marketers, we need to seriously consider our forecasting and anticipate economic wreckage certainly in the Gulf Coast region. That has already happened. And, if the worst happens and we have to compound this loss with a worse-case economic scenario that includes damage to the eastern seaboard economy, let’s understand this now. Retailers’ shipments will still arrive and promotions can still happen. Paid and natural search efforts will continue and websites will still accept orders.
But let’s not assume it’s not happening just because we can’t see it.
Next up: What we can do to better understand the potential impact.
