Corona & You surveys: an agency health barometer

Six months after ACC’s third You and Corona Survey, we planned a fourth edition, hoping that we could measure the effects after the end of the pandemic and see how well or bad the sector was bouncing back…

As it appears, we are still in the middle of it and we have no idea when it is going to end.

2020 appeared to be an annus horribilis for the sector, which struck the activation and event agencies extremely hard, whereas content, digital PR & Influencers and a large portion of the full service agencies could limit the damages.

Many agencies seem to have re-invented themselves after 1 year of Corona and have developed new services, hired other talents and re-organized their way of working from a distance.

Next to the uncertainty of projects and pitches being postponed or canceled, a big other concern has appeared and that is employees’ resilience and stress management. Our industry being a people’s business, we need to be able to offer perspective to our people and then shift to part time homeworking, which seems to be embraced by both employees and employers by now.

Will we get more perspective in Q2 or do we have to wait till Q3; that’s the question.

MANAGEMENT SUMMARY

Actual Income 20 vs 19:

7 out of 10 agencies saw their income drop in 2020 versus 2019; half of them even with 50% or more! 

Of the other agencies: half stabilized their income and the other half noted an increase (ie: 15%). 

All Brand Activation and Event agencies suffered from a big decrease of income, whereas the distribution of agencies winning/losing income is much more equally spread among Content Marketing, Digital and Full service agencies. All participating PR & Influencer agencies even did better in 2020 compared to 2019.

Projected Income 2021 vs 2020:

Whereas 63% of all agencies believes their income will increase considerably in 2021; 20% think it will remain stable and 17% are afraid it will even get worse as in 2020.

Again we see differences according to the main disciplines offered; content- and digital marketing agencies as well as PR & influencer don’t expect their income to go down. Most full service agencies are positive about volume growth, but for activation- and event agencies, we notice as many positive as negative income projections.

Temporary Unemployment:

Only 20% of all agencies didn’t put any employees on temporary employment in 2020, but 20% as well put +75% on temporary unemployment. Same constatations as above: mainly the activation an event agencies were hit.

50% of agencies stopped temporary unemployment in 2020. 16% think they will have to rely on this measure after Q2 21.

Staffing:

1 out of 2 agencies did not have to let anyone go since the start of the pandemic. It seems that most talent was made redundant at the activation and event agencies. But also at full service agencies, which probably executed some necessary re-organizations to cope with their evolved services, since they also hired a lot of new people.

We see a similar trend among the freelancers: activation- event- and full service agencies let go many freelancers, but also intend to rely on them to handle the fluctuations in demand.

Teleworking:

Although 1 out of 3 agencies still doesn’t know if they will allow their employees to work time from home after the pandemic, the most preferred option in agencies from all disciplines is to allow employees to work 2 days per week from home.

Extra benefits:

28% of all agencies offered a participation in home equipment to their employees and 12% offered a higher participation in IT support. 15% made changes in their mobility packages and 12% in their expense note policy.

Pressure on margins and consolidation of budgets:

51% of agencies expect even more pressure on margins in 2021, which is still a lot, but it dropped with 10% since the last You & Corona survey in August.

64% expect more consolidation of budgets among fewer agencies, which is a bit less as in August (69%).

Changes in Services:

9 out of 10 agencies expect a remaining impact of the shift towards digital. They expect bigger increases than drops for all main services in 2021. The biggest increases are expected in digital content, social media, content strategy, creative concepts and online events (although many think the number of online events will go down). Live events are still the most hurt services.

Challenges:

Projects and pitches being postponed or canceled are still the biggest challenge (respectively: 66%, 51% and 55%), followed by resilience and stress among employees (57%), which was hardly mentioned in the 3rd Survey!

A second cluster of challenges is the pressure on margins, uncertainty of government measures, resilience and stress of management and uncertainty among employees (38%).

Activity return:

In the previous survey, 47% of participating agencies expected a return to ‘normal business’ after Q2 2020. This number has decreased to 37%. 23% think this will only happen in 2022.

Government support and Corona Exit Strategy:

65 agencies made use of one or more government support measures. In 89% of the cases, this compensated up to 25% of their loss. 40% have an exit strategy on hand, 40% are working on it and 20% aren’t.

Financial strength:

29% of agencies think will end 2022 with loss; 15% don’t know yet and 57% hope to make profit this year.