Agency Brief: R/GA lays off 10 percent of staff and holding companies post bleak earnings
Interpublic Group of Cos.' R/GA is the latest agency to initiate a round of layoffs and furloughs. An agency spokesperson confirms that the agency laid off 10 percent of its U.S. staff, effective today, and also furloughed some employees, though it is unclear how many. "This was neither an easy, nor a simple decision," said CEO Sean Lyons. "It was important to us to provide all the support we could to those leaving, and are offering everyone at least four weeks of severance, healthcare coverage until the end of the year, and resume writing, interviewing, and networking services."
The R/GA news comes as holding companies WPP, Omnicom Group and MDC Partners all posted shaky first quarter results. For the most part, the earnings offered a pretty bleak outlook for the industry over the next several months.
WPP says despite a “good performance” in February, the holding company’s like-for-like revenue less pass-through costs declined by 7.9 percent in March, when its global agencies began working from home. Overall, WPP’s revenue declined by 3.3 percent in the first quarter. The holding company—which Ad Age learned was recently given access to £600 million ($747 million) in credit under the U.K. government's Covid Corporate Financing Facility—also implemented new cost-cutting measures including a reduction in “headcount in certain areas” and “voluntary salary sacrifice and part-time working.”
Omnicom, which has already carried out furloughs and layoffs across its agencies, warns of further revenue declines in the second quarter and full year but declined to post guidance given the uncertainties surrounding the business right now. Omnicom CEO-Chairman John Wren says that the company expects to continue evaluating the performance of agencies within its portfolio and further cost-cutting measures may be necessary in the process. Wren also managed to throw shade at Wendy Clark during an earnings call for her decision to “move on in the middle of a crisis.” (The former global CEO of DDB Worldwide announced last month she would be leaving to become the global CEO of Dentsu Aegis Network.)
MDC Partners’ stock skyrocketed 41 percent on Wednesday (it's since given up some of that gain) after reporting its first quarter earnings. The holding company posted organic growth of 2 percent—the first time its organic revenue has increased since the third quarter of 2018. Still, MDC is not immune to the adverse impacts of the pandemic and CEO-Chairman Mark Penn warns of organic revenue declines of 10 percent to 15 percent for the full year. MDC Partners’ overall revenue declined 0.3 percent in the first quarter. Penn says the holding company has taken the following cost savings measures so far: salary and hiring freezes; temporary compensation reductions; a “significant cutback” on discretionary spending; reduction in freelance budget; and “some furloughs and headcount reductions.”
Seniors try their hand at DJing during the pandemic
One ad agency in Atlanta, Luckie, has created an online radio station to keep seniors engaged—not only through some light entertainment, but by literally handing them over the DJ mic. Radio Recliner not only caters to seniors but its content is controlled by senior living residents—allowing any retiree in any senior living facility worldwide to DJ, make requests and share their favorite songs and stories on the station. Any resident senior can make a request or sign up to be a DJ—so far, resident retirees from Tennessee, Georgia and Alabama have shared their songs and stories on air. (Check out Bob Coleman’s segment below.) The online radio station launched on April 27 and new content is aired weekdays, 12 p.m. - 3 p.m. The station was created by Mitch Bennet, chief creative officer of Luckie, who says the idea was prompted by working with client Bridge Senior Living. Bennett says the process is easy for seniors; Luckie sets up the times, helps them prepare for and record their shows, edits and broadcasts.
“We realized that retirees at senior living communities across the country are feeling really isolated right now, maybe even more so than the rest of us,” Bennett says. “They can’t socialize with other residents, they aren’t able to see visitors, and many aren’t great with social media. So Radio Recliner was designed to become a social medium that helps seniors stay together while they’re apart.”
Pinterest provides insight into consumer spending
Some agencies are turning to an unlikely platform to keep tabs on consumer sentiment and spending habits during the COVID-19 crisis: Pinterest. The social media site most commonly used to discover new recipes, home decor ideas or other style inspiration is sharing its insights with agencies to help guide them and their clients through the pandemic. Agencies are benefiting from insights such as how “back-to-school” is shifting to “back-to-home,” according to Pinterest. Yolanda Lam, global head of Agency & Ad Partners at Pinterest, says what she’s finding the most “surprising and illuminating is the arc of consumer mindset.”
