Many Marketors have worked for agencies, and the great majority have worked with agencies. As a former agency man myself, now working with more than a thousand agencies worldwide, I thought it might be interesting to share some observations on how these members of our community are adapting to life in the pandemic.
Agencies’ response to the pandemic can be seen in four phases – not dissimilar to their marketing clients’ experience:
1. “Open for business”:
Almost every agency has now been through this. Establishing remote working systems and technology – typically Zoom, Teams and whatsapp groups. (Just be sure you have separate groups for clients. No-one wants too much transparency.) Establishing people-systems – buddies for staff who may become isolated, confused or anxious. Empathising with clients: one agency sent hand-written notes to every client, avoiding the emotional faux-pas of automated personalisation.
Typically, 60% of an agency’s income goes to staff-related costs, so they quickly figure out who to keep, who to furlough, who to let go; and who to ask to work less hours, or accept less money. And of course, what support they can get from the government, not always distinguishing clearly between grants and loans. In this respect, some US states have the best system: “paycheck protection” morphs from a loan into a grant, if you take your employees back for at least two years after the crisis. Rishi Sunak, please note.
Phew, we survived. At least for now.
2. “What is happening to our clients?”
Once you have checked which clients are still paying their bills, and offered the others payment delay instead of project cancellations; and figured out who is going to net a windfall (Netflix, Amazon and Procter & Gamble) and who is going to lose their shirt (anyone in travel, or high street fashion retail), it’s time to think about how your clients are feeling.
Should you be in new business mode, trying to replace lost income with new assignments? Or should you offer new benefits and support without seeking payment, to retain and build goodwill for when the crisis abates?
The reality is that most marketers currently spend most of their time in forecasting. Unless they can forecast sales accurately, their companies will have excess stock going to waste - or insufficient stock to meet demand.
People and their time are also ‘stock’, in this context. Amazon hired 10,000 new staff as well as a very large volume of toilet tissue.
Now, forecasting is difficult: as Professor Spiegelhalter of Cambridge University observed this week, all data-driven models are part fact and part judgment. This is one reason why Boris, whose advisory team are all scientists and econometricians, is underperforming Angela, whose advisory team includes historians and philosophers.
It’s also why creative agencies can be helpful.
3. Forward planning:
Agencies are terrible at planning. They tend to look inwards, endlessly re-defining their purpose (as Solitaire Townsend of Futerra observes, “Purpose” is inherently selfish) or sideways, worrying about their clients or their competitors.
If they looked forward, they would see that other professional services firms like lawyers, who have 99.8% identical DNA to agencies (same revenue and cost model, just applied with more discipline), have already bought up all the heat-cameras and facemasks they will need, to get their staff back at work again as soon as Boris figures out how to get social distancing functioning on the London Underground.
The smart agencies are at least thinking creatively: how to furlough off the lower-value, commoditised services like programmatic media buying and dynamic creative optimisation, which clients are busy in-housing (TUPE, anyone?) - while hiring new people with expensive skills in martech evaluation and data analytics - and yes, creativity - that marketing companies can’t afford to employ full time, so have to outsource.
And of course it has to be the right kind of creativity: acts not ads, customer experience, service design and all the other trendy stuff.
4. Vision into opportunity:
The biggest change in the agency world was already underway before the pandemic arrived. Investors had finally realised that the acquisition-based, inorganic growth-driven agency holding company bubble had burst.
WPP, Publicis and others had lost 30% of their market value before Covid-19, in the same period that the Dow Jones rose by the same amount. So much for cyclical ad-stocks!
But now things have become worse. Since the virus finally spooked the markets in the last week of February, Publicis and WPP have lost another 50% of their value and are still crawling around on the sea bed, while the Blue chip stalwarts like Unilever and P&G, who fell around 25%, recovered most of that loss within a few weeks.
Did you see The Drum’s lockdown interview with Mark Read in one of his spare bedrooms, saying that WPP needed to become more like a Company and less like a Group? Wasn’t the whole point of WPP, that it is a Group?
The asteroid has hit the planet and the dinosaurs are gasping for breath. But look back those 130 million years: did the planet die? No. Yes, the lights went out and things overheated for a while. But before too long, new flowers began to bloom and new species were born. Like homo sapiens. Change can be good.
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