Act fast or risk being sidelined

Three key focuses for agencies to thrive post-pandemic.

What do agencies need to do to avoid being left behind? Armadillo's Chris Thurling outlines three key focuses for agencies to thrive post-pandemic.

Our industry has just experienced its worst quarter ever. With almost 64% of panel members registering a decrease in marketing spend and two-thirds forecasting a pessimistic financial outlook, July’s IPA Bellwether Report has given us the hard data to prove what we have previously surmised.

Agencies need to respond fast or risk being side-lined. Three areas where I think we can make an immediate impact are: measurability, speaking the CFO’s language and the contribution we can make to our clients’ bottom line.

Communicate the benefits agencies bring

Clients are faced with a bewildering range and volume of different agencies and Covid-19 has given brands a good excuse to prune – as Ramon Laguarta, PepsiCo’s CEO, also says: "Sometimes a crisis helps [a company] to be more selective and to be more impactful, to generate internal momentum against simplification and focus against fewer and bigger. That’s what we’re trying to do."

There’s also a growing threat to agencies of clients bringing elements in-house – both as a potential cost-saving exercise and as a response to 'always on' marketing communications. As Laguarta acknowledges: "[through in-housing] we can actually get the same or more value for less money, which is obviously a terrific outcome for the company."

However, brands disrupted by Covid-19 need transformative ideas more than ever. Agencies are in a unique position. DDB founder Bill Bernbach sums it up well, gendered pronouns aside; "We think we will never know as much about a product as a client. After all, he sleeps and breathes his product...By the same token, we firmly believe that he can't know as much about advertising. Because we live and breathe that all day long."

Talk in the CFO’s language

Historically, our industry has not been brilliant at drawing a line between what we do and things the brand’s CFO would recognise and value. We now need to get better at developing this dialogue. In tough times this is harder, but even more important.

As agency people, we need to ask ourselves if we really understand the goals and objectives of the finance people amongst our clients. Have we got under the skin of their targets? These will be different to those of the CMO.

We need to establish what our common ground is and communicate our value in their language. Marketing done well can make a significant difference to a business’ bottom line. You only need to look to companies like Coca Cola to see how the intangible value of its brand value underpins the net worth of the company.

How much of the marketing jargon that we use in our industry day-to-day resonates with the CFO, and, in turn, how much financial shorthand do we understand? If having direct access to them is proving difficult, let’s look to our own resources. Are we making good use of our own finance people, for instance? They have all been schooled in same language – use proxies where it’s helpful to do so.

Equipping everyone with a basic grounding in the business side of the industry we’re involved in is important – a course like the IPA’s Commercial Certificate can really help with the fundamentals.

Focus on measurability and effectiveness

Demonstrating measurement and effectiveness is nothing new. However, given that client budgets won’t be getting back to pre-Covid levels any time soon, marketing departments and their agencies will be under more pressure than usual to deliver tangible results. That means even greater scrutiny for every pound spent.

We are up for that challenge at Armadillo. Our focus has always been on cost-effectiveness – it’s baked into our DNA . We are lean and results-driven and have consistently delivered good value for clients which has led to long-term relationships with clients such as McDonald’s and Disney. Despite working with a major client in the severely-impacted eating out sector, we’ve seen them double down on CRM activity. For example, while other channels have been cut hard, our budgets have grown. That’s mainly thanks to proving strong ROIs on a continuous basis pre-crisis.

We believe the goal should be to have an end-to-end relationship with customer – tracking all the way through from first point of interaction through to purchase, to help influence the decision-buying journey.

Balancing pragmatism and optimism

Now is the time for agencies to create clearly defined market positions in line with commercials. We need to fulfil our role of trusted advisors, drawing on and demonstrating specialist expertise, experience and performance. We need to stay focused and be even more open to collaboration.

Whilst this is not a time to be naive, we must also try to balance our pragmatism with optimism. The world is not coming to an end just yet. Take our worst hit client in the travel sector. We prioritised pivoting to meet a dramatically different set of challenges – by thinking like stakeholders in their recovery rather than hard-done by suppliers, we’ve seen projects start to flow again far sooner than we might have expected.

Agencies must keep scanning the horizon for opportunities and be prepared to move the business in new directions to stay in the game. We’ve long positioned ourselves as nimble and responsive – those that can now display those attributes will prove invaluable.

This has not been an easy time, but we need to avoid giving in to nostalgic defeatism. A crisis like this could kill agencies off, but equally, if we could get more on the front foot, learn from past successes and fuse those learnings with the good things we’re doing now, this could also be the start of our renaissance.

Chris Thurling is Chairman at Armadillo

Last updated 25 November 2020