How Are Brands With Activations Coping After South by Southwest’s Cancellation?

Brands with on-the-ground plans work to mitigate financial losses

Lush, HBO and Bumble had all planned to return to SXSW with activations this year. Dianna McDougall for Adweek, Laura Delacruz
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Key insights:

For the first time in South by Southwest’s 34-year history, its host city of Austin, Texas canceled the cultural festival as the coronavirus—the pathogen that causes the illness COVID-19—threatens to become a pandemic.

The festival, which was slated for March 13-22, provides an outlet for brands to reveal some of their buzziest experiences of the year. Recent editions have been home to notable activations from HBO, Instagram-worthy stunts from Hulu and Amazon Prime Video, and creative activations for up-and-coming brands such as phone carrier Visible to introduce themselves on a global stage. The event also has a massive impact on Austin’s economy: 2019 generated a record $355.9 million in revenue and drew more than 400,000 attendees.

Mainstay brands like Twitter, Facebook, Mashable and Lush all dropped out before the cancellation because of COVID-19 concerns, while brands that held out, including Bumble, Vox Media and Dell, were forced to scrap plans once city officials put the kibosh on the festival late last Friday. The decision to cancel spells financial loss for brands that put a massive amount of time, effort and money into their SXSW projects.

But some brands and their agency partners aren’t planning to remain stagnant. Although most participating brands haven’t released plans for SXSW alternatives, agency partners said the focus is moving to finding new, safer ways to reach consumers, while still maintaining the themes and narratives they had planned for their SXSW activations.

How much are brands out on activations?

SXSW chief executive Roland Swenson told The Wall Street Journal on Sunday the festival didn’t have insurance that covered cancellation because of widespread disease. Sponsors and attendees also won’t receive full refunds; instead, they’ll receive credits for a potential future event. The financial loss on the brand side, however, really depends on the type of engagement they had planned.

Brian Salzman, CEO of brand and influencer marketing agency RQ—which was involved with producing experiences for HBO and LG—said the cost of a SXSW activation usually depends on the size, content, and whether it’s a festival partnership or festival-adjacent event.

“Experiences at SXSW can range in cost from $10,000 for a guerilla-style street team, to easily several millions of dollars for multiday activations,” Salzman said. “If you are an official partner you also have to add in the SXSW partnership fee, which comes with its benefits. Line items such as staffing, hotels and Airbnbs, custom technology and shipping add up really quickly. Likewise, cancel or kill fees this late in the game are high. Usually, a brand can recoup 25%, but costs incurred such as design, fabrication, shipping and travel have already been spent.”

Chiara Adin, co-founder and chief creative officer of experiential marketing agency N/A Collective, which was set to produce this year’s #TwitterHouse, said marketers should now focus on the coronavirus’ effect on brand experiences not as a catastrophe in terms of lost revenue, but as an opportunity for a marketing shift.

“From an experiential standpoint, it will be hard for any brand to get dollars back. But [the key is] to not get negative and not think all the money you spent was a waste,” Adin said. “It’s about figuring out ways to still utilize whatever creative content and fabrication you’ve already done and how you can leverage that for something else. Brands could use them for Austin City Limits [in October] or ship them to a different market. It depends on the brand’s objectives.”

Made In, an Austin-based DTC cookware startup, was slated to host The Paella Project, a SXSW-adjacent culinary event at Mexican restaurant Suerte. The one-day event would have included paella making, live music and food collaborations from chef Fermin Nunez of Suerte and chef Mei Lin of Los Angeles-based restaurant Nightshade.

Join the foremost brand marketers, such as Marc Pritchard, Brad Hiranaga, Kory Marchisotto and more, for Brandweek Masters Live on Sept. 14-17. Secure your pass and learn from the brand masters. Ian Zelaya is an Adweek reporter covering how brands engage with consumers in the modern world, ranging from experiential marketing and social media to email marketing and customer experience.