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News & Views

Nine ways the global pandemic is changing agency/client relationships

by Angela Lurssen
News
|
22nd June 2020
Nine ways the global pandemic is changing agency/client relationships, post image

Waypoint’s recent webinar with Relationship Audits and Management (RAM) uncovered some major ways that agency-client relationships have changed so far in the coronavirus pandemic

1) Everyone is nervous

Our ‘new reality’ is changing every day, and we have no idea what things will conclusively look like once we’re out the other side. Furlough, job losses, reduced hours working, and more are altering everyone’s experience, with no idea what will happen later in the year. There’s a feeling that things may get worse, with more job losses in Q4.

Agencies are becoming nervous about some client’s ability to pay media.

Some clients are asking for teams to be furloughed to ensure that they have teams ready to start when things pick back up.

2) However, we are seeing much more empathy and collaboration. 

From campaigns with an increasingly social conscience to inter agency collaborations, and even more brand collaborations – working together and caring more has become not just a ‘nice’ thing to do, but essential.

3) In the absence of face-to-face interactions, agencies and clients have realised they need to work harder to build and maintain relationships.

Clients were becoming less willing to travel before the pandemic hit due to environmental and sustainability concerns, and that’s amplified now – and unlikely revert to what it was before.

So, communications have to be more considered, useful and relevant – particularly from agency to client.

4) Supply chain disruption is passing down the line – with risk profiling and a move to smaller agencies as a consequence

Many clients have been hit by breakdowns in the supply chain and are consequently reviewing the entire way they work – including their agencies. For many, reducing risk is now a key focus – it’s coming up in pitches and current agencies are being asked to provide details of their plans.

We also believe this will be an opportunity for smaller, independent agencies who can be more agile in their responses.

5) The C suite is under pressure and CMOs are losing influence

Management is now refocusing on ROI, and so data has become even more important. There’s a new focus on who controls the data (and therefore has the power).

Agencies that haven’t historically provided much in the way of ROI may find this a struggle in the coming months. However, as a counter to this, some marketing strategies are changing from pure promotion to demonstrating social purpose.

CMOs are losing influence within some enterprise companies and as a consequence, agencies are struggling to be seen as trusted partners and top-tier advisors. Building these relationships with the C suite has become a key focus for many – becoming a ‘trusted advisor’ will be essential for survival in the new reality.

6) Larger enterprise clients are providing generous support for employees and the competition for talent

Smaller agencies will need to compete more for the best staff, as the large multinationals are investing heavily in talent. One large pharma multinational, for example, is offering free counselling and mental health support; remote learning subscriptions for children and new technology for employees.

Between the appeal of freelancing (and increased demand for freelance services) and larger corporations investing in employees; small to mid-sized firms may struggle to recruit.

With remote working becoming more of the norm we are likely to more “off-shoring” of some job functions.

7) Agencies are having their cost bases interrogated

There’s a perception amongst some clients that with reduced overheads comes a reduction in agency fixed costs. For many who are still paying for premises, this won’t have hit yet, but it will be something that you can anticipate down the line, as clients begin to expect that cost saving to be passed on.

Many larger corporates are also reviewing their payment terms. We know of one CFO who said: “each time I shake the agency money tree more money keeps falling out – so I’ll keep on shaking it.” Be proactive on communicating with clients on fixed and flexible costs.

There will be many agency reviews when we are out of the crisis – clients will be looking for agencies that have adapted their offer and way of working to suit their new needs. Those that can manage and adapt to the way clients want to work have the most to gain.

8) In-housing will rise further

The Association of National Advertiser in the US now report that 78% of its members have in house capabilities – and more clients are asking agencies to consider sending teams or part-terms to come and work in-house.

9) The agencies that do best are anticipating the new landscape right now

While it’s tempting to bury your head in the sand – especially if clients are continuing to pay and use your services, this isn’t a long-term option.

As we move down the line, with less budget and fewer briefs, the agencies that engage early and establish their role in their clients’ recovery plans now will be the ones that win out in the long term.

Invest in the right things that will make you competitive as we emerge from this crisis – look at pricing, team structures, services and other things that can offer you a competitive edge.

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