Ad Agency CEO

Layoffs or Firing? – Ad Age On Who Is Cutting

Peter · August 29, 2022 · Leave a Comment

Layoffs or Firing? That Is The Question.

So far in this “is it or is it not a recession” all I have heard from my advertising agency clients is that they are hiring.

At the same time, we see large companies laying off staff. I went to Ad Age and wondered if they report on company staff layoffs. And guess what… They do.

I’ll put some major reported layoffs below. But first. Are the big agencies hiring?

Example: WPP, alone has zillions of job openings around the world. Specifics?
1694 Media Jobs
650 Creative openings
717 in Analytics
819 in Client Services
596 Openings in New York
259 in Australia
106 in L.A.
501 at Ogilvy
331 at Wunderman Thompson
Omnicom has 10 AE openings, 7 production openings, and 19 “creative” jobs.
Publicis has 1,108 job openings on its LinkedIn jobs page.
Interpublic has 654.
There are 17,233 advertising agency jobs available on Indeed.com. 453 in D.C. alone.

I have no historical frame of reference but it looks like advertising agencies are looking for people. Client corporations?

From Ad Age Headlines on Major Client-Side Moves:

Ford Layoffs 3,000 Employees Globally
Apple Lays Off Recruiters (rater telling!)
Warner Bros. Discovery cuts 14% Of HBO and HBO Max
LinkedIn Lays Off Global Events Marketing team
Calm Cuts 20% of Staff (I Guess we don’t need as much calm these days)
HootSuite Lays off 30% of Employees
Shopify Lays Off 10% Of Workforce
Huge Lays Off 3% of Staff (An IPG Agency)
META Cuts Hiring Plans

Big companies are laying off while Big agencies are hiring. Yes, confusing.

I am looking at these numbers because a chapter in my new advertising agency management book (still in the typewriter) will examine all of the latest shifts in the ad biz hiring and talent management space. I’ll cover recruiting, burnout, diversity, and ageism. And, fun new terms like ghost quitting.

An Advertising Agency Survival Guide

Peter · May 16, 2022 · 3 Comments

The Advertising Agency Survival Guide. 2022 “Recession” Version.

I am republishing and updating my pandemic Advertising Agency Survival Guide blog post. It was originally written in 2020 when we all realized that we were heading into some Covidland hell. At that time, The Association of National Advertisers, the ANA, passed the article along to its membership. Why am I modifying the article for 2022? Because I think (not alone here) that we are heading to some form of recession. Recessions are not great for advertising agencies as marketing is one of the first line items that clients cut from their budgets.

Note: While we are not sure if a recession is heading our way, we do know that company valuations are down and that is not a good thing for marketing budgets. The odds on their being that full-blown recession … This from Bloomberg.

The probability of a recession over the next 12 months is now 30%, the highest since 2020, according to the latest Bloomberg monthly survey of economists. That’s up slightly from 27.5% in April and double the odds economists predicted just three months ago.

This from ADWEEK on Sir Martin Sorrell:

S4 Capital issued its 2021 Annual Report this week and company executive chairman Martin Sorrell in his letter to shareholders strenuously sought to manage growth expectations given recent huge reversals on the macroeconomic front.

Sorrell said that events and circumstances have developed to create a “perfect storm” that will dampen the “strong bounce-back previously expected this year and over the horizon in 2023 the clouds look even darker.”

Sorrell noted that GDP forecasts have recently been cut by the IMF and others to 3.6% from 5% just six months ago. “Less robust economic growth is important as it’s one of the drivers of S4 Capital’s growth,” Sorrell cautioned.

At S4 Capital, Sorrell added, “we’ll trim our sails accordingly and won’t be blown off course. But navigation will as ever, be challenging.”

Tough Question. Will Your Advertising Agency Survive This New Recession?

Here is my educated take on how advertising agencies will survive the big dip and how they will make lifeforce happen. It is my take on an Advertising Agency Survival Guide.

