Publishers grope in the dark for signs of what ’s to come and agencies face an identity crisis

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‘The world isn’t going back to where it was’: Publishers grope in the dark for signs of what’s to come

Over the past week, in discussing the current situation with top revenue executives at publishers, I return to an analogy: Waking up in a hotel room (remember those?) in the middle of the night and the momentary confusion you feel as your eyes attempt to adjust to what seems like impenetrably thick darkness in an unfamiliar room.

“We can sort of see where the wall is,” replied the CRO of a major digital publisher to this analogy. For this exec and many others, seeing the outline of the wall — or is that the dresser? — is an improvement from a week earlier.

Here’s the outline of what is hazily becoming clear:

This is a long-term issue.
There are binary camps emerging. One group believes the economy, and therefore the industry, will snap back to as it was, bruised but ultimately with strong fundamentals. The other camp sees a long, years-long grind and a sharp break. More people I speak to are seeing a scenario closer to the pessimistic camp. I haven’t heard anyone report anything less than a 20% decline in revenue from original forecasts. That is going to force further tough choices that go beyond pay cuts, as we saw with moves to cut staff by Group Nine and Bustle Digital Group.

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With ads on hold, agencies face an identity crisis

Like many business owners, the first reaction to the unfolding coronavirus crisis by ad agencies was to engineer a remote workforce to working as close to “business as usual” as possible. Agencies were quick to adopt digital collaboration tools, pitch clients over Zoom and attend virtual happy hours.

But with the world economy facing a deep recession, even a new Great Depression, and much of the world economy effectively shut, advertising agencies are faced with an uncomfortable truth: For all the talk of “business transformation,” most are still in the ad-making business when that’s the last thing clients need.

Richard Robinson, managing director of marketing consultancy Xeim Advise, told me he’s been asked by marketing directors over the past few weeks, “What can I do if I can’t produce any ads?”

“The fight for the survival of the client brand: That’s the client brief at the moment,” Robinson added.

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