tno survey report final...sources of support include professional advisers like lawyers and...

Copyright of thenetworkone Management LtdJune 2020

thenetworkone COVID-19 Independent Agency Survey

Final Report

www.thenetworkone.com+44 (0)20 7240 7117

[email protected]


Objectives & Background• Our mission at thenetworkone has always been to help independent

agencies succeed.

• In March and June 2020, halfway through the COVID-19 pandemic, we distributed an online survey with the aim of gaining an objective picture of where independent agencies stand.

• Our aim was to gain insight on how independent agencies have been affected and how we, at the thenetworkone (as well as other industry stakeholders) can support the independent agency community in a positive and useful way.


MethodologyThe survey was distributed using Google forms, to a cross-section of independent agencies in 42 countries, with every continent represented. 127 completed responses were obtained, from agency owners, and CEO’s or equivalent.

Fieldwork took place from 25th May to 12th June 2020, during the Covid-19 pandemic. Most countries were still in lockdown, although some were beginning to anticipate the reduction of restrictions and a small number had entered a recovery phase.

Results are broadly consistent across most geographies. Numbers do not support analysis by individual countries. However, where there are statistically significant regional differences, these are highlighted in the report.


Participant profiles

Argentina Estonia Macedonia Slovakia UKAustralia Finland Mexico South Africa UruguayBangladesh France Netherlands South Korea USABrazil Germany Nigeria SpainCanada Greece Panama Sri LankaChile Hungary Peru SwitzerlandChina India Philippines TaiwanColombia Ireland Poland ThailandCroatia Italy Portugal TurkeyCzech Republic Japan Singapore UAE

Respondents are all leaders & CEO’s of independent agencies from the following countries:


821

105510

Regional split

23


Regional split


Summary of key findingsAgency income

There is no doubt that most agencies have experienced a significant loss of income, and expect this to continue through the reminder of 2020. 74% reported a loss of income since March. 89% expect their 2020 revenue to show no growth versus the previous year and 75% expect it to be reduced. 31% expect income to be reduced by more than 20% (which will wipe out most agencies’ profit margin) and 11% expect income to be reduced by more than 50%.

51% of agencies have reported at least some clients who have stopped all cancellable their expenditure since March. 17% of agencies report that more than 50% of their clients have done this. 2020 is a very tough year for agencies.

Cost reduction measures

The Survey asked what cost reduction measures have been put in pace by independent agencies. The two principal measures have been a reduction in rent and other office costs (51%) and the reduction or elimination of freelance costs (47%). Staff reductions are also reported: reported by fewer agencies: 32% have furloughed at least some staff and 17% have let staff go. Agencies in Latin America have had to furlough the most staff (only 30% didn’t) and agencies in Australia and New Zealand the least (80% didn’t).

More encouragingly, while 38% have applied for or received a Government grant to support their businesses, only 25% have sought a loan. Grants are hard income, while loans have to be repaid and can potentially damage an agency’s future prospects. American & Canadian agencies benefitted the most from grants & loans (87%) and African agencies benefitted the least (37.5%).

Adaptation to remote working

Independent agencies are generally agile and seem to have adapted quickly to remote working. The trend is expected to continue in the future; 84% expect to continue more remote working than before the pandemic.


Adaptation to remote working cont.

Zoom is the most commonly used tool (89%), followed by Microsoft Teams (65%). Google meets and hangouts (48%) are also popular. Whatsapp groups (38%) far outstrip the business use of facebook groups (just 3%). Skype (29%) and Slack (28%) performed relatively disappointingly. Bluejeans scrapes in with 6% but none of the other 18 remote working tools scores above 3%. (Clearly there may be some local variations, like WeChat in China, that are widely used in a few countries but don’t appear highly in our global sample.)

Agencies are generally treating staff well

There is much anecdotal evidence of independent agencies supporting their staff both financially and emotionally and it is good to see some hard evidence of this in the survey. A few agencies (17%) have had to make drastic cuts, furloughing or terminating more than 50% of their staff. However, others have furloughed a much smaller number and 54% of agencies have not terminated or furloughed any staff since the start of the pandemic. This compares with 67% of clients, who have terminated at least some agency-facing staff.

Who has been helpful?