Having gone through the 2007 – 2008 recession as an agency owner, I saw approximately one-third of advertising agencies shrivel. My current survival advice is based on my having navigated financial storms as well as recent deep conversations with small and medium-sized agencies. I did not choose to rush out these thoughts. I actually thought about my thoughts. LOL.

Plus, this article is not short and sweet. You will actually have to read all of it. OK, it is sweet.

Two Quick & Very Important Points.

How long will the shit-storm last? I am talking about the inevitable/impending reduction in client spending.

Like you, I have no clue when any semblance of normality will return. I have to assume it will. Plan accordingly.

Chamath Palihapitiya is one of my most respected “advisors”. He has said that companies should be able to adjust and make new plans to survive 36 months. 36! Yes.

He says, think like this is a form of depression. Whoa. Yikes. Are you ready?

This is what I do know… If you want to be in the top 1/3, you can’t lose all or even some marketing energy or brand awareness. Why make your voyage back to the land of happy clients too uphill?

You will get my marketing recommendations below. But first, the big question.

Will Your Advertising Agency Fail?

Here is what an advertising agency principle should be doing right now. I admit that this is generalized given the diversity of the types of advertising agencies. But generalized does not mean its not an effective how-to for virtually any agency.

First – Two Definitions

“Advertising Agency”: This is my universal term for most types of communications marketing firms.
“The Good Client”: A client is a company that has consistently used any form of advertising or digital marketing. In your case, it is a client that meets your target criteria (you have that, right) and you think would want to hire you.

OK, Advertising Agency… What Are You Going To Do About it?

I am going to be tough here. At least 30% of advertising agencies will fail or falter in the next twelve to eighteen months.

This post provides my take on how to survive. For the winners, how to set yourself up for growth.

6 Advertising Agency Pain Points – I Know You Know This. But, It Is Worth Restating.

Your current and future clients are starting to freak out. This goes from their business perspective (increases in consumer debt, lower spending by their B2C or B2B customers, that supply chain pain) and their own worries about their life savings.
Some current clients have already reduced or canceled advertising and project spend.
Growing agency profitability has been getting more difficult.
You could be too slow in managing your costs.
Agencies, too many, are already poorly positioned, do not stand out, and worse, are unbelievably ignorable.
Many prospective clients “probably” do not want to hear from you. Well, they might if you have the right messaging.

Advertising Agency Survival Guide Strategies

I know what I am talking about. I’ve won and lost. My advertising agency survived the 2007-2008 recession. My $30 million VC funded ActiveBuddy digital business did not survive the 2001 dot-com bust. Don’t feel bad for me, Microsoft eventually bought our technology.

Existing Client Opportunities

Neil Patel On Advertising Agency Mistakes

Peter · September 5, 2021 · Leave a Comment

I am a regular listener of Neil Patel and Eric Siu’s The Marketing School podcast. As of today, these digital marketers and prolific audio publishers are up to 1,848 episodes (WOW!) that cover many of the tactics and strategies that have made their agencies successful.

Each daily show is delivered at wake up and is approximately 3 minutes long. Bite-sized advice. A recent episode “Mistakes That Neil and Eric Made While Growing Their Agencies” (#1842) is worth a listen (link below). Hey, maybe your agency should produce bite-sized vs. those hour-long podcasts. Like my loooong, but entertaining 40 podcast series – Advertising Stories.

Below is my take on their Neil and Eric’stake.

The podcast transcript has been edited for clarity and brevity.

Eric Siu On Leadership and Work Habits:

“… when I first took over (the agency), one of the big mistakes that I made was taking a book too literally called “Let My People Go Surfing”. So some of you might’ve heard this story already, but it’s from the Patagonia co-founder, it’s a great book. And it talks about letting your people go surfing. He lets his people go surfing during lunch, right. Basically, it’s saying people don’t want to be micromanaged, and they don’t. And I went a little too extreme with it and I stopped showing up to the office. So I learned that it’s important, especially in the very beginning, especially when you’re trying to save something, to trust, but verify and also be there in person and be there in the trenches showing that, hey, you’re there and you have some type of vision for the company as well.”

