IPA Finance Director David Clasen outlines the key questions that agencies need to ask of their businesses during the coronavirus crisis.
Between the two of us, Paul Bainsfair and I have 64 years at the helm of advertising agencies and investment banking and we have lived through a number of crises – micro and macro. Each is different but each has commonalities which are worth thinking about now. Especially as agencies are planning the next few months ahead.
Here is what we know to be true.
There’s an old saying in the City that “profit warnings always come in threes”. It speaks to the human inclination to want to see a rosy outcome.
It was uncanny how often it turned out to be right and how a more radical response to the initial crisis might have led to a better outcome than the figurative “death by a thousand cuts” trajectory.
These profit warnings, when a public company is compelled to alert the equity market analysts and investors, that the current expectations for their future profit announcements are out of whack with the public company’s own internal expectations, are almost always micro in nature and relating to circumstances particular to the company or sub-sector in question. When the thing affecting profit expectations is more widespread, the equity market typically adjusts, at least directionally, pretty quickly.
But some of the lessons are the same. First-off, crises usually get worse before they get better. So we need to plan for this and be radical. In thought and deed. These are broad sentiments which need to take account of context, not least the Government’s welcome interventions to date.
The recessions of the late 20th century, the Barings crash in the mid-90s, Lehman et al. in 2008. These were all primarily economic, with the latter two having some element of fraud or chronic misjudgements. The SARS crisis is more comparable to coronavirus, not least in its origins, but by the time the ripples hit the UK, it too was more economic than medical. There are other memorable scares too like Ebola and Malaria which had less of an economic world impact. So crises are inevitable.
For agency management planning their future direction, there is already a wealth of information for the immediate: such as looking after the mental health of your staff and the practicalities of working from home and things to consider in times of acute economic shock (many of them here); but what else should be on Agency Boards’ agendas?
A high priority should be succession planning given the medical dimension of this particular crisis. Who is going to stand in or step up if key members of your staff are incapacitated for weeks? And how many different scenarios do you need? And who else needs to know?
What is your new communications plan. How can you communicate internally efficiently and externally copiously? There’s a plethora of new technologies, almost as though developed for this. Try them out. See what works for staff; see what works for each client. Then focus on those ones, to reduce the stress of channel overload. Above all else, don’t let a communication vacuum happen because it will soon fill with drivel or poison.
How can you use this time to reinvent your agency offering for a more virtual world? Now is the time to do it. Keep reimagining and reinventing.
What do you really need to service your clients’ needs? How has “relevant” changed in the last few days? Be ruthless in ditching what has just become pointless.
What do you need to retain to be ready for the post-COVID-19 world? In the aftermath do not expect things to be the same as the pre-COVID-19 world. Working practices are sure to change. Some values are likely to change. These affect markets. There will be new realities.
Is that cost or expense really a driver of revenue? Examine each one forensically. You’ll not want to look back and think you wasted any cash. Cash is going to be precious.
Be under no illusion that your clients will be thinking about survival too so make sure you are working together.
Their priorities should be your priorities now.
There is a reason why the most appreciated footballers are creative midfielders. They find time under pressure.
Often when others are losing their heads. Be the same and keep looking up for any opportunity - not cynical opportunism but new unfilled market needs that your agency’s skill set can help to fill?
Now is the time to prove your agency’s worth to its clients. How can we best listen to our clients and become a more trusted adviser in these difficult times?
To establish your trusted advisor status you have to show the client that you are putting them first. You've got to demonstrate you can give valuable advice beyond your specialism. You need to show you have broader knowledge of business in general, and of the client's business and industry specifically. That means you've got to do your homework.
Your contacts may be fearful, so find ways to make them more valuable to their bosses.
Another old saying, oft heard in the City is “the darkest part of the night is just before dawn”. We are not there yet but we will get through this crisis and business will go on. Just getting though the storm will be our biggest managerial challenge but how we act now is a huge opportunity to strengthen bonds with our clients and our people and be the making of our futures.Access IPA services and advice during the COVID-19 outbreak