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.

Never Before

The invisible threat to your agency. I’ve owned my agency for 25 years, and we’ve never faced anything like 2020. A pandemic, having to abandon our offices, a recession, and the social unrest that much of the world has experienced for the last several months. All of them have tested and taxed our leadership chops like nothing we’ve lived through before.

Each of them on their own poses a threat, but the combination of all of the 2020 bizarre realities has created what I think is the most dangerous threat of all. What makes the threat even more insidious is that it can go undetected for a long time until it’s really taken hold.

The threat is the fragility of your team’s mental health, not to mention your own.

Many agency owners are talking to me about the overall malaise among their team members. I think when the pandemic hit, we all stood tall and were determined to endure the 2-3 month lockdown. But as we approach the 9th month of this, no one is unaffected. Productivity is lagging, tempers are flaring, and the fatigue is hard to ignore. We are all juggling more at home/work than is humanly possible, and we’ve been doing it for the better part of a year. This isn’t a problem we can just wish away or ignore.

Here’s how some agencies are helping their teams hold it together.

Mandatory days off: Some agencies are shutting down on certain days or limiting access to email/servers after 5 pm to force their employees to take some downtime. Other agencies are strongly encouraging their people to use their vacation time rather than lose it.

The zoom cocktail parties are passe but fun is still being had: Most agencies abandoned the zoom cocktail hours sometime during the summer. But they are finding ways to be creative/have fun with contests (pumpkin carving, BBQ cookouts, etc.).

Giving employees access to mental health resources: Many agencies are reminding their employees that their insurance covers mental health treatments and even providing employees with a list of providers.

Talking about it: The truth is, most of what is stressing out your team has nothing to do with work. But it is still seeping into the agency and impacting our work. Investing in meaningful conversations with your team members and talking about it as a group (crowdsourcing solutions) is helpful and healthy. It’s not just your employees. It’s you too. I feel it. You are bone tired. Physically, mentally, and emotionally. You’ve been surviving on fumes for a while now. And unfortunately, it isn’t over yet. Whether your agency is incredibly busy and scrambling to manage the growth or you are still struggling to rebuild after this past spring – you are worn out.

No one is going to mandate you do something about this. If I thought you’d listen – I would. But you’ve got to recognize that you’re dangerously close to crashing and do what you need to do to refuel and replenish.

For some of you, that might be a complete detox from your agency for a few days and hiding out in a cabin. For others, it will be getting on a plane and being anywhere but home. You’re going to have to self-diagnose. But I’m telling you – this can’t wait until you take time off in late December.

I know you’re looking longingly at 2021. But don’t ignore this threat in 2020.

Lovingly contributed by Drew McLellan of AMI

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!

Guest Contributor – Drew McLellan of AMI

If there has ever been a year when our confidence has taken a knock to the chin, it’s this one. If you are like most agency owners, January and February gave every indication that 2020 was going to be a break-out year for you.

Many agencies reported the most robust January they’d had in a decade and were looking to exceed year-end goals. And then COVID hit. Many of us went two to three months, feeling it was inappropriate to sell at all, and when we did, it was a bit apologetically.

As if that was not enough, the combination of COVID, racial tensions, economic challenges, back to school maybes, and just feeling like we are still being restricted and contained at every turn has caused an underlying malaise in just about every human I know.

Muster Up the Courage – Given everything we’re all carrying on our shoulders right now, how in the world do we muster up the confidence to sell?

Marketing and sales are all about confidence. When you believe in what you’re selling, know it is the right answer for the prospect, and can see the benefits the prospect could enjoy – it’s much easier to approach a new opportunity and offer your assistance.

Focus on the facts – That’s where I think we can regain our confidence – by focusing on the fact that we have something valuable to offer and seeing sales as us offering assistance. Your marketing should be helpful and useful, which builds trust. Once the trust is seeded, sales is about continuing the trust-building while offering tailored solutions that are going to exceed expectations.

Barbara Corcoran, from ABC’s Shark Tank, recently shared a letter that she wrote to the show’s producer Mark Burnett. It’s clear from the letter than she had received a “thanks, but no thanks” response to her audition and I’m sure Mark expected her to exit gracefully.

Instead, she sent him this letter, outlining very respectfully why this was not the right decision. Her arguments were not about her but how he was taking a more significant risk by not allowing her to come to LA for the final tryout, even though her rival for the position would be there as well.

She called Burnett’s rejection a lucky charm and then gave him point by point suggestions of how his final decision would be more reliable if he reconsidered her for a role on the show.

The entire letter exudes confidence. There’s nothing arrogant about it, but as she builds her case, you begin to understand what a formidable force she really is. She ends the letter acknowledging that it is his decision, but she’s already booked her flight and hopes he invites her to get on that plane.

