Winners and losers in the advertising industry in 2020

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  • 2020 was the most crushing year for the ad industry since the 2008 recession. On a human level, it was worse, with nearly 50,000 ad agency jobs lost worldwide, according to Forrester. .
  • Insiders said some digital and health agencies have seen growth, but the job market remains weak, especially for black people and those over 50.
  • Winners included Facebook and Google, and Amazon, which built an advertising powerhouse under leaders like Ryan Mayward, landing it on our annual list of 10 Leaders Transforming Media and Advertising.
  • WPP’s GroupM expects its business to improve in the second half of 2021 as online shopping explodes and hard-hit industries like travel start advertising again.
  • Visit Business Insider’s Transforming Business homepage for more stories.

2020 rivals 2008-2009 as one of the advertising industry’s most defining years.

WPP’s GroupM, the world’s largest ad buying network, said overall U.S. ad revenue fell 9% this year to $214.6 billion, excluding political campaigns, or 20. $6 billion less than in 2019.

The human toll for advertising agencies was higher than in the previous


recession

. Forrester estimated that 49,000 jobs worldwide have already been lost and US agencies will have cut 52,000 jobs by 2021. By comparison, about 24,000 jobs were lost in 2008 in the United States.

Tech giants have made big gains

Facebook, Google and Amazon were the winners this year as advertisers shifted spending to flexible, performance-driven platforms.

The Big Three easily beat expectations for ad revenue growth in the third quarter despite congressional hearings, antitrust lawsuits and political scrutiny, with Facebook almost entirely untouched by the boycott of the big summer advertisers while the small ones companies bought more ads on its platform to offset the pandemic losses.

Amazon ad revenue rose nearly 50% in the third quarter as more people shopped from home and marketers funneled money to the platform and its ad-supported competitors like Instacart and Kroger. Amazon has built an advertising juggernaut in recent years under executives like chief sales officer Ryan Mayward, who has made inroads with big advertisers through holding companies.

Their growth poses a risk to agencies, which still manage much of client spending on these platforms, but say these platforms push advertisers to work directly with adtech companies and bypass agencies altogether.

Digital overtook all other forms of advertising for the first time this year, which also benefited Google rival The Trade Desk, whose market valuation outmoded that of the two largest agency holding companies, WPP and Omnicom, combined. WPP and Omnicom lost 30% and 20% of their value respectively in 2020.

Ark Advisors partner Ken Robinson said the pandemic has also been good for consultancies like his, which help marketers find new agencies and review their business, as CMOs struggle. are trying to save money or keep their jobs by launching agency reviews this year.

Insiders say many jobs are not coming back

The biggest losers of 2020 were agency workers, with each holding company suffering a mix of layoffs, furloughs and pay cuts.

Omnicom cut 6,100 jobs, or 8%, in the second quarter alone – well beyond the estimated at 3,500 people he laid off following the last recession.

Some have started to recover; Sources said Dentsu US CEO Jacki Kelley recently promised employees that cuts of 10% and more would be removed by January 1.

But informed sources said even agencies with open job openings, such as WPP’s Ogilvy and Omnicom’s Siegel & Gale, have laid off employees in recent weeks.

Tim Young, a recruiter for agencies and tech companies like Google, said applicants started reaching out earlier than usual this fall, a sign of a particularly weak employment field, and that only people with skills in areas like AI and UX are in demand right now. .

Christie Cordes, another recruiter, said many had been unable to find work for months, particularly executives over 50 and black people, despite promises of diversity from agencies following the Black protests. Lives Matter.

Young predicted hiring wouldn’t resume until next spring, while Bob Hoffman, who writes the Ad Contrarian newsletter, doubted holding companies would return to pre-COVID staffing levels.

The pandemic will fuel entrepreneurship within and beyond the advertising industry

There is light in the dark.

GroupM predicted a K-shaped recovery with improvement in the second half of 2021 as advertisers in hard-hit sectors like travel start spending again.

Here are four bright spots:

  • Agencies are capitalizing on changes in consumer behavior by launching their own e-commerce and consulting or digital transformation hubs.
  • Tim Young said agencies that focus on healthcare and pharmaceuticals have done quite well this year as their clients have continued to spend.
  • Digital-focused networks like You & Mr. Jones and Martin Sorrell’s S4 Capital outperformed industry trends; You and Mr Jones said it was up 27% in the first half of the year, and S4 reported 23% organic revenue growth at T3.
  • Forrester predicted that this year’s job losses will also lead to a surge in start-up agencies and businesses like freelancer network We Are Rosie and consulting firm Fndr.

Some traditional agencies have also shown resilience. Goodby Silverstein & Partners co-founder Jeff Goodby said he did not lay off any employees after doing more consulting projects and in-house production work for “COVID-proof” clients like Doritos and Boston Beer.

Ken Robinson said the ad industry will come back when customers start spending again.

“Agencies expand and contract like waistlines,” he said. “When times are lean, they tighten their belts.”

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