I was a guest on The Digital Marketing Hub monthly webinar last week. The brief was to give my views on the challenges and opportunities for agency leaders both now and beyond the crisis. A – very – tough brief.
Here’s a summary of my thoughts:
Where to start?
To begin with a positive, I certainly think that this crisis has brought the agency sector together more (as it has our society as a whole). Despite the restrictions, I’ve seen more agency owners talking and trying to help and advise each other than ever before. Nobody would want these circumstances, but it’s great to see this in what is a very competitive and often protective industry.
People have said to me that agencies are all in the same boat. I don’t agree. I think we’re certainly all in the same storm but each agency (and business) has its own unique circumstances. Some are in small agile boats but without a lot of fuel, others are larger vessels that are harder to manoeuvre. Most are somewhere in between.
As things stand…
Because of this dynamic and the unique situation, it’s extremely difficult to offer general advice or guidance to agencies. This is far from a factual study, but from the people I’m talking to, numerous webinars I’ve attended and several surveys I’ve seen both here and in the US, the sentiment amongst agencies appears to me to be as follows:
60% think that they’re (sort of) OK. It feels like just over half of independent agencies are – reasonably – comfortable. Don’t get me wrong, I don’t know anybody that’s happy or thriving, but these agencies think they can weather the storm.
30% of agencies are struggling and are in survival mode. They’re taking drastic action including furloughing large numbers of staff and cutting costs. These agencies are either usually relatively new or have had significant client work paused or cancelled altogether.
10% of agencies are already in big trouble. They’re already saying that it will be a miracle if they can survive, if not the lockdown period, but certainly the economic conditions that are going to follow. Lack of cash is the main reason for their sensitivity to the situation.
This is broadly how I see the market at the moment. Whether you agree with my “temperature check” or not, I hope your agency is in the 60% group (or at least can make it into it). Sadly I’m sure that in the next 12 months we’ll see many agencies struggle and the 10% group may well increase.
Challenges & Opportunities
Individual agencies in unique situations are facing a perfect storm that the entire world is locked in. General advice is difficult but despite the nuances and complexity of the situation, I’ve attempted to capture what I see as the Top 3 challenges and the corresponding opportunities for independent agencies.
Effective leadership is an important ingredient for any successful business of course, but in testing times it can be the thing that decides whether the business survives or not. There has never been a bigger challenge for agencies than there is now. Leadership could be the difference.
Providing leadership is extremely tough at the moment though. It’s incredibly difficult to plan at the moment. Uncertainty is literally everywhere and providing your team with a vision for the future is hard many of our lives practically on hold.
Leaders know that this is a situation that will not be over quickly. Even when some sort of normal working conditions return, the economic backdrop will be extremely tough. It’s going to be a long haul and agency leaders will need immense stamina, guts and determination to see it through.
A leadership role can often be lonely, but the current crisis exacerbates this. For agency leaders, the stress of trying to make tough decisions whilst remaining motivating and optimistic can be difficult to cope with. For agency staff, the future of the business is important. For agency owners it’s often their entire hopes and dreams.
Working from home under lockdown has been difficult for most, despite what technology has enabled us to do. I’ve spoken to agency leaders though that are finding it a real challenge. They want to be with the team in person, they’re working harder than ever, and as many have pointed out to me, they feel they’re always in the office. Even when they’re away from their home desk for a few hours, people have said they feel guilty as they wonder if they could be doing more to support the business.
On a brighter note, this period is a challenge but also an opportunity for agency leaders. If your agency can survive this situation, the experience and knowledge you will have accumulated will make you a much better leader for the future. Personal growth often comes out of adversity.
Whilst nobody is happy, I’ve seen some agency owners energised by the situation (to some degree). I’ve seen enthusiasm come back from people running agencies that were perhaps a little demotivated and coasting before all this happened. The fire is back in their bellies. Long may that continue, it will be needed.
Clearly there are some huge operational challenges for anybody running a business at the moment. As agencies, unlike say the hospitality sector, we are at least able to operate from home and at a distance reasonably well. Nevertheless, it’s a real balancing act.
People are the lifeblood of agencies, and looking after them in these difficult times is a priority for every agency owner. Furloughing and other measures have been adopted by many, but it is incredibly difficult to choose the right course of action for both the agency and the people within it.
Most agency leaders I speak to have had their clients pause work in some way. Either retainers/fees or project work. Some agencies have been heavily impacted by this, others only mildly so far. All agency leaders understand their clients’ situations and emphasise with them. Nevertheless, it’s causing huge difficulties in deciding what people resources an agency needs to operate effectively during the lockdown.
Agencies have all been forced to review their entire cost base and do some really detailed financial planning over the past few weeks. Most now have a clearer idea of what cash runway they have and what steps they need to take. Unfortunately, we all know this crisis will have many twists and turns before it is over. Many agencies will find the forecasts impacted by clients failing to pay when they said they would. Some clients may not even survive themselves, of course, leaving a hole in the agency cashflow and future revenue.
