As we see more and more of the fallout from the initial coronavirus wave and subsequent stay-at-home orders, one thing that’s clear is that the ad agency landscape is changing.
According to the World Federation of Advertisers (WFA), between March 2020 and April 2020, the number of large multinational marketers holding back on ad spend went from 19% to 52%. 92% state that COVID-19 will have a long-term impact on operations.
The WFA also reported in early May that global ad budgets are expected to be down almost a third in 2020. For agencies that rely on advertising investments as part of their revenue, this is devastating. Pierre-Nicolas Schwab for Into the Minds reported on May 6, 2020, that “Depending on the agencies, the figures we have had access to show an impact, over April 2020, of -54% and -91%” depending on the portfolio.”
Many large agencies are expected to weather the financial storm—although not without their own layoffs and cutbacks—but many smaller agencies cannot handle such a financial blow.
Ad Agency Rescue
As Deena Kamel shares for The National, “This year was slated to be a lucrative [advertising] period with mega events including the Tokyo Olympics, US elections and sports tournaments but may shape up to be the worst for advertising giants such as London-based WPP, Paris-based Publicis, US-based Omnicom and Interpublic Group…Advertising agencies face steep revenue losses and some may not survive the pandemic.”
CNBC reported on May 19, 2020, that “Experts expect business bankruptcy filings to rise in late summer, after loans from the Paycheck Protection Program run out and expanded unemployment benefits end (scheduled for July 31).”
You can expect ad agencies to go under, merge, or get acquired and dismantled—perhaps the one your brand works with could be in this number, and clients who don’t lose their agency may still lose their account executive to a round of layoffs. It’s essential to handle this in a way that will preserve your campaigns and data, maintain important relationships, keep your business reputation healthy, and create a plan for moving forward.
In running a rescue agency for the last 6 years, I have gained significant experience in how to handle agency turmoil and change. Here are our recommendations for what to do if your agency goes out of business:
- Have compassion. Everyone is facing new, often life-changing challenges right now.
- Maintain good relationships and grow your network.
- Look for a rescue agency or an agency that specializes in transitions.
- Remember the value of the institutional knowledge that your existing agency has.
- Be proactive. Remember who your runner-ups were the last time you went through an agency selection process and reach out to them.
How to Professionally Fire Your Ad Agency
We also regularly see new clients who have had to end a relationship with their previous agency. There are steps you can take during this process that can significantly help smooth the transition to a new agency.
I have found the guidance from the Forbes Agency Council’s Expert Panel very useful. They shared the following advice on how to end a professional relationship with a client that is equally applicable for a client ending a relationship with an agency:
- Remain ethical and honest. Your reputation will be reflected in how the situation is handled.
- Keep professional. There may be something you need later on from the old agency, and reputations and relationships matter regardless of whether the business relationship is ending.
- Communicate the dissolving of the relationship directly.
- Don’t delay. When you know things are not working and efforts to address issues have not been effective, take action immediately.
- Seek mutual respect. It’s possible that the other party also recognizes the need for change, and will work towards an amicable parting.
- Don’t burn your bridges. Individuals at the agency will remember you, and those connections may be important in the future.
- Always communicate clearly and with professionalism
- Remember to separate the business from the person. You are usually not ending any personal relationships, just business ones.
Liz Alton offers additional important considerations in How to Break Up with an Agency Safely for Customer Contact Advisor. Take time to carefully review your contract with the agency—consider having a lawyer work with you on this. Create a list of everything the agency has access to and create a cybersecurity plan with your IT department. “Help mitigate any risks of injuring an agency relationship by identifying wide knowledge gaps that may exist and how they will be filled.” And finally, another reminder to keep things positive. As Alton says, “The creative community is small, and having a good reputation as a client will help you attract the best talent over the long term.”
After the Agency Break-Up
Whether your client-agency relationship ends because you’ve fired them, they’ve gone out of business, or any other reason, there are some very important things to know about your rights. First off, the agency should handle providing you with everything you need to continue your marketing and outreach activities. Ian Lurie writes for Portent that “If your agency built something for you, created something or managed something, it’s probably yours.” But taking possession of all that is rightfully yours isn’t an easy process. If this is a struggle, it’s a reminder that moving on from that agency is the right choice for your business.
Lurie lists a variety of things to make sure you receive from your agency: all creatives including video, audio, and photoshop files, all web copy (provided as text files not just web pages), your domain name, all reports and audits, pay-per-click accounts (information about keywords, campaigns, and ads are essential), software, analytics, the house email list, and all social media accounts and access.
Ad agencies don’t just run ads. They build history, create and track your reputation, become stewards of your brand voice, and build social proof through various ad campaigns. The people who worked on your campaigns hold a lot of knowledge, sometimes more than the brand managers or in-house marketing directors about marketing activities. This is another reason to try to maintain relationships, as you never know when 6 months down the road you may need a piece of information tucked away in someone’s brain. Remember that all of these things have value. Lurie concludes, “The assets and history you paid your agency to create have real value. You deserve to keep that value when you switch firms.”
Another important step after you end an agency contract is to conduct a recap with your team. In How to Get Over Your Last Agency Break-up, Josi Lugo (for Tribu Creative) offers the following points to discuss: what worked and didn’t work in the agency relationship, what do you need for marketing now and whether your goals have changed, do you want an in-house marketer or an ad agency, and keeping an open mind as you look for a new agency.
How to Find a New Agency
You hired an ad agency in the first place because you wanted expertise from outside your company. Just because things didn’t work out (or the agency closed) doesn’t end your chance of finding the right agency that’s a perfect match.
In Nathan Harris’ article for New Perspective about how to break up with your old ad agency, he gives these things to look for in your next agency: look for an agency that has experience in companies similar to yours, find out about their billing structure and retainer, look at what marketing channels and methodologies they use, and ask how they’ll report to you on performance, and how they’ll communicate in general.
We also highly recommend you talk to the individuals who will be directly handling your account, not just the executives pitching their agency. Before you issue an RFP read this article about the pros and cons of using RFPs in the agency search process. Unfortunately, the industry has a reputation for glossing things up in the introductions and then pawning the actual management of your account to very junior employees once a contract has been signed.
At KPI, we make sure you have a chance to meet and talk to the people you’ll be working with personally. This personal match helps us provide the very best expert service to each account—and it keeps your account manager directly accountable to both you as the client, and us as the face of the agency. There are other agencies equally dedicated to connecting you to the client manager and subject matter experts who will be doing the actual work on your account.
Opportunities with a Fresh Agency
As with so many things, the crisis that the coronavirus pandemic is bringing also brings opportunities. Finding a new agency who is successfully operating under the new landscape we find ourselves in, can set your brand off in a powerful new direction, use emerging platforms to better capture your audience, and bring new energy to your marketing campaigns.
Jaime Robinson, the co-founder and chief creative officer at JOAN creative says this about the opportunity in Fast Company, “What we’re trying to ask ourselves is, what are some things we can do now that we couldn’t before? Depending on how long this goes on, Hollywood’s pipeline is going to be pretty empty. This could be an opportunity for brands to consider how they can create entertainment.”
If you need to find a new agency or if your campaigns need rescuing I’d love to talk. In KPI agency’s work as a rescue agency, we seize the opportunity to bring fresh eyes, creative thinking, and innovative solutions to brands who have been stuck in a stagnating relationship with their old agency. Often, it’s more effective to just step in and fix a failing brand reputation than it is for that company to try to dissolve a years-long retainer and then find a new agency. Whether it’s under these circumstances, or any other challenge your company is in, we’re here to help.