March 15, 2020, stay-at-home orders keep millions of people indoors, bringing entire industries to a halt.
March 25, 2020, we asked our network of agency executives to report on the impact to the marketing industry.
June 25, 2020: We repeated the survey to see how the impact to marketing agencies has changed. 103 agency execs responded.
Note: this survey was conducted in partnership with Drew McLellan of the Agency Management Institute.
The results show the uneven disruption to marketing firms. Everyone feels the impact, but some much more than others. Some are even benefiting from the pandemic.
We started with a broad question about demand for marketing services. Originally, most agencies reported a negative impact. No surprise.
Three months in, the shock has passed. More than half still report negative impact, but we see an uptick on the upside. One third of agencies report a positive business impact from Coronavirus.
But marketing is a broad category, encompassing a huge range of services. The impact to demand for those services ranges widely. Some were far more likely to feel the worst of it.
When we combined all negative and positive responses, you get a better picture of which service providers were more likely to struggle or thrive.
Note: Orbit Media is a web development firm, but we are not in this dataset.
Scroll down for more insights into the most and least impacted agencies.
Next we see the impact projections for the bottom line. We asked the agency executives how they’re revising their financial forecasts for 2020. For some, things have improved since March.
Staffing and the Payroll Protection Program
Most of the agencies in the survey are small businesses. 98% of respondents have fewer than 100 employees and were eligible for PPP funding. What percentage secured PPP funds? 88% of creative agencies were funded through the Payroll Protection Program.
This has likely been a huge help to many of these firms and may have had a positive impact on this next dataset. The majority of agencies have kept their teams in place.
Happier news. We asked about the cultural and work life impact, where we found widespread reporting that communication on teams and with clients is better than it was pre-Coronavirus. Incredible.
But here’s the flipside: 35% of agencies report a negative impact to productivity and focus. Although many creative agencies are virtual with remote teams, many are not. Any business suddenly shifting to a work-from-home team is naturally going to have a productivity hit at first. But may have positive long-term implications.
“We made a rapid transition to a virtual agency. However, the decision has been made regardless to remain a virtual agency long term. Saves a lot in rent and helps protect jobs.” Nick, 4CM
“Running a remote team with a focus on international brands has put us in a better-than-average position. We’ve had no cancelations, but a number of “pauses” and “temporary downgrades” — all for an estimated 1-2 months. Messaging needed an extra heavy dose of empathy and problem-solving. And lastly, a number of our ecommerce clients have seen supply chain disruptions that we’ve been coloring outside the lines to help resolve.” Corey, Northcutt
What about the impact on the work itself? Has the quality of the operation or of the deliverables been impacted? Yes, but it’s not all bad. Most agency executives report no change. Some report an improvement.
Indeed, adversity drives creativity. Amazing creative work is often produced during the most difficult times.
How about morale? It’s a mixed bag, which is amazing to me, considering the circumstances. But look at this stat:
To me, this shows the resilience of our population and our teams. It shows the resilience of our industry and our economy. It says this to me:
“Is that all you got, Coronavirus? That’s it? Not impressed. Watch us bounce back from this one. Hold my beer.”
Most providers of media planning, social media and PR reported a major negative impact. Consumer behavior has changed so drastically and quickly that advertisers are pulling back, despite falling CPMs on sites like Facebook.
Most retainer-based services take a hit as brands look to reduce monthly expenses in anticipation of an almost certain recession. CMOs and CFOs everywhere are debating what to cut.
The most impacted agencies serve most impacted industries: travel, hotel, events, higher education and entertainment. No surprise there.
“Restaurants, Athletics and Physical Retail is about 50% of our client roster. All have paused ads entirely.” Brian, Matchnode
“Lost 75% of billings for April and May. Hope to return to normal after and bring back the team.” Anonymous
“Being in a luxury service field, we (video production) are always one of the first items to get set aside by companies and especially by consumers. This has been the worst possible case of that type of shift.” Nick, Bitter Jester
25% of all agencies actually report “landing more work” because of the pandemic and 6% report a “very positive” impact from the pandemic.