Agency leaders are facing really tough decisions, but as an owner of a business, there’s a real balance between making tough decisions and being optimistic and positive.
The opportunity here is to come out of this with a different business. One that may be smaller than before, but will also be leaner and more efficient. This is inevitable for most, as the world will not go back to complete normality. Many of us will come out with different businesses, different business models even. All of us will come out with different ways of working.
I know a few agency leaders who were quite sceptical about utilising remote working before the crisis. I admit to being in this mindset myself a few years ago. The power of the agency has always been the interaction of the team all together in the office for me. These agency leaders though are now often buoyed by their team’s approach and attitude during the pandemic and some have become complete converts to the remote working model. That said, on this particular issue, a do think there is a bit of honeymoon period that is starting to falter. People and productivity are becoming a little strained in some cases.
3. New Business
Finally, last but by no means least, the third major challenge I see is the need for new business. Franky, new business would have featured on my Top 3 list of agency challenges before the virus. It’s a constant issue for all agencies. Almost overnight, it’s suddenly become even more important, and – if it were possible – even more competitive than ever.
I’m seeing all agencies up the ante on new business. Many of them are not necessarily desperate to gain or replace new business right now. They simply recognise the challenges ahead and know from experience that new business is often a long sales cycle.
I’m also seeing many agencies reporting that whilst their new business pipeline has not completely dried up, there has been the inevitable pausing of decisions. What was once warm leads have suddenly gone quiet. Just like existing clients pausing work, agencies can appreciate the reasons for this of course. Prospective clients are, like the rest of us, are occupied with operational issues and trying to get their company through the lockdown.
Perhaps the most distressing thing I’ve witnessed is agency owners realising that their new business pipeline, and maybe even the people and processes they have in place in this area, are not what they thought they were. Having reviewed all aspects of their operations, some agency leaders have been shocked to find the pipeline wasn’t as healthy as they thought – or were being told – it was. That said, I also know many people that have got a good pipeline and they’re pretty positive about it. Indeed, I’ve seen agencies pitch for and win some significant new clients and projects in the last few weeks alone.
I think the opportunity out of this is to come out with a sharper and more focused business. An agency that is better positioned more effectively targeted. A business that is more strategically aligned but also more executionally sound and fit for the future.
What to prioritise?
What would I be prioritising as an agency owner right now?
- Planning – All agency leaders and business owners I’ve met have developed some sort of emergency plan for COVID-19. Most have a had a decent go at planning the next 3 months. We all know these plans will change, but it’s vital to have some sort of roadmap. Whilst I see lots of people with a Plan A, I don’t see as many with a Plan B or a Plan C (different scenarios based on further account losses, pausing or none payment of invoices). This clearly involves both more work and confronting more scary outcomes, but I believe its a worthwhile exercise to be better prepared. Whatever you do as agency leaders, even if you have a robust plan, stay close to the detail for the foreseeable future. Now is a time for stepping in, not stepping back.
- Regular transparent communication – You can’t over-communicate to your team, clients or suppliers/partners at the moment. Even if you’ve not got anything particular to tell them, make sure the channels of communication stay open. If you just don’t know what to say, I suggest briefing your team on some scenarios to explain what might happen i.e. if x happens then we’re going to do y. People, in particular Gen Z members of your team, would prefer to understand the full picture than being left in the dark. Don’t protect your team from the realities of the situation you are in. They need – and want – to understand
- Lead Gen and New Business – If you had previously stepped back from the frontline of this and/or are less than 100% satisfied with your sales team then as the agency owner any remaining time you have would best be spent in this area. Even if the lead gen work is covered, re-thinking and improving the new business strategy and providing input into current opportunities are all time well spent for agency leaders under the current restrictions.
The Stockdale Paradox is a quote by Admiral James Stockdale, a POW in Vietnam. It was referenced in Jim Collin’s book Good to Great. Admiral Stockdale said:
“You must never ever ever confuse faith that you can prevail in the end with the need for the discipline to begin by confronting the brutal facts, whatever they are.”
The people who own and run agencies tend to be a positive, optimistic bunch. It’s one of the reasons why I love the agency world and it’s what makes agencies great places to work.
In times of hardship though, whilst you have to be able to retain a sense of optimism, you can’t let it cloud your judgement or stop you confronting and acting on issues quickly and decisively.
Referring to his time as a POW, Admiral Stockdale said that the ones that didn’t make it out of the horrors of captivity as well as he did were the optimists. He said “The optimists…they were the ones who always said, ‘We’re going to be out by Christmas.’ Christmas would come and it would go. And there would be another Christmas. And they died of a broken heart.”
Optimism is crucial when you leading a team, but I don’t think we’re getting out of this situation – fully – by Christmas. Balance your optimism with the courage to confront the challenges your agency faces swiftly and head-on. You will get through this crisis and you will be a stronger agency and leader for it.