My take. I grew up during the always be in the office days. I was usually the first in when I worked at Saatchi & Saatchi New York and London, definitely when I was the CEO of two digital startups and when I owned my own agency. It was critical that I demonstrated interest and energy – and its good news for me that I have always been a morning person. Sure I know all about the idea of work-life balance, especially when I had two offices in outdoor , fresh-air driven Oregon. But, running an advertising agency, or any business, requires real leadership and dedication. I demonstrated this dedication by showing up. Showing up is especially requiered for client focussed businesses.

Now, how to exhibit this style of leadership in a WFH environment is a bit up for grabs these days. We’ll see where this goes. That said, the last thing I’d do as a leader today is to pump out 6:35 AM emails that ask for an immediate response. That is not effective leadership.

“The other thing is I made a lot of kind of rash decisions without consulting people. And I learned that building actual relationships and building rapport with people and not coming from an arrogant perspective that just because I came from tech I thought that I kind of walked on water, which I didn’t, right. I just thought I was super amazing when really – it takes a village to build something amazing. So that’s what I would say. Don’t take things too literally, build relationships with people and make decisions that are… If they’re reversible, act on them quickly, but if they’re not reversible, you’d probably want to deliberate on them a little more.”

My take: There are a couple of points here. First, yes your agency will work better in a team environment. Even if you are the smartest or most experienced person in the room, don’t act like an ass. If you stop and listen to other people you will generally come out ahead. LOL, most of the time.

Second, it is OK to fail. But, try to do it too too fast and own up to mistakes. That said, repeted faliures are not a good thing.

Neil Patel On Client Concentration:

The Cobbler’s Shoe Excuse

Peter · June 26, 2021 · Leave a Comment

The Shoemaker’s Children Go Barefoot

I hear a lot of excuses from large, medium, and small advertising agencies about why they are not running a long-term, 24-7, active business development program. These agencies often chuckle – a wary chuckle, before mentioning the cobbler’s shoe excuse.

You know what I’m talking about. The excuse is that the agency is so focused on its day-to-day clients that they neglect their own biz dev, or better expressed, their own sales program. These agencies act like the way too busy shoemaker whose children go barefoot. “Yup, I’m like really busy making shoes for my customers. Just don’t have the time to take care of the kids.”

Of course. This is insanity. Many agencies touch failure because one of their large, cash-cow clients leaves, and the agency does not have the active pipeline that will deliver the next big account. Insanity. I have never seen an agency in my long-term experience that did not eventually lose a major account.

A Recipe For Business Development Failure Success

Let’s get really simple. This is what every advertising and digital and PR agency has to do. Period. Give me a shout and I can help you create and run the plan that will make these actions happen fast. As in, make those shoes for your kids.

Caveat: Is this radically new information? No. But, this is the blueprint. If you do not do this, then go barefoot.

Have agency leadership that recognizes that they must play a major role in agency growth. When I ran business development at Saatchi & Saatchi, both Maurice and Charles dove into pitches.
Figure out who is in charge of the day-to-day management of the business development program.
Make sure that your advertising agency can get found by a future client that is looking for your type of agency. Just for kicks, start with a ‘blank sheet’ and try finding your agency. Do you stand out from the 4,000 marketing options that are in front of most clients? Have a get-found plan.
Have an active friends, business associates, family referral plan. WOM does not always happen automatically or when you want it. You need to manage your WOM outreach.
Love the clients you have and grow them. This can not be placed on automatic. Do your people know how to nurture?
Build the agency marketing plan. A manageable plan. And, KISS.
Have a standout positioning. Being an expert in something would be a rather good idea. Translate this into an “elevator pitch.” You could even carve up your positions and use targeted marketing to deliver multiple messages. You can be both a mobile and a pet marketing expert. Try different landing pages.
Know exactly what clients you want and how to entice them to want you. Ask yourself, “why would that client want to get to know me?”
Build your prospect lists. And, personas.
Leverage Account-Based Marketing to go get their attention. This takes time. Make sure you nail a LinkedIn program and then move on.
Create thought leadership that cannot be IGNORED. Please be unignorable.
Build a website that is sales-oriented. And different. Drive contacts. Did I say sales-oriented?
Use video to sell yourself, your story, your reason for being. Just for kicks, try using paper. Yes, paper.
Have a must-follow process that includes plan elements, a marketing calendar, to-do lists, and very clear responsibilities, and a CRM system.