While the letter may not be your style — I know you can find your own way to exude that level of confidence.

It’s about having faith in yourself and what you sell. It’s about truly understanding what your potential buyer is trying to accomplish, his/her situation, and being helpful to their efforts. And even when you get a “no”, remembering that it’s not really a “no”. You’ve planted a seed that you need to nurture. Sooner or later, it will grow to a “yes”.

How can you bake that confidence into your sales efforts for the rest of the year?

Editor Note: Your paid Manager or EVP Plan will bring qualified opportunities to your door.

Sometimes Amused: As the owner of an agency search consulting service, I’m sometimes amused when an advertiser is surprised when every invited agency wasn’t interested in their opportunity. Maybe that harks back to the days when consultants were guilty of sending out 50+ RPF’s (i.e. – the infamous cattle call) and waiting for the chips to fall. Under today’s circumstances, you might expect agencies to pounce on everything new that comes their way. That’s clearly not the case, and never was, but for any company looking to engage new “marketing outsources”, it helps to know what attracts an agency. Here’s a thumbnail.

What agencies want to know: At the onset, agencies like to know why they were included. Was it their reputation, creative, awards, profile in a database or experience with the consultant.  Agencies expect to be talking directly to the client. Gone are the days where the consultant served as a conduit between the two, screening and interpreting the message content. An impersonal RFP calling for pages of agency detail coupled with an admonishment not to contact anyone at the company is an immediate Red Flag. An agency wants to be speaking and dealing with the person who is managing the review, an individual with authority, well beyond the collection of candidate credentials. An initial due-diligence phone interview saves everyone time and money. It gives the agency a chance to ask and answer and the client to reciprocate.  Here the parties evaluate “chemistry”, the magic elixir that will or will not cement the two in an extended relationship. Questions such as – Is this a project or an extended relationship? What’s the desired measurable outcome? Then budget, that elusive budget.  An agency worth hiring needs to know what funds will be available to manage the assignment. Not precisely but order of magnitude. Don’t shadowbox there. Summarizing, that phone interview should have given the agency sufficient information to produce and send a package of preliminary agency materials with relevant experience, similar client challenges, creative strategies, client testimonials, agency capabilities and credentials.

There’s always fallout: There’s always an immediate fallout from initial invitations; then more will follow phone interviews. Upon receipt of agency materials, corporate colleagues are assigned to examine and evaluate what was received. Some agencies are eliminated (for any reason). Ideally there should be 6-8 firms that remain.  Schedule those for on-site or Zoom visits. Then identify the 2-3 finalists. There’s clearly more to those visits and final presentations than I’ve described; the entire process is where a search consultant earns their stripes!

Editor’s Note: Your agency may already be a member of Drew McLellan’s Agency Management Group. Drew works extremely hard to help and guide his agencies. That’s particularly true now. His advice is good for all.

For most of us, we are approaching the six-month mark of the most challenging time of our professional lives. If we’re being honest with each other and ourselves, it is taking its toll. We have to listen to what’s happening in our hearts and give a lot of credence to the nudges that are subconsciously trying to keep us whole and healthy through this.

It doesn’t really matter if your agency has never been busier or you are scrambling to bring in enough new business to keep your team intact — none of us are getting through this unscathed. Everything is just more difficult. We’re not meant to be this isolated, and the cracks are showing. The burden of leading your team through this is a heavy one.

The coping mechanisms we deployed in March are starting to wear thin and everyone is feeling very frayed at the edges.

You may be experiencing it differently, but many of the agency owners I’ve talked to have felt themselves slipping into this odd mix of anger, frustration, and depression. We feel like we have to keep it contained because our team, our family, and our friends are counting on us to lead them through this.

And we will — but we have to lead ourselves through it as well.

The problem is, the pressure of that containment is going to win out if it hasn’t already. I know for me, I had to consciously find ways to release it before it exploded in a really ugly way. I had to take back what control I could and recognize that I do have choices that COVID has not taken away from me.

Every one of us is going to have a different pressure valve. And our own coping skills are whispering to us what they are. You have to listen with intention sometimes to hear the nudges — but they are there.

For some of you, it may be about being with people who fill you up and finding a safe way to do that. For others, it may be getting away from technology and truly unplugging for a few days by a lake or a cabin in the woods. For yet others, it may be forcing yourself to take a few days off and indulging in whatever hobby brings you joy. I believe for most of us, it’s going to require something significant to help you keep your equilibrium.

I know you’ve been coping through this thing in lots of little ways. I’m not talking about another zoom cocktail hour or FaceTime with a friend. All these options are good — but it feels like the pressure is winning out for many. It’s time to truly take a break of some kind to release that pressure valve.

Listen for it. Find it. Give it to yourself. This isn’t about being selfish. It’s about making sure you don’t run empty.

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.