UK prime minster Boris Johnson said the country had reached “a perilous turning point” as he set out a raft of tighter Covid-19 restrictions for individuals and business earlier this week. But what does the ad industry – which has been dealt an economic blow since the pandemic reared its head – want from the government?
In July and August – in between asking people to get down their local, have a pint and “eat out to help out” – UK prime minster Boris Johnson pleaded with office workers to return to their desks if they could.
“I want to see more people feeling confident to use the shops, use the restaurants, and get back into work – but only if we all follow the guidance,” he said. Ad agencies, and their clients, were quick to set up flexible working solutions in the huge offices that had been laying empty for months. For some, business lunch meetings resumed at Scott’s and Soho House. The Drum understands a few pitches even saw the reintroduction of chemistry meetings (albeit at a socially acceptable distance).
Two months on and the Conservative leader has now advised those who can work from home to do so where possible. The government has issued a curfew of 10pm for all bars, restaurants and venues, tightened up the ‘rule of six’ for social gatherings, and made it mandatory for hospitality and retail staff to wear masks at work. In Scotland, Nicola Sturgeon has gone even further – banning any indoor gatherings between mixed households. Northern Ireland has imposed the same constraint.
Amid all this, Britain’s economy is re-entering choppy waters, with the latest indicators suggesting that a summer surge in activity was ending even before Johnson tightened restrictions on socialising and returning to the office.
Repeated knocks to consumer confidence (which correlates closely with upticks and cuts made to media budgets) are once more taking their toll on the economy. On Tuesday (22 September) Bank of England governor Andrew Bailey warned that even without a resurgence in Covid-19 cases, “the harder yards are ahead of us”, while senior Treasury officials have voiced concerns about a “very weak” economy in the fourth quarter of the year.
For the ad industry, the reverberations of Johnson’s clampdowns are wide-ranging – from limiting returns to the office to another potential dip in ad spend and the resulting job losses.
Chris Combemale, chief exec of the Data and Marketing Association (DMA), is calling on the government to further support and work with businesses to find solutions to protect people’s health and livelihoods.
Along with furloughs, major cuts have already been made at the likes of WPP – which saw its staff headcount fall by 5000 globally, or nearly 5%, to 101,000 between January and June owing to “a combination of voluntary leavers whose roles were not replaced as part of the hiring freeze, and redundancies”. Publicis has also made a host of redundancies across its 5000-strong UK workforce, as has Omnicom Group.
The Creative Industries Federation projects that by the end of 2020, job losses in advertising and market research will amount to 49,000 (or 26% of the total workforce).
Combemale argues that the most recent regulations from Number 10 are likely to only further increase concerns for the survival of many companies, particularly small- to medium-sized businesses. He points to the need for continuing many of the support schemes launched by government previously – such as the furlough initiative, due to end in October – which have helped many businesses to survive to date.
“Trading remains extremely difficult for many businesses across the data and marketing industry,” he explains. “Despite some revenues gradually returning, we are still nowhere near pre-pandemic levels and many businesses will have difficult decisions to make over the coming months if they are to survive.
“We welcome the government’s approach, which seeks to protect both people’s health and livelihoods, but it is clear that today’s new measures will slow down the recovery and must be balanced with additional support for businesses.”
According to the DMA’s latest figures, half of the data and marketing professionals surveyed say their organisation has used the UK government’s coronavirus job retention scheme (52%) to avoid redundancies. However, a third of businesses have already made or expect to make permanent staff redundant (33%) – a number that will likely increase with further strict measures on businesses ability to operate.
The trade body is continuing to lobby government on behalf of its members on a range of key areas that our industry needs to both survive and then thrive post-outbreak.
“Most urgently, this week’s news combined with our survey results makes it clear that an extension of the furlough scheme until at least the end of December is essential to ensure companies have the confidence to retain staff and freelancers,” he says.
Stephen Woodford, chief executive at the Advertising Association (AA), agrees. He says: “Advertising is a driver of economic activity and growth and with business and consumer confidence so fragile, we call on the government to match further restrictions on economic activity with measures to alleviate their impact, particularly to continue to support jobs and businesses that are hardest hit, like many of the media sectors dependent on advertising.”
He says this is particularly important, given the indication that such restrictions will be necessary over the next six months, coming as they do during the biggest quarter annually for ad spend in the run-up to Christmas.
“Advertising can play a major role in both helping the national public health effort and the recovery and the AA has proposed an advertising tax credit for consideration in the chancellor’s autumn statement as a means to stimulate the broad economy.”
More specifically, the AA has asked the government to look again at aspects such as business rates relief on office premises and out-of-home (OOH) poster sites, plus sectoral support for the most challenged areas of the advertising economy including entertainment, leisure, travel and hospitality, as well as the extension of help for SMEs and freelancers and other means to support employment as the furlough scheme comes to an end.
WFH? ‘We’re a people business’
When it comes to pitching and chemistry meetings, an ad agency’s four walls can serve as a differentiator. For creatives, copywriters and planners, the office is a hub where campaigns come to life. For agency management, it can be a concrete monument to their business culture.
From pitching over Zoom to dreaming up creative from the kitchen table, the pandemic has forced the ad industry to adapt and service clients remotely. Indeed, many agency employees and marketers will be among the 90% of UK professionals that don’t want to return to the office full-time – no matter how much Dettol might romanticise it.
Many agency staffers have now acclimatised to a more digital way of working and while it’s understood that major agency network chief execs in the UK were – as recently as last week – keen to push for bums on office chairs, the government’s U-turn will force yet another operational rethink.
Paul Bainsfair, director general at the Institute of Practitioners in Advertising (IPA) agrees that people are the industry’s number one asset.
“Their creativity thrives on energy, interaction and magic, which is of course made easier by physically being in a room together. Which is why, the general sentiment from our agencies is that, in an ideal world, that is where they’d be. Physically together. Perhaps not all day, every day as was the norm pre-Covid, but at least some of the time,” he says.
“These are far from ideal times, however. Our agencies know that with the potency of the coronavirus this isn’t entirely possible; they must prioritise their people’s health and wellbeing, while also continuing to protect and drive their businesses."
He points to the “countless examples” of agencies continuing to produce strong work in lockdown and says that for now these efforts must be continued virtually.
“It is a delicate balance to tread for all of us but we hope this reinstated measure will be an effective short-term move in order to allow longer term gains in the future.”
In the meantime, the IPA is providing all of its agencies with legal and production advice, best practice guidance, insight and research, training and development in order to help support them and grow their clients’ businesses through these “toughest of times".
“We also firmly support the AA’s calls to government for tax credits and business rates relief, as well as further financial support for SMES and freelancers – measures that would benefit ad land as a whole,” Bainsfair concludes.