Is Advertising Agency Pitch Pain Deadly?

Peter · April 22, 2021 · 1 Comment

I think that agency management has to ask the question – Is advertising agency pitch pain killing your agency?

I kicked off “The Levitan Pitch. Buy This Book. Win More Pitches.“, my book on how to win a pitch (still selling well if you are wondering if books have a long life), with a discussion of the hardships that come from running after every new RFI, RFP, and pitch. We are now in a marketing world where the number of client-driven, post-pandemic (well the worst of the pandemic) pitches are on the rise. However, make sure you know which client-based pitch you should go for.

At best, you have a 30% chance of winning. If you are the incumbent, you might even want to bow out fast. The win rate for incumbents is not, um, great.

Pitching Is Good. Pitch Pain Is Bad.

The good news.

The number of clients seeking new agencies is up. I hear this form agency owners, from pubs like Campaign Magazine and pitch consultants including Avi Dan as he wrote in his Forbes article, “Marketers Plan To Shed Even Good Agencies In The Coming Months.” Here’s a tidbit…

Almost all advertisers that I spoke with are considering an agency change. Surprisingly, only a few are motivated by bad advertising. For most, the issue has more to do with the future than the past. As one CMO put it, “Our agency is doing an OK job, but times are changing and I’m not sure they are ready for what’s next. We need a different type of agency, with different skills than the one we have.”

Why are clients looking for new agencies?:

Clients orgs and CMOs are worried. Worried about their marketing programs in light of the pace of digital transformation. And, they are worried about their jobs. Agency change represents some form of quick solution and a sense of progress.
Clients are looking for more and more digital expertise.
Many incumbent agencies are somewhat somnambulant. Their client contact people have not been trained on how to hold and grow clients. A serious training issue that I will help address this year.
Many clients simply have no clue what they need and want. Let’s politely call it being fickle.

These factors, and more, lead to agency shifts. This can be good for the agencies that “get it.”

The bad news.

The bad news is that agencies will need to figure out what business they should pitch. I’ll get right to the point…. do not pitch everything. Why? Do not pitch every new account prospect that comes your way – it will be a waste of your time, money, and – importantly – agency mental health. Have a plan for what the right clients look like and have a budget (oh, and a process).

I offer this agency CEO mantra:

We will not pitch every account that comes our way. The pitch process is simply too costly. Before we pitch any account we will work hard to determine if the prospective client is a good fit for the agency based on a set of predetermined criteria. Here is a start. Is the client famous? Do they respect marketing? Do they actually know what they want? Do they want us to do brilliant work? Will they pay well? Are they a cultural fit?

Hopefully, you can say yes to two or three of these.

The $$$$ problem.

Writing RFIs, RFPs rather time-consuming and expensive. Understatement. Here is a bit from my pitch book’s chapter: More Painful Math. Clearly, your numbers may vary. But, you’ll get the point that not having a business development plan with objectives and strategies is a loss-leading problem.

From The Levitan Pitch. book…

Agency CEO’s and Business Development Directors occasionally use metaphors to help describe their business development efforts. One of the all-time favorites is how similar agencies are to cobblers and shoes. Cobblers do not have the time to make shoes for their children, and too many agencies don’t make the time to run smart business development programs.

