ACC Survey on impact Corona virus September 2020
For the third time now, the Association of Communication Companies (ACC) has questioned its members about the impact the corona crisis is having on the agencies' activities. Main conclusion of the survey: the first semester hasn't turned out quite so bad as initially anticipated, but agencies are expecting the second semester to show even worse results.
The last edition of this survey dated from the month of May. By now, the first semester is over and the dust has settled, for the most part. Which means the ACC members' springtime predictions can now be qualified somewhat.
88 members (representing about 100 out of 145 ACC-agencies and, admittedly, fewer than the 117 members who took part last time) filled out the questionnaire in the course of the summer. They stated that they had experienced a first half-year that was bad to extremely bad. 53 members saw a drop in income. 17 among them mentioned a drop of some 75%, 19 a 50% drop.
This is consistent with the estimates members had made as early as a couple of weeks into the crisis, though it is striking that, at the time, 80% of agencies had predicted a downturn, which actually occurred in only 60% of the cases. So, fortunately in some cases things never turned out as black as they had seemed.
The specific branches that were hit the hardest were, as was to be expected, the event sector and the brand activation sector. PR, content marketing and integrated agencies showed a much more diffuse picture. Each of these branches feature agencies that are declining as well as agencies that are progressing.
Many agencies still availing themselves of temporary unemployment scheme
Given the decline in income, it is logical that, again, the event marketing and brand activation sectors have the highest number of temporarily unemployed. In our sector the temporary unemployment scheme is still in effect. 45% of agencies currently have 20% or more of their employees making use of this system.
Moreover, in the course of these past months, a number of agencies have made a part of their workforce redundant. 24 agencies had to let go 1 to 3 members of their account management staff, 4 or 5 even, in the case of 3 agencies. 13 agencies reduced their headcount of creatives.
For those who kept working, remote working was the norm for a while, and this will remain so for the time being. 49% of agencies are not imposing a fixed day for working from home; employees' preferences are duly taken into account. Staff are allowed to choose their own home working day (or days). 36% are working from home more than 2 days a week. Especially in the fields of content marketing and digital marketing, remote working has become part of everyday life.
This will not be over soon
Yet the main insights drawn from this 3rd ‘You & Corona’-survey are not based on what has been happening in the past few months, but derive from agencies' expectations regarding the near future.
Many agencies expect the worst is yet to come. 31 agencies foresee a 75% decline in the second semester (compared with the same period in 2019). And the situation does not look very appealing afterwards, either. One third of respondents expect the trend set for the second semester of the current year to continue in the first semester of 2021. 23 respondents even expect things to get worse. And they predict similar results for the second half of 2021...
So, the corona crisis is far from over. 24% are already recording losses for 2020 (in May, this was 21%), though 32% indicate that – at the present pace – they will be able to manage until the end of this year. In May, only half as many expected to avoid losses until the end of the year.
61% are expecting more pressure on margins in the future, 32% expect the pressure to remain unchanged. Striking result: only in the field of digital marketing is the proportion of agencies expecting a status quo higher than that of those who think the pressure will rise.
Crises obviously also entail a change in demand: ACC-members expect higher demand for content strategy, digital content, creative ideations, online events and social media. They are foreseeing lower demand for live events and (to a lesser extent) PR.
Almost 7 out of 10 agencies are expecting a consolidation of the total amount of work at a smaller number of agencies, which will undoubtedly lead to a lot of shifting and agitation during the post-corona era. And 36% expect to see more strategic creation from international headquarters, which may lead to erosion of our added value and further pressure on our margins.
Let us conclude with a spark of hope. Whereas a lot of agencies have had to let go some of their staff in the course of the past few months, many respondents are expecting an upturn in the coming months. 22 agencies (not necessarily the same as the ones that laid off staff earlier) intend to hire 1 to 3 employees for positions in account & project management (in the case of 1 agency even 4 to 5), 19 agencies will hire creatives and 10 agencies will recruit strategic support.
So, in the course of the coming months, the fall in staff numbers should be compensated by fresh recruitment. In order to bring this process of dismissal and recruitment of talent to a successful conclusion, ACC founded the : an online platform where agencies (which remain anonymous) can list talents they have to let go, and agencies who are hiring can consult the profiles of newly available experienced talent.