by Alison Weissbrot

US agency sector will lay off about 52,000 jobs

The US agency sector will lay off about 52,000 jobs over the next two years as media spend declines 23%, Forrester predicts. Agencies are projected to cut 35,167 jobs in 2020 and 16,578 in 2021.

The global picture is even starker, with the big six agency holding companies poised to eliminate an additional 49,695 global positions by 2021.

“It’s a dismal forecast,” said Jay Pattisall, analyst at Forrester and author of the report. “Layoffs are inevitable and already underway.”

To date, all of the major holding companies have announced layoffs, furloughs and voluntary pay cuts. This activity will only continue as large swaths of the economy remain shut down and categories such as travel and retail are dark.

“This set of circumstances is unprecedented,” Pattisall said. “The contraction of spending is across the board, and agencies as a service provider take the biggest hit.”

Advertising agencies, which have struggled to adopt technology and are experiencing a long-term financial decline, will be the hardest hit by layoffs.

Advertising agencies already account for more than 50% of layoffs across the sector, and they are currently laying off 15% of staff on average, compared to 7% at digital and media agencies. Digital and media agencies offer more relevant services to clients looking to embrace digital transformation and communications.

“Economically, [advertising agencies] have been the most challenged in the United States,” Pattisall said. “Advertising has become a more programmatic and data-driven offering, and [advertising] agencies have been slower on the uptake of that technology.”

As agencies shed jobs, some will inevitably close, especially those that skew toward pressured categories or traditional services. Smaller agencies are more likely to close than larger ones with more resources or cash in the bank, but public companies are held to greater scrutiny for cost-cutting and creating shareholder value.

“The impact should be pretty even across the two,” Pattisall said. “But it’s likely that you see publicly owned companies taking action earlier because of the economic pressures.”

Silver lining?

As agencies are forced to reduce headcount, there’s “tremendous opportunity” to reshape their talent pool, Pattisall said. Agencies that embrace automation and hire talent with multidisciplinary expertise, as opposed to channel-specific knowledge, are better positioned.

“Ultimately, it will be less specialization and more of a multiskilled workforce that includes new systems and tools,” he said.

Agencies must also accept technology and automation as a fundamental part of their workflow. While digital and media agencies have been adopting automation, machine learning and AI for years, advertising agencies need to catch up.

Creative agencies, traditionally resistant to technology, have an opportunity to use automation to surface insights that inspire ideas, help teams collaborate and scale production. And media agencies can lean even further into AI and machine learning to inform audience segmentation, channel selection, budget allocation and measurement.

“I see all agency capabilities being assisted by automaton to one degree or another, from finance to HR, all the way through to strategy, creative and production,” Pattisall said.

Cuts to the agency workforce could inspire CMOs to bring more work in house, either to cut costs in the short term or as a result of agency talent drain. There will be more opportunities for brands to hire in-house talent or freelancers who have been laid off from agencies.

But eventually, companies will have to decide whether a long-term investment in an in-house team is worthwhile. And if it’s not, marketers have to play a role in reshaping agency structures and compensation models so they can survive in a new reality.

“CMOs that cut these corners may find themselves continuing to suffer from the impact of the shortening tenure inside the C-suite,” Pattisall said.

How in the world can you expect to stand out; how will anyone find you? If you’re an ad agency or any of its derivatives, you’ve been told for years there are 29,999 more agencies in the US competing with you, wanting to be found. So what’s the secret for breaking through the clutter to connect with ideal clients?

Follow this… Not too many years ago in the mid-nineties, most agencies were content to prospect within a limited-mile radius of their office. Biz Dev consisted of direct mail, modest early-stage email and telephone outreach. And most competitors were also within that radius, but certainly nothing like 30,000! From the client’s perspective, other than Yellow Pages and Redbook, there was a crying need for a place or service they could use to search and find perfect-fit agency candidates. In 1997, to answer that need we introduced AgencyFinder.com, one place clients could visit to find and explore a database of extensive agency data contributed by our many good-friend agencies themselves. Substantial Internet traffic found us and for quite some time the “world was our oyster.”

