Ad giants Omnicom and Dentsu announced layoffs and other cost-cutting measures as the pandemic blunts ad spending
Hi and welcome back to the Advertising & Media Insider newsletter, where we bring you the latest in BI Prime advertising and media coverage. I'm Lucia Moses, deputy editor for advertising and media.
The agency world braces for cuts
This week, the economic devastation caused by the pandemic sped up with ad giants Omnicom and Dentsu announcing layoffs and other cost-cutting measures across their agency networks as advertisers slash spending. Meanwhile, layoffs and belt-tightening continued to wrack publishers from Condé Nast to Group Nine Media.
The scale of the changes is unclear, but analysts say this recovery will be longer and harder for the ad industry than the last economic downturn, in 2008. For perspective, Omnicom laid off at least 5% of its global workforce then.
Everyone has a take on how the post-pandemic world will look, and we're starting to see the seeds of one change in how ads are being pitched and made, as Patrick Coffee reported.
Tech platforms like Tongal, Communo, and Mofilm and networks like We Are Rosie that help freelancers get commercial work are booming as brands scramble to make new campaigns. If the shift lasts, it could speed up the undoing of traditional ad agencies.
But don't cheer for freelancers just yet, since that work has traditionally meant lower pay and less stability than permanent gigs.
Read further: Freelance job platforms are thriving in the pandemic, and their rise could further erode ad agencies
Digital media's reckoning
Digital media, which was supposed to be entering a period of stabilization and profitability, is facing a reset. That has people asking which companies will be best positioned to survive.
Some of it's timing. Companies that recently raised money or are close to profitability are in a safer place, as are founders who have raised before and have a track record, media investors told me.
More vulnerable are those that haven't gotten funding in a while and were aiming to raise money this year. Those that are most reliant on advertising also face a harder road.
Investors said beyond cutting to preserve cash until the economy comes back, there are some proactive things media operators can do, like testing new forms of paid content and super serving advertisers.
"Be as creative and test as many different ways, like deep content to monetize, as possible," Rachel Lam of Imagination Capital said. "Are there ways to sell to a smaller percentage of your audience? How much would they pay? Or would they pay microtransactions? Use this window to try things in a limited test. You might be surprised and see things that do work."
Read more: Digital media companies are facing a major ad downturn. Here's what VCs including Lerer Hippeau and Comcast Ventures say they should do to survive
Sports authority
No one wants to appear to be capitalizing on a crisis, but one obvious opportunity for some of those media companies is to pick up some of the millions of ad dollars that would normally have gone to live sports audiences. NFL ad revenue alone in the 2019 regular season totalled $4.5 billion, data from analytics firm iSpot.TV found. The problem for advertisers is replicating the size and composition of those live sports audiences elsewhere, as Lauren Johnson reported.
Go deeper: This year was supposed to be a banner year for sports TV. Now advertisers are scrambling to figure out where to put their money as live events get scrapped or postponed.
Here are other great reads from media and advertising:
- Leaked screenshots reveal what it's like to use Marcel, the AI platform ad giant Publicis is betting will help turn it around
- Comcast will soft launch its big streaming TV bet on Wednesday. Here's an early look at Peacock, which will have NBC classics like 'Parks and Rec' and trending news.
- The top 19 talent managers and agents for TikTok influencers who are helping build the careers of a new generation of digital stars
- How Ford pivoted its PR efforts to deal with the shift to remote work, medical supply manufacturing, and criticism from President Trump
- Exclusive data suggests Netflix was hurt by the launch of Disney Plus, but has rebounded in recent weeks
- Direct to consumer retail startups like Bandier and Rhone are retraining staff and doubling down on e-commerce as they face the worst financial crisis in a generation
- 'Totally unprecedented': United Airlines reveals how it's adapting its PR strategy as the coronavirus pandemic hobbles airlines
- 'We really need to adapt if we want to survive': Influencers and marketers break down how ad spending has changed and the future of 'paused' brand deals
- Hospitality-focused PR firms are shedding staff and looking for new revenue streams as the pandemic wallops the industry
- Esports is attracting major attention from the sports-gambling world, but there are big hurdles to taking bets on pro video game matches
So long for now. Stay safe, and as always, if you're new to this email, sign up for your own and share it with others by clicking here.