Crisis fuels industry divide as some suffer, others thrive

The coronavirus pandemic has not only triggered a huge surge in companies using digital and data techniques it has also created a big divide between the haves and have nots, with many businesses thriving, while others have seen a major collapse in work.

So says the new State of Digital study from digital trade body BIMA, which quizzed digital agencies and their clients over the effects of Covid-19 on their operations and found that while some were suffering, others were managing well.

For instance, while more than a quarter (27%) of agencies have or expect to make redundancies, just under half (44%) are recruiting. When it comes to revenues, agencies are split equally down the middle, with just over two-fifths (41%) expecting to hit their revenue targets, but exactly the same proportion (41%) also expecting revenues to drop by up to 25%; some 18% anticipate a revenue drop of more than 50%.

When it comes to clients, nearly two-fifths (38%) have seen sales reduced by more than 75%, yet 26% have seen them rise. Nearly half (49%) of clients also expect redundancies but there is deep uncertainty about how many jobs will go.

But while the impact on revenues at client organisations has been mixed, just under half (44%) have slashed marketing and digital budgets by more than 50%. Even so, three times more clients would pick an agency that could show a return on investment than one which was 10% cheaper.

BIMA Digital Leaders’ Network chair Laurence Parkes, who is also founder and chief executive of Rufus Leonard, said: “One factor that appears to distinguish those managing the current situation best is scale. Bigger organisations clearly have a greater security buffer – but this study shows small and mid-sized agencies and clients are feeling particularly exposed right now.”

The report also looked at how agencies and clients could better manage the uncertainty and insecurity together, a valid point considering that a separate report by new business agency Alchemis found that the crisis had strengthened client-agency relationships.

Parkes added: “Communication between client and partner is more important than ever. We’re seeing huge amounts of strategic change happening in both agencies and with clients and that means clients need fewer but better external partners to help them with fundamental business-driving activities (like performance marketing) and a few focused strategic projects.”

He went on to highlight what he believes agencies could do to win business: “Helpful agency partners should focus on ROI rather than low prices. They should show they understand client cultural challenges and help ease them. And they should be a safe pair of hands, delivering exactly what the client needs.

“For clients, they should look for genuine partners, not suppliers, because they need an agency that cares about delivering results, and cares about understanding the business.”

Natalie Gross is the former CEO of Amaze, who is now vice-president of brand and marketing EMEA at EPAM Systems and BIMA co-chair. She commented: “This report highlights a real need on agency and client sides to forge something new, something built on genuine partnership that helps all parties deal with uncertainty and strategic change.

“At the same time, it shows that agencies need to manage their own cultural shift, meeting the challenge of more homeworking to ensure they can continue to enable teams to innovate and individuals to excel. At BIMA, we need to help that process by helping the industry look forward and reboot.”

As part of that support, BIMA has announced four Peer Network Groups, covering digital leaders, HR, new business and client services/project management. Each new network will comprise experts in their respective fields, who will meet regularly to explore key issues, find solutions and issue advice and guidance.

Gross explained: “BIMA has always been a community of communities. At a time when many of our members need fresh thinking and new ideas to help keep them afloat, our new networks are going to be an invaluable source of support.”