Web design and development may be another bright spot. It’s a one-time expense that improves the foundation for all future marketing efforts. And while during a crisis, some marketing may be considered “tone-deaf,” it’s an excellent time to rebuild a website. (Reach out if you want to talk about your website)
As for industry focus, the least impacted either don’t specialize in any one industry or they specialize in food, CPG, industrial manufacturing, healthcare or tech. These are clearly the less impacted industries.
“It’s been a boon. Everyone’s event budgets are now going to digital, so we’re seeing a marked uptick.” Chris, Find A Way Media
“It was a godsend that we did not specialize and that we had so many clients, none is more than 10% of our revenue. Additionally, I am so pleased that we are reaching our 1st-anniversary of using EOS. Those tools have been a gift during this time of working remotely.” Kaye, Web Talent Marketing
That’s my take, for now at least. Here are other voices, from other agencies on the marketing frontlines. This is a selection of the 100+ comments and stories. Emphasis added by me.
“Never seen the pace of business this fast with as little clarity; the decision-making process has had to be flexible and short termed; we’ve found it important to recognize what is controllable and what is not; we can’t control the environmental impact but we can control the level of service we are offering our clients.” Anonymous
“We are working at a cost right now with our existing clients, because so many of them had to pivot and pivoted fast. We decided to help without charging extra, for a month. I’ve been impressed with how the majority of our clients are using this as a time to innovate. We’ve been pretty selective in who we work with, and it’s showing. We work with companies that are bold and can handle risk and are using this as an opportunity to build a stronger foundation, which motivates us to want to help them, and gives us the fuel we need to do even smarter marketing. So we’ll also come out of this a stronger agency.” Mana, Lightspan Digital
“Clients in the travel industry are essentially out of business at the moment.” Ashley, ashleyidesign
“My biggest concern is the effects of isolation on my team. I’m used to being there for my team day in and day out, keeping them motivated, helping whenever they ask for it. I can tell the absence of it all is beginning to take a toll on a few people. Some of them live alone and these activities are what they used to look forward to every day. It’s a big challenge to overcome now that they’re all split up.” Obaid, Planet Content
“Clients I had have run for cover, so to speak. They don’t have any money coming in, so they don’t want to pay for my services any longer. It’s, pardon the expression, a shitshow.” Anonymous
“For the agency it’s been a way to show just how responsive we can be and how online marketing keeps businesses in communication with their audience, community and teams. But for our team members personally it’s been hard for their spouses, children and community as a whole.” Jessika, NOW Marketing Group
“Right now, my business impact is positive as we are shifting marketing focus and content to address new needs and a rapidly changing business environment. However, I expect that to level off and potentially be down as negative business impacts are fully absorbed by B2B client companies. I see this entire process as 3 distinct phases. First is the initial business downturn, which we are currently experiencing. Then as we level off, businesses will need to retool and reset to a new normal, including potentially setting a new vision, new strategies, and new business-building initiatives. Finally, will be an accelerated ramp-up to hit the ground running and drive business growth as quickly as possible.” Dianna Kingery, Kingery Marketing Solutions
“We’ve had to do one round of layoffs and are working hard to avoid another.” Anonymous
“For me, and others I work with, we are climbing a steep home schooling learning curve while trying to manage clients outside of normal routines. It feels like an unsustainable situation. I have had some clients put on hold but I honestly couldn’t have managed it all while also managing kids full time and providing 3 meals a day from our self-quarantine pantry. On a positive note, many have quickly tackled learning curves around remote work. I have had clients in other cities hesitate about working with me due to distance and I expect that will decrease in the future. For me, brainstorming and creative thinking with my teams has not been as effective virtually. Standing at a white board with tons of sticky notes and seeing people’s full body language, laughing together, sharing food and drink… it hasn’t been replaced.” Caroline, Goldfish
