Perspectives - The crisis and the agency model

By Peter Horgan | 7 December 2020
Peter Horgan. Portrait by Rocket Weijers using a Samsung Galaxy Note10+ smartphone

This first appeared in the AdNews Annual 2020. Subscribe here to make sure you get your copy.

AdNews asked industry leaders their perspective on the year that was and the prospects for the road ahead:

Peter Horgan, CEO, Omnicom Media Group and MFA chair

Facing a crisis, our industry rose to the challenge. 2020 was not the year we expected back in January. When the proverbial hit the fan in March, advertisers slammed the brakes on media spend almost instantly. According to SMI data, in April — the first full month of COVID-19 lockdowns — we experienced a 35.4% drop in media spend. In other words, $331.13 million was pulled out of the market.

While this is not an experience I’d care to repeat, it was gratifying to see how the crisis helped prove the value and flex of the agency model for clients. Media agencies wasted no time scaling agency teams up or down to accommodate client needs — just as a lot of clients retreated, others had important messages that needed to be communicated or experienced increased demand in their category.

At a time of enormous disruption to business as usual, our industry stepped up to manage staff distress and safety, while maintaining a focus on adding value for clients. Seeing how media agencies rallied to keep as many jobs as possible safe through initiatives such as the reduction of hours and salary
sacrifices from senior leaders reminded me of the integrity and unity of our industry.

A pandemic in three stages

From a business perspective, we navigated the pandemic with our clients through three stages. First up was the tactical reaction as the crisis hit in March, followed by high-frequency re-planning (largely unpaid) through lockdown, informed by global and category sentiment analysis across verticals.

In the third stage, we worked together to formulate a strategic roadmap of how to win in the recovery.

The literature supporting maintained investment through downturns is ubiquitous, but is well captured in the post-GFC Harvard Business Review article, Roaring Out of Recession. The publication examined the performance of 4700 US public companies during and after three economic downturns (1980-1982, 1990-1991 and 2000-2002). The companies that emerged in the best shape were those that managed to get the balance between cutting costs to survive and investing in future growth.

As always, there are exceptions: airlines, travel and tourism have been hit massively by international border closures, enforced quarantine and lockdown measures. However, for the majority of companies, kneejerk cuts to marketing budgets will make it a lot harder to retain market share let alone grow once we emerge from the current crisis. The nuance of this situation is the need for contextual calibration as consumer sentiment waxes and wanes with greater volatility than the textbooks have witnessed before.

What will it look like at the other end?

As the latest SMI figures for August and the availability pressure for TV into November show, spending is on the rise — although still not at pre-pandemic levels. Sentiment is also improving in the market. I’d like to interpret that as the first signs that a cautious recovery is underway.

Yes, there has been significant pain, but we’ve learned a lot that will carry us through to the other end. 

Agencies have gained newfound respect by showing up as nimble and responsive partners. Importantly, we’ve also gotten a hell of a lot better at responding to the needs of our greatest asset — our people. 

As a leader, looking out for our people and helping them feel engaged and supported occupied a big part of my headspace from the beginning of this crisis, and it will continue to shape our focus for the year ahead. 

The COVID-19 induced crunch isn’t over yet, but I have a feeling we’ll emerge stronger and more appreciative of the things that count. 

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