Amp spotlight: How COVID will affect agencies' 2021 budgets

In a normal year, September means back to school and the return of football. In agency world, it also means budget season. But as we’re all acutely aware, 2020 has been anything but normal.

The outlook for the coming year is far foggier than in years past. Some industry leaders have tapped into creative thinking to adapt to the challenges 2020 has brought on, while agile strategies have helped others roll with the punches. Although the industry-wide trend has been to cut back, some agencies have increased spending.

“We’ve literally banked on optimism and advancement,” says Mike Popowski, CEO at Atlanta’s Dagger. “In the economic downturn of COVID-19, a season in which many brands and agencies have been tightening purse strings and taking a conservative financial approach, we’ve taken a contrasting approach.”

Similarly, at Duckpin, the approach has been to maintain status quo as much as possible. “Despite the business world coming to a screeching halt in March, the leadership team here agreed in our quarterly meeting that we would leave our sales goals and budgets exactly as we initially set them for the year,” says CEO Andrew Woods.

Here’s how the rest of the Amp community is handling fall planning and budgeting in the coronavirus age:

People

With most of the country working from home, agency leaders have been pushed to look at new ways to keep their employees engaged and happy, while continuing to build on existing skillsets—an important investment given the shifting landscape of media consumption. At Just Media, that investment has taken the form of educational programs, certifications, and leadership and diversity training, along with more flexible schedules and added mental health days. “I’m continuing to invest in personal coaching because I want to do everything I can to help guide our team through what is a very stressful and emotional time,” says CEO Brandon Friesen.

Some agencies have looked at outside-the-box ways of making employees feel valued, even at a distance. “During the peak of quarantine, we implemented Friday lunch deliveries to both support local restaurants and to provide a creative way to engage with our people,” says Mark Ervin, president at Big Communications. Fun stuff aside, that investment also means tangible support for Big's staff. “We evolved our cross-departmental mentorship program to be virtually focused, and we have been making significant investments in our technology infrastructure to ease everyday access to our digital tools and resources,” says Ervin.

Workspace

Physical offices have been cast in a harsh light this year—and we don’t mean fluorescents—with many business owners wondering if they really need them at all. For production-heavy work, however, there is still a resource gap that needs bridging in a work-from-home reality. “After having so much success with remote work, we decided to downsize our dedicated office space but invest further in our production studio facilities next year as well as our team’s home-studio capabilities,” says Night After Night CEO Elliott Phear. “While many of our creative disciplines can now be done anywhere, we wanted to ensure we could continue providing effective and safe production solutions for our client’s rapidly changing content needs through our efficient owned studio set-up.”

Tech

Even in uncertain times, technology continues to be a critical investment for businesses aiming to stay on the forefront of industry trends. “We are investing in technology and new businesses in 2021,” says Gina Michnowicz, CEO and ECD at The Craftsman Agency, where the focus has been on expanding experiential offerings. “These pivots will continue to diversify our business, building a stronger foundation for the future.” 

Elsewhere, investments in tech have been more resource-focused. “We have doubled down on platform and partnership investments, including media-planning software, qualitative and quantitative research tools, project management software, people management platforms and regular quarterly business reviews with key agency partners,” says Just Media’s Friesen.

For some, investing in new tools has meant opening up new revenue streams. “Taking our fee on the backside via sales or a product offering is one new thing we’re doing,” says Voltage CEO Eric Fowles. “We are investing in a technology product that integrates into Shopify and other e-commerce platforms, and have partnered with a client on an e-commerce startup.”

Other agencies have turned their focus to tweaking SEO strategies and tuning up web presence. “"We worked with a great partner to update all our meta tags, new URLs and backlinks, and add some new content—yes, it’s boring stuff, but it’s critical and ongoing,” says Josh Denberg, founder and chief creative director at Division of Labor. “Then we spent some money redesigning our website based on the SEO rehab—the look and feel is one thing, but the redesign incorporates all the SEO work and will make updates easier going forward as Google continues to change its algorithms.”