Here’s another metaphor.

Agencies (OK, American agencies) often point to the career batting averages of major league baseball players when they discuss the success rate of their new business programs. As they put it, even baseball Hall of Famers are perceived as victorious if they have a career batting average of .300 or more. That’s only 3 hits for every 10 times at bat. Even the great Hall of Famer Reggie Jackson only had a .261 batting average. In agency think, this would mean that the agency would be Hall of Fame material if they won 3 out of every 10 pitches.

Let’s do some agency math using the 1:3 ratio.

Based on my personal experience, conversations with agency CEO’s, and a review of existing data, on average, small to medium agency responds to 10 RFP’s and participates in 6 pitches per year. Your mileage may vary but let’s go with this.

My estimated cost per RFP is $15,000 based on 150 hours of work at a direct labor cost of $100 per hour. At ten RFP’s per year, that’s a participation cost of $150,000 per year.

A conservative estimate of an average finalist pitch, which includes external and internal meetings, pitch management, strategic planning, writing, creative work, pitch design (as in leave-behinds and supporting digital programs), the pitch itself, T&E, and post presentation follow-up costs an agency approximately $35,000. If an agency does 6 pitches per year that’s $210,000.

Obviously, given the size range between multinational networks and small shops, an agency’s mileage may vary but these numbers seem fair for the average agency, and they help frame the issue.

Using my scenario, the total annual cost for RFP’s and pitching comes to $360,000. This number does not include the day-to-day costs of business development. If you add in management, creative, analog and digital market- ing, and business development director time, an agency could easily top out at over $500,000 in labor and outsourced business development costs per year. I am ball-parking here just to get to a reference number.

It can get much more costly. The search consultant David Wethey of Agency Assessments International reports that the average pitch cost per UK agency was £178,000 in 2010. Channeling Las Vegas, as an agency owner I’ve put my own hard-earned cash on the line to win new business. As I write this book, Microsoft just handed their international account to Interpublic. Just imagine how much it took to win that pitch.

Bottom line… an agency could easily spend $500,000 to have a “Hall of Fame” business development batting average of .300. Given today’s decreasing creative services industry profit margins, these numbers could be considered depressing.

Do you like this math? I don’t.

The People Pain Problem.

Pitch Pain is real… Pitching, too often, results in significant agency employee pain. I started my book by quoting a research study of advertising professionals by Provoke Insights that supports the idea that agency employees are dissatisfied with their agency’s pitch process.

“Approximately half (47% of respondents) of advertising professionals surveyed by Provoke Insights say they are dissatisfied with the current internal approach to pitching.”

And, again from Avi.

During the last year I had been traveling all over the country, meeting with advertisers and CEOs, except, for the fact that I’m not actually traveling physically. I’m still stuck at home, in New York, relying – like many of us – on virtual meetings.

As much as pitches represent a chance for agencies to win some much-needed revenue, they’re also an additional cost. Already short-staffed, in light of cost cuts during the pandemic, agency bosses will need to weigh their chances of winning new business, along with the impact it will have, on work for current clients. It can be a slippery slope for those CEOs struggling to balance short-term gains and the longer-term stability of their business.

One more point. Responding to RFIs and RFPs and pitching takes time away from current clients. need I say more?

The Advertising Agency Pitch Pain Bottom Line?

Look, winning new business is good. However, winning the right new business is very very good.

Running after every “available” account is bad. You will lose more than you win. Have a plan and decision-making criteria for what account you should pitch for.

Back to the main question: “Is RFI, RFP, And Pitch Pain killing your advertising agency?” The answer can be a disastrous – yes.

Give me a shout if you want to have a talk about my perspective.

Even More – Winning The Zoom Pitch

I built a video presentation on how to run a winning virtual advertising agency pitch on Zoom. It is guaranteed to help reduce advertising agency pitch pain. Check it out.