Encouragingly for thenetworkone and other independent agency networks, 59% of respondents cite their appreciation of useful, pro-active support from their agency networks. (This compares with 32% who report useful, pro-active support from national agency associations. Other sources of support include professional advisers like lawyers and accountants (36%) and business consulting firms like Kantar, McKinsey and WARC (17%).

The most valued support from these sources was clearly webinars, which 80% of respondents described as useful. Positive mentions are also recorded for newsletters and other information (55%) and group chats with other agency leaders (48%). New business introductions scored surprisingly low (22%) but this may reflect the relative paucity of clients seeking new agencies during the period.

Looking to the future

The survey also asked, what investments agencies have made during the Covid-19 period, or are being planned. By far the highest response, encouragingly, was for staff skills training (50%).


Looking to the future cont.

Even more interesting, is the kind of up-skilling which agencies are planning for their own teams. These charts repay detailed study, but the broad pattern is that agencies’ biggest priority is to upgrade their staff’s business skills: digital transformation (understanding and deploying new technology), commercial awareness, presentation skills, performance marketing, e-commerce and s-commerce, pricing agency services and negotiating with procurement. Craft skills like creativity, VR, AR, video production, creative automation, are of mentioned but at a secondary level. Perhaps surprisingly, the themes that dominate the media recently like Brand Purpose and CSR, diversity and inclusion, mental health and other HR issues rank far lower in agencies’ investment priorities. We make no judgment on this, we just report the findings.

Next in the investment rankings, below investment in staff training and professional development, are IT upgrades at 27% (perhaps the pandemic has exposed some shortfalls?) while only 9% of agencies are taking advantage of temporary remote working, to refurbish their offices. Perhaps surprisingly, only 3% report any investment in marketing or promoting their own agencies.

Hopes and expectations

The survey also reveals independent agencies’ forecasts on who will be the big winners and the big losers, from the business changes caused by the pandemic. The likely big losers are clearly seen as the network holding companies (87%) and also freelancers (38%).

The big winners, predictably, as seen as the big tech platforms (84%): Google, Facebook, Amazon and the like. However, small independent agencies are also seen as likely winners. 47% think that agencies with less than 50 staff will be big winners, compared with 23% supporting larger independents with more than 50 staff.

LatAm agencies rate their chances of survival much lower than agencies in other regions, with only 30% rating their chance of survival at 95% or above. Conversely, 70% of agencies in Australia and New Zealand consider their chances of survival to be in this bracket.

Finally, independent agencies are generally optimistic that profitability will return, at least to the independent sector. Asked what margin would represent success for “an agency like yours’ in the future, 54% of respondents cite a margin of 15% or above, and 20% of respondents suggest a margin of 20% or above. While only 3% say “any margin above breakeven” would represent success.

There is life and optimism still, in the independent agency sector.


19.7%53.5%15.7%3.9%7.1%7.1%

3.9%


19.7%53.5%15.7%3.9%7.1%

10.2%15.7%29.1%26%

16.5%

2.4%10.2%

2.4%


7.1%

10.2%15.7%29.1%26%

16.5%

2.4%

11%14.2%30.7%

11%

2.4%

30.7%2.4%


9.4%

16.5%

51.2%22%

0.8%


58.3%22.8%13.4%5.5%0%5.5%


4. How many of your staff have you let go permanently, or stopped paying temporarily (furloughed)? (Regional trends)


33.9%53.5%12.6%


66.9%18.1%9.4%5.5%

9.4%

5.5%


8. Have you received or applied for a government grant or loan to support your business during Covid-19? (Regional trends)


When asked “During the Covid-19 period, what investments have you made or are you planning?”, the most common answer was staff skills training(globally, and in every continent individually). The other two most common investments globally were IT upgrades and management / strategic business consultancy.


48.8%48.8%2.4%

2.4%


3.9%12.6%29.9%29.1%17.3%3.1%3.9%12.6%

3.1%

3.9%

3.9%


thenetworkone Management Limited

3rd Floor

48 Beak Street

London

W1F 9RL

U.K.

+44 (0) 20 7240 7117

[email protected]

www.thenetworkone.com

Thank you!

mailto:[email protected]

http://www.thenetworkone.com/

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