We delivered no-cost algorithm agency search coupled with HI (human intelligence) consultant-assisted guidance. That was good for the industry because agency websites were themselves at an infant stage. Maybe you don’t remember, but agency websites were often wanting! Then after quite a spell, AgencyFinder copycat directories began to surface. Disappointingly directories embraced the “Google Model” – the more an agency paid the more prominent their display. Not really fair to agency or client. Close but “no cigar” in what they delivered, but they chipped away at our traffic anyway. And agencies were beginning to learn.  SEO and SEM; keywords, social media – all to vector searching clients directly to their websites. And that’s where things are today. Slowly but without mercy, those 30,000 agencies each introduced websites all decked out in their best SEO, shouting “I’m here!” But what is here? Is it equivalent to searching a database of 4,500 prominent agencies committed to new business who drew upon more than 500 data fields, 7 essays, case histories and website access to factually and visibly define their firms, or is it the relatively shallow agency website data Google will use to find candidates? For local search Goggle is powerful, but most clients are well beyond locations as their primary stipulant.

So what to do… well, what goes around comes around. Direct mail is again shouting “look at me!” Agencies advise clients to target; so agencies should target as well. Email these days is destined to the giant junk mail folder in the Cloud. Clever DM can be a pleasant and compelling surprise. That coupled with professional telephone outreach to ask – “what did you think of what I sent?” can begin a meaningful business relationship. But don’t forget to check out or overlook AgencyFinder.com and those few like us that still offer the precision and free service that’s always been our forte’. If you’re an agency needing targeted client introductions Enroll Now. If you’re a client needing “perfect-fit” agencies, Search Now!

Right after my mom passed away, several wise friends who had endured a significant loss of their own counseled me not to make any big decisions for at least six months, because grief brain was real. It’s a physical reaction that can release high levels of stress hormones in the body leading to confusion, fuzzy thinking, disrupted sleep, and depression. Sound familiar?

Looking back at that time, I recognize how grateful I am that they offered that advice and I was smart enough to take it.

I think we’re all suffering from grief brain right now. We are grieving the killer year our agencies were on track to have. We’re grieving the normalcy of a collaborative work environment without social distancing and wiping everything down. We’re grieving clients who have paused or left. And each of us is grieving our personal losses on top of the work ones.

It’s easy to rush to an extreme decision when you’re in the grips of grief brain. It feels good to take back the control. It makes sense in the moment to make a radical change in your business based on what you know about today. But, for the long-term health of your agency — please proceed with caution.

There’s a significant difference between the reality we’re in, versus suffering the loss of a loved one. One is a new and permanent reality. This is not. We are not all going to be wearing masks forever. We are not going to be wiping down every surface forever or feeling anxious when a stranger bursts our six-foot bubble.

I have no idea when we’ll be past COVID, but we will get past it. This moment in time is not our new normal.

If you’re heading towards a huge decision — find people to think it through with you. Ask them to play devil’s advocate. Force yourself to explain in as if it were 2023. Does it still make sense?

It might be the right call. Or it may be the right call for the rest of 2020 but a terrible decision for 2021. A rash decision in 2020 could unravel what you’ve spent decades building. Just go slow and double-check your thinking.

Don’t let grief brain play its tricks on you.

Great thoughts from Drew McLellan @ AMI

In last week’s notes, I talked about all of the ways agencies are using this strange moment in time as the impetus to create something new or give something old a fresh twist. The ingenuity that you are demonstrating is just one of the reasons why I think your agency is about to bloom in some very cool new ways.

Stay with me, this might explain and offer a fix. Here at AgencyFinder.com we use our own mail server for Flash Reports and group email intended for our registered agency contacts. We don’t use services like MailChimp or ConstantContact because we don’t want their Opt Out feature to remove a critical agency contact. Even in our emails, an incorrect Opt Out request can end up taking the agency off-line. Read our Opt Out instructions below for details.

For years our incoming mail came in through Earthlink. They proved to have an aggressive filter that seldom grabbed anything we needed to see. Your agency should want to see all non-malicious email that arrives so you can pick and choose. After all, we’re both wanting to engage anyone looking to hire an agency. In  our case, we’re also on the lookout for agencies wanting to enroll for new business.

Six months ago, we experienced a change. Email from my ISP Webmaster wasn’t getting through to me. When he asked why I hadn’t been answering, I went looking. Not in my computer’s Outlook Junk folder, but I did find his messages in the early upstream Earthlink web-mail folder. To make a very long story short, EarthLink had hired a new aggressive third-party service to screen and filter their incoming mail. And I was told in no uncertain terms that they couldn’t and wouldn’t do anything on our behalf. My Webmaster tells me all the carriers have tightened up considerably in response to bogus COVID-related traffic. And all that takes place well prior to whatever filters you have set locally, including your White Lists. So for incoming mail we switched to Gmail with good results.

