As holding companies opt out of Cannes, festival rethinks its options
Most of the major agency holding companies and one of the country's biggest independents are pulling out of the 2020 Cannes Lions Festival of Creativity, or are at least seriously considering doing so, leading the festival to assess its options. Among the alternative options being considered is going entirely virtual, one person close to the decisions who spoke on condition of anonymity told Ad Age.
Spokespeople for Cannes Lions did not return requests for comment.
Two years ago, the industry raised a collective eyebrow when Publicis Groupe opted out of The Cannes Lions Festival of Creativity to focus on building Marcel. Now, with the coronavirus pandemic putting a squeeze on finances and raising obvious concerns around travel, most of the big holding companies are assessing whether they will be there in October, when the rescheduled festival is set to take place, as Campaign first reported.
One person close to the matter who spoke on condition of anonymity said WPP and Omnicom Group have pulled out of the festival. Two people close to the matter said Wieden+Kennedy, one of the most creative shops in the industry, will not be attending Cannes, though the company declined to comment.
According to several other people close to decisions, Interpublic Group of Cos., Publicis Groupe and Accenture Interactive-owned Droga5 are among those that are still assessing the situation.
IPG, Omnicom, WPP, Publicis Groupe and Droga5 declined to comment.
According to one person who spoke on condition of anonymity, IPG CEO-Chairman Michael Roth sent a memo to agency CEOs urging them to pull back attendance and stop submissions until the company reevaluates the matter in September. For some networks within the group, the person said, entries and attendance for all upcoming awards shows that haven't been entered were frozen, including Cannes, the Clios and the Effies.
Earlier this week, WPP issued an update on its financial guidance for 2020 due to the pandemic and mentioned that it had launched a review of its costs, with protecting its people its top priority. WPP said part of the actions it has taken includes "stopping discretionary costs including travel and hotels and the costs of award shows." One person close to the matter said WPP "is out" and already alerted Cannes to its decision to pull out of all awards shows before that statement was made to shareholders.
The person said the decision was not made lightly. "We respect Cannes, it's great for our creative community," the person added, but wondered how it will go forward with several holding companies pulling out—Holding Company of the Year would be especially difficult to award if most are not participating, the person noted. The person also questioned whether Cannes "will ever be the same again" after this, and advised that "it should look very different going forward."
Cannes has historically been criticized for its ostentatiousness. According to estimates from R3 Co-Founder and Principal Greg Paull, a holding company can spend between $20 million and $30 million on Cannes each year "by the time you factor in flights, hotels, access passes and all those cocktails on La Croisette."
Paull did note that the "danger of staying away from Cannes is that, with the week reinventing itself in the last five years to attract marketers, your client could be left sipping Negronis with your competitor while you’re staying your distance."
That is assuming of course that competitors will be there. Or clients. A U.S. spokeswoman for Anhueser-Buch InBev, which usually sends people to Cannes, in a statement said: "I think it’s too early for us to make any decisions on Cannes—it will for sure be something to consider as we navigate the next couple of months." A spokeswoman for another large consumer packaged goods firm said that “as with all events that require travel, we are really just continuing to evaluate.”
Burger King, however, says it will be in France if the festival goes on as planned. Burger King Global Chief Marketing Officer Fernando Machado was previously announced as a speaker at the 2020 festival. "So far our plan is to participate in full during Cannes in October," Machado told Ad Age via email. "I really think that our industry needs uplifting moments during such a tough time. So I hope the situation is better by then and we can still celebrate the hard work of everyone."
Several people close to Omnicom's decision said the company has not yet confirmed anything official to its agencies, and noted that the festival's new timing may be working against it. One person at an Omnicom agency who spoke on condition of anonymity said "there are definitely rumblings about pulling back on awards and such for the rest of the year to keep costs down. Realistically with it happening in October, that's the time most agencies cut costs anyway, so as to hit their targets or make up for any loss of projected income —and save from doing layoffs," the person added.
According to one person with knowledge of the situation, W+K will be sitting out the awards circuit for the remainder of the year save for entries already existing, unless a client or production company enters their work. The agency also declined to comment on that report.
Agencies that have already registered for Cannes are unlikely to be refunded, according to several people. The person at Omnicom noted that certain clients can also insist their agencies be present, but speculated "if it still goes ahead in October, it will be a shell of its normal self."
"As an industry we need to think creatively about how we come together to showcase and celebrate the best quality work that makes a difference to people’s lives and delivers brave solutions," a Dentsu Aegis Network spokesperson said. "This is a time where there is opportunity to consider new ways of achieving these outcomes. An alternative awards approach. At Dentsu Aegis we would advocate a virtual showcase of the Cannes Lions winners as a globally accessible way to celebrate the work and continue to provide an important platform for industry talent to be recognized.”
Cannes is a significant money-maker for its organizer, Ascential. According to its financial reports, Ascential in 2019 generated about $174 million in revenue, or about one-third of the company’s overall revenue, from its Marketing segment, which includes the Cannes Lions awards, data venture WARC and strategic advisory firm MediaLink.
Award entries account for the lion’s share of Cannes revenue. According to Ascential, Cannes Lions’ 2019 revenue came from three buckets: award entries (36 percent of Lions revenue; delegate passes (33 percent of the festival’s revenue); partnerships and digital (31 percent of Lions’ revenue).
Ascential’s stock fell 5 percent today and is down 47 percent from the 52-week high reached in January.
Contributing: Bradley Johnson, E. J. Schultz, Jessica Wohl