“We have provided live streaming and virtual event production in the past but with our new reality of remote working and social distancing we have built out a more robust infrastructure to serve clients in this regard. We have begun new digital advertising campaigns around these services, which was not done previously. The biggest impact is on our attitude to be more aggressive with our own content marketing, customer acquisition, and searching for potential talent.” Chris, Salvi Media
“Blow to all plans.” Anonymous
“We have 48 on staff. We prepared for rainy days and were first able to put all at rest knowing we have over five months of cash for full employment. Once that was in place the team has shined brilliantly. However there are still many that want to panic at the slightest mention of a negative news story failing to recognize that while there is reliable information out there the news is not one of them. They specialize in getting you to not look away so everything on every channel is super hyped as if an atomic bomb was just dropped. I’ve always had a rule that if the news is creating graphics you know it is partially a hype. That said, it is a lot of work to keep people calm and you have to remember to find times and places of calm for yourself.” Tim, Renegade Communications
“Had to take a paycut and few overseas clients from hard-hit areas are unable to operate and paused operations.” Rahul, Content Ninja
“We’ve only lost one client so far, while two others have paused for the time being. The HARDEST part is team comms and morale; they seem to be panicking about personal/politics that it’s affected their work behaviors. We have always been a remote team and we are global (with two members are mandatory lock-downs in their country … Germany and Spain). I thought that meant that we would be best prepared for this scenario, but keeping people focused and level-headed is the biggest battle I’m facing.” Anonymous
“Very tough – All clients cut or cancelled contracts. All potential opportunities that were in the works have stopped and no new business opportunities.” Anonymous
“It’s really hard to know what three months from now looks like. Coming up with the vision for the agency and planning accordingly is something I’m challenged with at our agency. I need to be able to forecast, plan and scale. I’ve never been more unsure what the next few months are going to be like. I’m also just heartbroken for my client base. Our clients are mostly SMBs and it’s almost impossible to overstate how devastating this lockdown is for their business. Everyone just wants to go back to normal.” Mark, SearchLab
“We’re seeing mobile and web product strategies are continuing to push forward and in a couple cases accelerating, anticipating a longer shutdown around travel and face to face interactions with their end customers. With some of our focus in education and trade shows there is potentially a lot of opportunity here to advance or pitch initiatives that bring any type of tele-services to the front line of our clients’ digital / mobile strategy. We’ve had some luck pitching a couple of these ideas. Ultimately, these pitches pose a pivot for our clients and could lead to a larger tech investment.” Brett, Eight Bit Studios
“We have a 4% fallout on clients so far. Expecting that number to increase to 10% and potentially beyond; these fall out clients are primarily providing services in industries that have been affected by the shelter order (restaurants, events, services). On the flip side we have seen a massive increase in e-commerce. Businesses that sell essential products like food and medical products are producing numbers that are superior to what they do during holiday (black Friday and cyber Monday. Even non essential e-commerce products are doing really incredible numbers. With so many people working from home, we have seen an increase in traffic in general on our paid social efforts. Lastly, I will say that my team has rapidly adopted video conferencing which has been really helpful. We are over communicating in every way that we can, both internally and with customers. I am sending out daily updates to my team and we do an all hands video conference at the end of every week.” Chris, Logical Media
“As you can imagine, with 99% of our clients hotels, it’s really tough.” Anonymous
“My small PR firm represents clients in the arts (primarily non-profits) i.e. ALL of my clients depend on audiences, groups, and/or visitors to survive. Subsequently, ALL of my clients have been affected, either outright cancelling or postponing projects. I am paying as many employees as I can. I’ve already had to lay off one full timer and one part timer. Not a good time to be a small business owner (and a humane one).” Anonymous
“The general mood feels very similar to post 9-11. Not having a clear end to how the Corona-19 event ends has put all of our clients on edge. Lack of political leadership at the Federal level is also making everyone uncomfortable as illustrated by the stock market crashing.” Patrick, C2 Creative Studio
