People talk about coming out “on the other side” of this crisis, but that’s an ambiguous destination that we may not recognize until we’ve already been there for some time. What if the other side is months out, years even? What do we do until then? When we get there, what will your agency look like?
There was a brief pause to process the magnitude of the current situation. It passed. We are now moving forward on our altered trajectories towards “the other side.” The abruptly revised 2020 landscape has created new challenges and opportunities for everyone. Nobody is where they thought they would be at the start of the year. So, where does your agency fit in going forward?
Other than your day-to-day tasks (solidifying client relationships, managing cash flow, receivables, etc.), what are you doing to evolve your agency? Have you mapped out a plan? Now is the time to do so.
“Many clients need money-making ideas and they need them fast. This means you need to know your client's business inside and out and you need to know exactly how they make money. Understanding this will mean you will bring them ideas grounded in practicality and financial realities, rather than a bunch of pie-in-the-sky ideas that are impossible to execute.” –Ed Cotton, Strategy Consultant
I suspect you have revisited your clients’ marketing strategies and tactics and made adjustments based on the current environment. My challenge to you is this: take stock of your agency as it is right now. Be honest; was it built for the pre-coronavirus days? We have turned the corner and entered a new landscape, shouldn’t your agency look like it belongs here?
If you are like me, you’ve been consumed with fighting fires for clients since this crisis became real for Americans. It’s always been tempting for agencies to neglect their own work while tending to clients, but it comes at a higher cost now. Now is the time to ensure your agency will see the other side of this crisis, whenever that may be.
We may hope for a V-shaped recovery, but the odds are it will look more like a U-shape, meaning we can expect to drag bottom for a while before things look up. No one knows when we will arrive at “the new normal,” but it doesn’t seem we will return to the way things were. There is no way to sugarcoat the projected economic impact on the advertising industry.
Firstly, there is no true point of comparison; what we are experiencing is unprecedented. Secondly, as Lara O’Reilly observed in Digiday, “The ad industry will almost certainly lag behind any economic recovery. It took four years after the last financial crisis for ad spending to return to 2007 levels, according to McKinsey. And this crisis is set to be far more disruptive.”
Here’s what Avi Dan of Avidan Strategies said about it in Campaign:
“During the 2008 recession, we saw advertising decline by 13%. The slowdown that lasted 3 years. This time, the coming recession will prove to be much more severe, both in terms of the ad spend deterioration, and the duration. In 2008 ad agencies had entered the recession from a position of strength. In contrast, this timing could not have been worse...I do think we’ll see a lot of small agencies closing their doors due to plummeting cash flow, especially if the trend toward 120 days payment by clients continues.”
Granted, none of this sounds very reassuring, but keep in mind that challenging circumstances are nothing new for agencies. No matter what, agencies find ways to create opportunities and generate revenue for their clients and themselves.
Here are some observations and educated guesses about what the future holds for agencies:
It may seem like everything has changed, but in certain respects, perhaps not so much. These are all familiar themes that agencies have already had on their radar, and many have already made adjustments for—if you have, congratulations on your head start.
Agencies may be up against their biggest challenge yet. My best advice is to do the work to get your agency ready for the new landscape and stay proactive about creating opportunities. The stage is set for disruption. I expect some of you will create new ways for your agency to make money that upsets the entire playing field. I can’t wait to see the outcome.
Here’s a quote I saw from Stephanie Nadi Olson, Founder and CEO of We Are Rosie, which exemplifies the opportunistic thinking agencies need to have right now:
“When we come out of this global pause, the old normal won't make sense anymore. We have a huge opportunity to embrace the pause and think long-term about what makes sense for the workforce and for business...It's a jump ball right now and any agency –big or small, boutique or full service – can use this pause as a chance to listen and adjust to create a future that serves the highest good of the talent and their clients. The winners will be the leaders and organizations who openly and authentically acknowledge, own, and offer up new structures to fit our brave new world. My hint: lead with the people in mind.” — Stephanie Nadi Olson (in Campaign)
Image credits: First photo by Paweł Czerwiński on Unsplash; second photo by Scott Eckersley on Unsplash.