Innovation

The old adage “Fortune favors the bold” has never been truer—and agency spending reflects that. “Our budgets are going to innovation and measured risk-taking,” says Bakery CFO and COO Hector Silva. “We’ve benefited from our clients' boldness during the lockdown, most of whom have understood that we're in a Wild West-style situation and only the ambitious will come out on the other end.”

Others are going big by getting serious about the opportunities with OTT. “There’s no getting around the radical changes that we’ve seen with brand budgets in 2020 thus far. This coupled with the unprecedented boom of new media production for the four major OTTs—Netflix, Amazon Prime, Hulu and Apple+—going into 2021 creates a tremendous opportunity for challenger brands to reach the masses in the hundreds of millions, at a super-low, super-efficient budget,” says Travis Peters, CEO at EightPM. “Consumers that still sit through more traditional TV commercials are not paying attention to them in the same way that they did five years ago, interruption-free streaming viewership is up, and production budgets are tight. This leaves lots of room for making deals to get a product in the hands of your customers' favorite characters on the big/small screen.”

Creativity

For many, the year’s challenges have manifested in a push to get back to the heart of why they do what they do in the first place. “Creativity is the soul of our business, we consider our company a house of ideas, and creativity is the only real ‘tool’ that can guarantee growth,” says Rolando Cordova, co-founder and CCO of Lanfranco & Cordova NYC. “Ideas are what resonate with clients and the current context puts even more emphasis on creativity, from how we present to clients to the way they integrate and find relevance.”

Similarly, at Day One Agency, the year’s challenges have highlighted the need for agility. “We’ve had to pivot faster than ever to meet client needs as well as to keep our teams informed and engaged,” says CEO and Co-Founder Josh Rosenberg. “We’re continuing to invest in our ability to be nimble and creative so that we can continue to deliver strong results in this quickly changing environment.”

Branding, marketing and partnerships

Good work goes hand in hand with good outreach, and the latter is an essential piece of any recipe for long-term stability. “As history tells us, and as we advise clients, ensuring a strong brand in a down economy delivers long-term results,” says Just Media’s Friesen.

The team at L.A.-based Native Tongue Communications has a similar mindset in their approach to 2021. “We’re unashamedly beginning to promote ourselves more,” says Founder Marissa Nance. “We are certain that our skills and offerings can change brand trajectories for the better, and we need more of our industry to be aware of that fact.” Nance and her team have allocated budget to organic PR, promotional investments and social media storytelling to broaden their reach to “what is rapidly becoming a majority minority nation, consumer base and audience.”

At Chicago’s ArtVersion, investing in themselves has meant recommitting to a true coast-to-coast strategy in seeking new business. “Local footprint expansion has been working very well for us, and it’s currently complemented with nationwide efforts,” says Principal and Creative Director Goran Panovic. “A number of new West Coast and East Coast accounts have been added to our roster of agency-of-record retainer accounts that helped with the actions in serving clients in the software, financial, banking, technology and fintech markets.”

Community

This year may have been defined by the new and novel crises afflicting the country, but it has also been a time of reckoning for an illness that has gone unchecked for far too long: systemic racism. Many agencies are committing to continue the work they began this year to root it out, both at the office and in their communities. “We’re continuing to invest in not only doing good work, but work that does good, and recently pledged our support for Ms. Opal Lee’s Juneteenth national holiday campaign by making the day a holiday and providing our services pro bono,” says [INVNT GROUP]’s president and CEO, Scott Cullather.

At Atlanta’s Dagger, furthering that commitment to community means doubling down on their mission to tell local stories that matter. “We’ve leaned into our in-house media company, Butter.ATL, to roll out culturally relevant community support communications from social justice to voter resources,” says Dagger's Popowski. “While this year has been tumultuous, we’ve made the seemingly risky move to be more aggressive, and the early indications of that move are solid.”