“We have a very social team and it’s hard for some of our employees to not connect and collaborate in person. That said, they are always positive and upbeat and willing to pivot as needed. We’ll get through this together. In regard to business, we have high demand right now as our clients need support communicating to their customers, but we’re unsure what demand will look like in the long-term.” Anonymous
“I think as a small team, we miss the human interaction between each other and our clients.” Tim, Geile/Leon
“We have several clients that are closed, so we are suspending some direct bottom-of-funnel lead types such as Google Ads. A lot of them can’t even answer the phone or make appointments. However, we are promoting long term content strategies – some of them very authentic and related to the Coronavirus disruption – so that they can continue to build momentum for when we come out the other side.” Elijah, Loop Marketing
“Some clients have cut budgets and some new clients are signing contracts. But it’s difficult to predict and forecast. We have to let two of our top-paid employees go. For the most part, we have people to pick up their slack. Unfortunately, we have three account managers that just started this year. Overall, though, the slowed-down pace has been good for all of us.” Mary, Mabus Agency
“With our focus being mainly Fortune 500 we’ve seen very little slowdown in the immediate, as many teams are pushing on creating more communication pieces. But we do expect spend to reduce within the coming weeks. One other item we’ve noticed is that average completion time of projects can naturally grow, as what was once a priority is now not a concern. For agencies that structure their SOWs in a way that don’t have a hard date for invoicing, this can make cashflow a big concern. What was an almost launched website now has a chance to be scrapped or rethought, which could delay payment for 6+ months. So, put hard dates in all contracts of “invoiced on completion or 4/1/20, whichever comes first”. And it may be wise to encourage pre-payment if a client is cash flush. With a very small discount it can benefit them while making you sleep easier at night.” Anonymous
“Our work has been fairly steady, but some customers have completely gone quiet. We still have RFPs coming in, and we’ve been able to focus on some of our own branding initiatives, which we NEVER have time for!” Anonymous
“We’re a nimble agency and were fully mobile, partially remote prior to this event so it didn’t impact us operationally. We rely on new business less than most as we have a fairly good book of stable recurring revenue. Most of that is not impacted. so, even though new business has come to a near complete halt, it hasn’t taken a total toll on our bottom line. we’re taking some cost cutting to “flatten” our cash flow curve but for now we’re a mix of continuing work on existing projects, continuity planning, working with clients to remind them that we’re stable and being creative in our outlook. A big part of what I’m doing internally is to remove uncertainty from employees and remind them that 100% productivity is not expected. We have zoom charades starting in 8mins.” Alex, ePageCity
“It’s just a weird feeling. Some friends are going out of business and that takes a toll on me mentally. I hate to see people I care about struggle. Overall, business is still ok because people want to do things digitally. I just hope we can see a light soon. In the meantime we are just trying to help people as much as possible.” John, Calendar.com
Share your experience in the comments below.
Great stuff, Orbit Media team!
I have generally found that agencies are in a better position than many of their clients due to PPP money. If your primary expense is people then 2.5 months payroll goes a long way rather than if you have hard costs to manufacture a good or pay an expensive lease for retail.
Also, agencies that have a more diverse portfolio of clients are in a better place with clients in “winning” industries making up for clients that are heavily impacted by COVID.
I can pretty much relate to Alexander Rus’ comment – I run a digital marketing acency and we had a very smooth transition from working in the office to working from home (thanks to trello, slack, google meets … ). We ourselves haven’t really had a dramatic change in business, the only thing is that meetings were all held via Zoom or GoogleMeets. Some projects, especially concerning our film- and videoproduction are delayed due to the governments measures, but are gradually taking place now.
Love the format and visualizations, this piece is valuable even when skimmed. The findings are valuable, a bit more positive than I had expected, which provides valuable learnings. Original research ftw 🙂
Thanks for the great info! Personally, I haven’t been much affected by the pandemic since my business is entirely online and I’ve always worked from home, but I know some people who are almost entirely out of business because of everything that’s going on right now.
we are all suffering.
My visitor figures are going we close our lash shop.
What are your thoughts?