Agencies Post COVID-19

17 April 2020

It may seem premature, given that like many I am locked inside with only multiple Zoom calls for company, but one day life will start to return to something approaching normality. What will agencies, and agency life look like then?

There are two schools of thought on the effect that this crisis will have on us all, depending on the broadness of the question. When it comes to society as a whole (‘will we all hang on to this new-found kindness and respect for others?’) Bob Hoffman (in an asicast interview with me) thinks we won’t.

In a similar vein (‘will marketers learn the lessons of the pandemic?’) Mark Ritson (in his Marketing Week webinar) thinks not, and that most will revert to making the same old mistakes.

More parochially, and relevantly for most of us, agency leaders, including MediaHub’s Danny Donovan and WPP’s Lindsay Pattison (brought together by Mediatel) are rather more positive, believing that we will learn to be less selfish, that social media platforms will become kinder places, and that we will all by necessity come to appreciate how technology can help us through what will no doubt be a period of great economic difficulty.

The great thing is that in even a few weeks no-one will remember a word any of these guys said – and anyway the whole situation is so fluid and so nuanced that even if someone did think to ask any of them everyone involved will be able to point to something that proves that they did indeed read it correctly.

Will agencies and life in agencies change? On the basis that I may as well join in, given our collective short memories, my answers are ‘yes’ and ‘yes’. And, I’m afraid it won’t be pretty.

There are some uncomfortable (and uncontested) truths. Money will be in short supply, with adspend diving, and even if/when it recovers and even if there are more smart marketers around to listen to Mark Ritson, agency revenues will fall.

Clients, like the rest of us will be looking to save on fees as well as on what too many of them still see as frivolous activities like advertising.

There are still too many agencies, it’s still a buyer’s market, and so those looking for a bargain will find plenty of agencies stupid enough to give it to them for the sake of a ‘Campaign’ headline and a position near the top of the new business league table.

The cycle of: ‘pitch low, win, over-service, lose money, under-service, pitch again, lose’ will certainly not disappear.

With less money, and by far the majority of their costs in staff agencies will have to cut back. There are already signs of this with the holding companies preparing themselves, the markets, and their staff for redundancies.

Tough questions will no doubt be asked within the large holding groups. For example – is there really any need for so many individual operating units? The original argument for multiple agencies under a holding company, as per the inventor of these things Phil Geier of Interpublic was to provide alternatives for clients.

So if you didn’t like Agency A Phil could always offer Agency B.

Then there was the matter of competitive clashes. Agency A and Agency B could handle competing brands, in theory at least.

But this competitive clash matter has subsided and with some technological ingenuity on behalf of the agencies could be quietly kicked even further into the long grass.

These days the holding companies are of course more than a collection of ad agencies. But even the best of them duplicate services and are generally wasteful.

Why on earth do the large holding companies need quite so many media agency operating units? Is MediaCom really that different from Wavemaker from Mindshare? Can clients tell the difference?

You don’t have to go through all the grief of closing one or more agency; there is a halfway house.

As a start, it’s not a bad principle to think about things from the client’s point-of-view. Clients care about relationships, and planning and consultancy skills. Yes, they want lower fees too – but if you excel at the first bit you can more easily justify higher fees.

And of course they want cheap media prices. The old ‘deal mentality’ lives on in most client’s description of their media agency partner as ‘my media buyer..’

If media agencies in the future are to be more about planning excellence supported by hugely efficient buying capabilities, and if buying is all about to become automated anyway, why does a group’s agencies all need buying departments?

Or, come to that modellers and researchers?

Why not one massive buying operation, accessed by the planners who use it to deliver their plans (as opposed to having it dictate what their plans should look like)?

Why not a properly funded and well-staffed research unit, encompassing media researchers, market mix modellers, analysts and data scientists and available to all of a group’s planners?

Why not follow the lead of outfits like VCCP, and Mullen Lowe / MediaHub and create strong synergies between creative and media specialists, with some media buying done elsewhere?

Central group services would provide a superior resource to the client-facing planners, who become true communication consultants operating across all channels (not just advertising). Such a move could save money, lead to a greater value add, and ultimately to higher fees.

Eventually there will be fewer pitches, as clients become more wedded to an agency’s services and less bothered about one agency’s claims to be able to buy TV cheaper than the next guy.

Driven by harder times, agencies will become more like true consultancies. Now there’s an unoriginal thought.