The ad agency free fall

Industry needs curiosity to see the path ahead.

While newsrooms across the nation—from the New York Times to the L.A. Times—publicly grapple with systemic racism, with journalists and staffers applying pressure to leaders to be more transparent about everything from salary inequities to job promotions, ad agencies are also taking a hard look in the mirror. 

Over the last several months, companies like IPG, Dentsu, Havas and Publicis have all released EEOC data:

Dentsu: 

IPG:

Havas:

Publicis:

And each agency has also put specific plans on paper on how to move forward. For example, Publicis has a 7-point plan:

  1. Publishing and monitoring diversity data on an annual basis

  2. Putting 45 million euros ($50.7 million) toward funding its commitment to Black talent, allies and leaders, including training programs, subsidizing partnerships, and supporting institutions fighting against racism

  3. Cultivating Black talent via career development programs, mentorship and coaching, with metrics that will be “monitored, measured and also reviewed.”

  4. “Design a recruitment, interviewing and onboarding experience that champions Black talent.” While the memo did not go into much detail regarding how exactly it will do this, it did say it will “scale and aggregate current and new partnerships across historically Black colleges, local community schools and specific organizations.”

  5. Creating a Diversity Progress Council comprised of employees, key clients, and academic and youth representatives, set to convene in September

  6. Launching an “open apprenticeship” for minority youth on Marcel, its AI-driven connectivity platform introduced in the U.S. earlier this year, with how-to guides, online lessons, live workshops, networking, mentoring and gig opportunities. In its first year, it will target 1,000 young people in the U.K. and the U.S., with a commitment to hiring 50 people each year.

  7. Building a “culture of strong ally-ship” by making all employees partake in bias training, which consists of three tracks: Understanding Everyday Bias, Inclusive Leadership from Any Seat, and Bystander Intervention Training. It will be available to all agencies by January 2021.

So this accounts for 2/3 of the industry’s holding companies. Yesterday, one of the remaining holdouts, Omnicom, dropped its EEOC numbers.

Omnicom:

Omnicom also introduced its own eight-part plan called OPEN 2.0 to help move the company to be more equitable. 

According to AdAge, Omnicom found its conscious only because

Nathan Young, group strategy director at Minneapolis-based agency Periscope and co-founder of the nonprofit 600 & Rising, called out Omnicom Group on an episode of Ad Age Remotely for not releasing its diversity makeup data or responding to the 12 action-steps he laid out for agencies in an open letter last month to tackle racism in the ad world.

"They haven't made any commitment to change" or "even acknowledged 600 & Rising's existence," Young claimed on the episode.

When Omnicom released its numbers, AdAge reached back out to Young, who said:

"Put it back in the oven. This plan is half-baked," Young told Ad Age. "Given how much they delayed this release, I expected more. The excuses their executives gave me is that they were taking their time to ensure they get this right. If that was their goal, they failed."

And then there was only one holding company yet to give its numbers: WPP.

Ad agencies continually find themselves hopping from one industry crisis to the next. The business model is being disintermediated, as clients start to either go directly to publishers and/or build agency-like capabilities in-house (programmatic desks; content studios; media buying), and I have a feeling we’ll see added pressure coming from remaining clients to get their agencies in order.

For example, let’s say you’re a company that has talked often and loudly about supporting Black Lives Matter and equitable representation. You can bet dollars to donuts the CMO is now telling its agency, “Get your shit together or we’ll go to an agency that aligns with our thinking.” I’m guessing this, more than anything, is driving ad agencies to release their numbers and put together plans. 

The ad world is in a free fall and hiring is just one aspect of the industry’s descent (assuming agencies will get back to hiring; more on that below). Facebook and Google hoover up digital ad revenue (though it will be interesting to see how Congress admonishes Big Tech CEOs in the Zoomlight at tomorrow’s House Judiciary Committee on antitrust). And according to Zenith report, via Hollywood Reporter: 

Global advertising expenditure will decline 9.1 percent in 2020 driven by the coronavirus pandemic, including a 7.0 percent drop in the U.S., according to the latest forecast from media planning firm Zenith on Monday. In comparison, ad spend fell 9.5 percent during the 2009 recession, it noted.

In its earnings report on Tuesday, Omnicom, which has laid off 6,100 staffers amid the coronavirus (as well as hiring freeze and pay cuts) said revenue dropped 25 percent and expects it to continue heading south for the rest of the year. 

In June, Forrester predicted the industry will lose 52,000 jobs over the next two years, according to Marketing Dive.

If the 2000s and 2010s were about the rise of the digital shop, the AKQAs, the Carrot Creatives, the Huges, to take on the legacy powerhouses, the 2020s will be a battle for survival across the board. The agencies that come out on the other side will be the ones that diversify: their service offerings, but also their points-of-view, based on hiring.

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Weezer, “Say It Ain’t So”

Some interesting links:

  • Sarah Palin’s Facebook Grift (Popular Info)

  • Facebook takes down viral conspiracy video (Forbes)

  • Uninteresting places (Popula)

  • After Quitting Deadspin in Protest, They’re Starting a New Site (New York Times)

  • ‘A Permanent Nightmare’: Pinterest Moderators Fight to Keep Horrifying Content Off the Platform (One Zero)

  • Inside Tony Haile’s expedition to (help) save the news business (Digiday)