After lockdown: marketing and PR agencies in recovery
The agency market is in flux as the economy recovers. But there’s plenty of opportunity. Managers are focused on reorganisation, positioning, scaling, Brexit and ESG.
Agencies are facing the following opportunities.
Reorganisation and investment in talent
Agency positioning for growth
Scaling and corporate development
Brexit is done: deal and no deal bring same issues
Environment, society, and governance
Every conversation with marketing and PR agency bosses at the moment starts with the same question about the market. What’s your take on the industry and what are other agencies doing?
It’s understandable. We live in uncertain times. I wrote last week that the next four months are likely to be as chaotic as the last eight.
According to LinkedIn data published this week, communications and media professionals are among the least confident among the UK workforce.
The economy is slowly recovering but the impact of COVID-19 has been brutal.
The latest ONS data shows that the economy contracted by a fifth in the second quarter from April to June 2020. By comparison, during the 2008 recession GDP shrunk by no more than 2.1% in any quarter.
There is no magic. I wish I had a golden bullet or an elixir. The solution is an old fashioned one. Gather data, make a plan, review it regularly and work really hard.
Here are five areas in which I’m helping my agency clients work through the current business environment.
1. Reorganisation and investment in talent
A significant chunk of my time is being spent helping agencies restructure. Founders and managers are using COVID-19 as an opportunity to get fit and invest in new talent. Income forecasts and utilisation are under scrutiny unlike ever before. Aim for a staff cost ratio of 45% of fee income and 80% utilisation. There’s nowhere to hide if you’re not contributing billable revenue. Earned media is proving challenging, triggering those agencies that haven’t modernised already to invest in data and content and execution across paid, owned and shared media.
2. Agency positioning for growth
Another significant focus is helping agencies sort out their marketing and sales processes, and refine their proposition. COVID-19 is flushing out a fiercely competitive market. It’s no surprise that there’s been a slew of new start-ups. It is also creating opportunities for smart, assertive agencies. These agencies understand a market and have a clear proposition and delivery model. They haven’t missed a beat. Clients need to demonstrate value and results now more than ever.
3. Scaling and corporate development
There’s a related area of development. Agencies that work in sectors or provide services that have been needed during the pandemic have had an altogether different crisis. It’s a mix of luck and good judgement. Technology, heathcare and areas of corporate development have continued to perform strongly. Behaviour change, internal communications, online events, training design and voice technologies are in huge demand. Here the challenge is unlocking scale and recruiting talent to grow. Agency M&A activity is also starting to warm-up.
4. Brexit is done: deal and no deal bring same issues
The outcome of Brexit negotiations won’t be known until mid-November, but if a deal comes it will be on the skinniest of terms. The big stuff such as free movement, passporting, and alignment on standards, has all been rejected. The negotiation is fiddling around the edges on subsidies and trade tariffs. Unless you’re an agency in a market impacted by tariffs the impact of deal and no deal is likely to be the same. Agencies are planning accordingly.
5. Environment, society, and governance an emerging issue for 2021
There’s lots of discussion about the environment, society and governance agenda. COVID19 has called out flaws in the use of financial metrics to measure the health and wellbeing of society. It’s an issue rising up the corporate agenda and is firmly in planning for 2021 but right now management teams are focused on survival. Brand and corporate agencies that have a track record in purpose-led are taking an assertive leadership position.