“We’ve always considered people who come to Pinterest as future planners, but that changed when the pandemic hit,” Lam says. “For the first four weeks, people were reacting and searching for ideas to figure out what to do immediately. Consumers were in triage mode: How do I keep my kids entertained? How will I work from home? What pantry meal can I prepare?” Lam says people are using Pinterest nowadays to find inspiration not for household projects but for how to “manage stress.” She says Pinterest is working “across all of the top holding companies globally” to help them assess what's top of mind for consumers during the pandemic and where their spending has shifted. “Pinterest is inherently different from social content or news content. People aren’t coming to Pinterest to broadcast their thoughts and opinions to a social network; they come looking for ideas to discover, save and do,” Lam says.
4A’s names new lead Government Relations liaison
The 4A’s named Alison Pepper as its new executive VP of government relations; she previously was senior VP of the division. Pepper succeeds Dick O’Brien who will be retiring after 19 years serving as The 4A’s principal representative to the White House, Congress and regulatory agencies. During his service, O’Brien is credited with leading the successful cross-industry resistance to a proposed 2017 change in the corporate tax code that would have ended full deductibility of advertising, as well as the marketing industry’s efforts to create federal standards for the collection and use of consumer data in target advertising.
Pepper, meanwhile, has represented thousands of companies on public policy issues around media, data, privacy and technology. Since joining the 4A’s in early 2018, she’s been a key player in the Privacy for America coalition, leading the industry’s response to the California Consumer Privacy Act. During the pandemic, Pepper’s focus has also been directed to deciphering the U.S. Coronavirus Aid, Relief and Economic Securities Act and its implications for agencies. Prior to joining the 4A’s, Pepper was the assistant general counsel and senior director of public policy for the IAB.
Tool of North America takes on Europe
An increasing number of shops have been forging partnerships during the pandemic. We’ve seen Trust Relations form a strategic partnership with Cover3 Creative, Minneapolis agency Stable merge with Arkansas-based retail shop Kreative Sales & Marketing, and now production company Tool of North America is partnering with Belgian creative tech studio nøcomputer to open its first European operation: Tool Belgium. Tool, which is celebrating its 25th anniversary this year, says talks with nøcomputer to establish a satellite presence—which will serve as the shop’s dedicated tech development studio for projects with North American clients—began in 2019. Still, Tool of North America President Dustin Callif says his company has collaborated for years with nøcomputer “on a wide range of projects,” including an immersive AR experience for Verizon at Super Bowl LIV in Miami. Callif says this was “a natural next step in our relationship.”
Some wins this week
JacobsEye Marketing Agency was awarded a five-year national marketing contract with the U.S. Department of Homeland Security. In partnership with NCN Technologies, JacobsEye will be tasked with developing a national recruitment advertising campaign for the U.S. Secret Service, as well as handle national media outreach, recruitment marketing, website and digital platform development, experiential events, emerging technologies and implementations, content development and training. JacobsEye has previously been awarded contracts for the U.S. Air National Guard, U.S. Army, U.S. Marines, Centers for Disease Control and Prevention as well as brands like Coca-Cola, Ford, Nike and The Home Depot.
Movement Strategy was named the social and influencer agency of record for Klarna, a Swedish bank that provides online financial services and payment solutions. The Denver-based, social-led creative agency will be responsible for growing the company’s U.S. audience. Klarna is one of the early “buy now, pay later” players and is now one of the world’s largest payment providers.
U.K. agency Brothers and Sisters was named lead creative partner across Europe for the Japanese probiotic dairy drink maker, Yakult. The appointment follows a seven agency, six-month pitch process that involved shops from the U.K., Germany, Netherlands and Italy. Minoru Osada, European commercial director for Yakult, says the company was looking for an agency partner to “help us deliver a strong creative communications platform across Europe.”