But there’s more. In our recent group emails, we’re seeing evidence of increased blocking by Outlook. Bounced email example: “Outlook blocked access to the following potentially unsafe attachment.” All I did was use a semi-colon in the subject line. If you knew all this already, great. If not, hope it helped!

Note Example: To remove only yourself from AgencyFinder, Opt Out here. To remove your agency from any future invitations, you must be a C-Level Officer. Type REMOVE in the subject line and reply.

The word on the agency street is that most want and need new clients now, not tomorrow. But how realistic is that? That expressed urgency has everything to do with orders to sequester-in-place issued for the COVID-19 fiasco and then the ensuing riots in protest of the killing of George Floyd. Just as some states were beginning to allow phased openings, the country-wide riots frightened many people who in-turn chose not to travel for work to city-center properties or to begin shopping in ernest. The result – a continuing drag on the prospect of renewed commerce and positive agency cash-flow.

After months of deep cash-flow reductions, many agencies, even those who managed to snare some of the government’s stimulus monies, were down to spending for absolute necessities, and that didn’t initially include spending for future business development. So what’s an agency to do? Some rather lucky shops may have been cultivating opportunities during the past months and now feel comfortable working to close that business. For them that’s great. But the majority found themselves stuck in limbo; choosing not to reach out to prospects and at that same time, prospects were also “hunkered down” and constrained their research and outreach faced with an uncertain future.

OK, time to get moving! Consider these options and sequence for deployment. Options are sorted by timing and costs. Not considered are items and inventory already owned by agency. Nor is talent or training of agency individuals.

Code: Timing A-Now B-3 months C-6 months D-9 months  Costs F-Free $-charge

1. Agency Website content – AF
2. Agency Telemarketing – AF
3. Agency Email blasts – AF
4. Match-Maker enrollments – AF$ i.e. AgencyFinder.com
5. New Business Newspapers – Leads, espionage – A$ i.e. Ratti Report, Winmo
6. Agency Website SEO & PPC – B$
7. Agency Direct mail w/phone follow – B$
8. Directory Listings – BF$ i.e. Clutch, AgencySpotter
9. Outsourced (Third-Party) appointment setting – B$ i.e. RSW-US
10. Agency Search consultant enrollments – CF i.e. See 4A’s
11. Agency LinkedIn Programs – C$
12. Agency Speaking engagements – CF
13. Agency experiential events – C$

This rather long list illustrates the fact that agency business development is no part-time proposition nor is it for the faint-of-heart!  Have at it.

Advice from Drew (McLellan of AMI Fame)

Penned today by Drew McLellan of AMI

We are living through what feels like a surreal moment in time. I don’t know about you, but there are times when I have to stop and think “Is this real? Am I really on house arrest, wearing a mask to the grocery store, and feeling offended when someone stands within three feet of me?”

It happened to me today. The weather has finally warmed up and I was in the backyard, trying to exhaust the puppy so I could get some work done. I took in a deep breath of fresh air, laughed at the puppy pouncing on the ball I’d thrown, and thought, “today is a good day.” It felt perfectly normal.

And then I remembered. It’s like my mind knew I needed the break and so, for a moment or two, it gave it to me.

Yesterday (Tuesday the 7th) was the first day since COVID-19 really hit the US that I was not on the run from 7 am – midnight, or later. Like all of you I’ve been busy, I haven’t had time to react to the crisis and what it’s doing to our world, our industry, our agencies, and our families. Many of you had to scramble to get your team set-up to work from home and then you were dealing with the client pauses and cancellations and from there, you went right into applying for financial aid in whatever country you’re from.

We’ve been so busy trying to keep our head above water, we haven’t had a moment to step back and process what is going on. But I expect that for many of you — that pause will come this week or next. And in that pause you may experience a flood of emotions that you’ve successfully kept at bay up until this point.

Over the last few days, my communications (calls, texts, emails, carrier pigeons, etc.) with agency owners have shifted. You’ve gone from being shell-shocked and very focused on your next task to being angry, frustrated, or sad as you face potential layoffs, financial goals that aren’t going to happen, and all of the unknowns ahead of us.

As I thought about what I wanted to say to you today, my first instinct was to dive right into what we need to do next. More tasks and action. That’s partially my type “A” personality. It’s probably tied to my enneagram type (the helper) and it’s what I know you look for from me in this newsletter. But, as I stood in my backyard and had to ask myself if this was truly happening, I decided that we all need to just stop for a minute and acknowledge what we’ve lost. We have to make room for the grief.

Grief is a funny thing. We can run from it for a time but sooner or later, it catches up to us. This is a lesson I’ve learned the hard way. You don’t have to wallow in it but you do need to acknowledge it. Otherwise, it just keeps getting in the way and you can’t get past it.

It feels like this week, or maybe next, is when we’ll all start the next chapter of this crisis. The initial burst of panic and activity has passed. We’re functional and we’re serving clients. Even though none of it is normal, we’re settling into it and now we need to figure out how to endure the virus as it runs its course through our countries and our agencies. Our job is to survive it.

There’s a moment before that next chapter starts when we can stop and just feel. Just vent. Just grieve. And then, we can get back to it. I’d like to suggest that you watch for a momentary calm in between strikes of lightning where you can simply stop and mourn what you’ve lost so that you can keep fighting for everything else.

I promise next week we’ll talk about what we need to do next.

Courtesy of Drew McLellan at AMI

I’m a huge baseball fan and one of the more interesting aspects of the game for me is watching how teams manage their roster. They only have 32 spots, 20 position players, and 12 pitchers. They have to play over 160 games with that small set of players on the team. They can’t afford for any of them to be in a slump for too long. If a player isn’t helping the team, they don’t stay on the roster for long.

They have to win with the team they have, so they can’t really afford to tolerate a player who isn’t contributing in a significant way. They can’t just add more people to make up for someone’s deficiency, so they’re forced to deal with sub-par performances in short order.

Unfortunately, our agencies don’t have a player cap. Which means we often tolerate too many games where someone on the team isn’t holding up their end of the bargain and the team suffers a loss as a result. I am working with a couple agencies right now who are dealing with the toughest thing I think an agency owner can face — wrong people in the wrong seats. If you’re a small to mid-sized agency, you have no wiggle room when it comes to your team. Everyone has to be an A or at worst, a B-player if you are going to survive, let alone thrive.

In this instance, I am not talking about having to lay people off (which also sucks) but I’m talking about coming to the painful realization that you hired someone to do a job they are not capable of doing. Odds are you and the team have been working around this problem for quite some time.

I can hear you now….”but they are:”

Great for the culture
Very popular with the team
Have been super loyal for a long time
Big client XYZ is their good friend
My baby’s godmother

I have heard, seen and honestly, lived through it all. If we are ever together and sipping a cocktail, ask me about the time I had to fire an employee a couple years after giving the eulogy at his daughter’s funeral. I cried like a baby through the entire conversation — but it was probably at least a year overdue. I allowed my personal feelings to put my agency at risk. Which meant I was willing to sacrifice my other employees, client relationships, and ultimately the business because I didn’t have the courage to have the conversation I knew I needed to have.

If our employees could wave a magic wand, this is the one thing they would change about us — that we take forever to take action when an employee is not adding value at the level they should. They resent it and over time, they stop working so hard because they figure out that they can simply live up to the lowest standard we deem acceptable.

As you’ve been reading this, some of you have had an employee that keeps popping up in the back of your brain. You keep trying to push it aside…but you know I am talking to you.

In baseball, when a major league player no longer plays at the level the team needs (or maybe he never did) they don’t just cut him. They send him down to the minors to rehab. But there’s a clear conversation that goes with that move — “Here are the three things you need to improve by X date and here’s how we will measure that improvement. If you can’t accomplish that, we’re going to need to release you so we have room on the team for someone else.”

That’s the conversation most agency owners are not gifted at having. The “You need to level-up or move on” conversation. We may have it passive-aggressively — but few agency owners are consistently giving their team performance feedback that is clear and direct, with rewards and consequences. (If you have not read the book Radical Candor by Kim Scott, it should be your next read) .

As you were reading this, if an employee did come to mind, make a commitment to yourself that you are going to resolve that conflict with the agency’s best interest in mind within the next 90 days.

Absolutely try to save them. But do not squander one of the few seats you have on the bus. If they can’t level up — help them move on. You owe it to the players that are earning their seat every day, your clients, and your agency.

Meyst contribution – this is SO TRUE for people in the new business development slot. It’s one of the few “measurable” jobs in an agcncy and it doesn’t take long to witness an ill-fit.