By May 9, 2020ISDose

The latest moves shops are making to deal with the fallout, in reverse chronological order

In this unprecedented time as the ad industry copes with the coronavirus, Ad Age is keeping a continually updated log of how the agency business is working to stay on track.

This story will be updated as the situation develops, with the latest news on top. If you have news to share on this topic, email lrittenhouse@adage.com. For a list of industry events that have been postponed or canceled, check out our events tracker here—and a frequently updated list of how marketer’s are responding here.

WPP approved for more than $700M in U.K. government loans

WPP received access to £600 million ($747 million) in credit under the U.K. government’s Covid Corporate Financing Facility, Ad Age learned. WPP CEO Mark Read recently told The Telegraph that the holding company had applied for the CCFF borrowing program from the Treasury and Bank of England. According to one person close to the matter, WPP was approved for the borrowing but had not yet dipped into the funds. WPP declined to comment.

The U.K. government announced in March a series of temporary measures—including the CCFF program—under which, “firms making a material contribution” to the U.K. economy can borrow money for up to a year on terms comparable to those available before the COVID-19 economic shock and then use the money “to pay wages and suppliers, even while experiencing severe disruption to cashflows.”

Dentsu postpones first quarter results, reassesses forecast

Dentsu, parent of Dentsu Aegis Network, has postponed its 2020 first quarter financials release that was originally scheduled for mid May. The group said in a statement that it now expects its first quarter results to come a few months later, “tentatively considered to be late May,” Dentsu said.

Dentsu explained the reason for the postponement: “Dentsu Group consists of approximately 1,000 companies, comprising approximately 130 companies in Japan and 900 companies in more than 145 countries and regions outside Japan. As reported, the spread of the COVID-19 has had a major impact on worldwide society and the economy. This, in turn, has caused some delays to accounting procedures for the consolidation of the Group’s first quarter results.”

The company also said the impact from “factors including the spread of and responses to the COVID-19 and the impact of the postponement of the Tokyo 2020 Olympic and Paralympic Games” on its business and results for the fiscal year ending Dec. 31, 2020 is under assessment. “The business environment on which the full-year consolidated financial forecast announced on February 13, 2020 was based has changed significantly and we will announce the revised financial forecast as soon as we recognize the impact from factors mentioned above,” Dentsu said.

IPG warns of “a very difficult second quarter” and further layoffs

Interpublic Group of Cos. today reported a first quarter organic revenue increase of 0.3 percent but a net revenue decline of 1.6 percent to $1.97 billion, compared to the $2 billion in net revenue posted in the same quarter last year. IPG Chairman-CEO Michael Roth warned on an earnings call to “expect a very difficult second quarter” and further layoffs. “In this environment, visibility into marketing and media spend is, to say the least, challenging,” he said.

Roth outlined the cost-cutting measures IPG has taken to tackle the coronavirus pandemic so far, including “deferred merit increases, freezes on hiring and temporary labor, major cuts in nonessential spending, furloughs in markets where that option is available and salary reductions where possible or appropriate.”
“Given the breadth and complexity of our portfolio,” he said, “the types of the crisis will be quite different across many of our companies. As such, there is no one-size-fits-all approach to the appropriate combination of cost actions.”

Ad Age has learned that IPG agencies, including McCann Worldgroup and MullenLowe have already implemented staff cuts.

“We are of course doing what we can to minimize the impact on our people to the greatest degree possible,” Roth said. “But, as you have already seen at some of our agencies, and will regrettably see again, in order to align costs with the new revenue reality, staff reductions will be unavoidable in the face of the pressures most every business is facing.”

Cannes plans “Lions Live” virtual event for June

Cannes Lions announced it will host a virtual experience focused on education and networking opportunities during the original dates of the Festival of Creativity, June 22-26. Organizers say “Lions Live” will feature masterclasses and hangouts with creative industry legends; expert lectures; and talks with speakers already confirmed for the festival before it was canceled. It will also feature expert talks on COVID-19 and “showcase the best of the hundreds of responses to the current crisis from the global creative community currently being shared on the newly launched Creativity Moves us Forward platform.” The virtual event will be free.

“In order to drive progress through creativity, and support our community at this difficult time, we want to provide the global industry with the opportunity to learn and network throughout June and beyond,” says Simon Cook, Cannes Lions managing director.

Hogarth reduces hours and salaries, looks to avoid layoffs

Hogarth Worldwide, owned by WPP, reduced employee hours and salaries, Ad Age learned. A spokesperson for the agency confirmed, saying the “degree of this reduction” varies by office and team but is never more than 20 percent.

“Like everyone, we’re seeing a few clients who are reducing activity as they react to the coronavirus effect on their business,” the spokesperson said. “The overall effect across the whole of Hogarth is that we are carrying slightly excess production capacity at the moment. We’re confident this is a short-term effect so, unlike some others in the market, we’re not looking to make any redundancies, and are instead on a targeted basis reducing the working hours for certain teams across the company. The degree of this reduction varies by office and team, but is never more than 20 percent. On average it’s somewhat below 10 percent. As clients begin to return to normal levels of activity we’ll emerge from this period with our full team, and with good momentum.”

BBDO lays off two high-profile execs

BBDO Worldwide laid off two of its top execs—New York Chief Creative Officer Greg Hahn and Exec VP-Director of Integrated Production Dave Rolfe—just days after Omnicom Chairman-CEO John Wren warned that furloughs and layoffs were imminent across all the group’s agencies.

Hahn joined BBDO in 2005 as an executive creative director and went on to steer some of the agency’s most celebrated campaigns, including multiplatform efforts for Fedex, HBO and AT&T.

Rolfe joined the agency in 2012, having made his mark as a partner at CPB, where he was largely credited for introducing the concept of “integrated production,” now industry standard. His work includes seminal campaigns for Burger King, Best Buy, Microsoft, Ikea and Volkswagen.

BBDO North America Chairman David Lubars said, “I’m too heartbroken to comment.”

Grey New York furloughs staff

WPP’s Grey is furloughing about 3.5 percent of its staff in New York. People close to the agency say the furloughs are expected to last approximately three months, adding that Grey has also put in place hiring and salary freezes, along with temporary pay cuts for senior employees on a voluntary basis.

“We’re using all levers possible to protect jobs and be ready to ramp up in [the third quarter] when the economic climate improves,” said a Grey spokesperson.

Furloughs and layoffs loom at Omnicom

Omnicom Group Chairman-CEO John Wren warned employees in an all-staff memo obtained by Ad Age that furloughs and staff reductions will be carried out “across many of our agencies.”

“Since my last note to you, we have solidified some of the internal measures to adjust our business to meet the changing needs of our clients,” Wren said in the email. “Regrettably, this will include furloughs and staff reductions across many of our agencies. We are doing everything we can to limit staff reductions, and to take care of those who are affected.”

Wren said that Omnicom agencies—which include DDB, TBWA, BBDO, PHD and Omnicom Media Group—will participate in various global government subsidy programs “to reduce the number of permanent staff reductions we need to make.” The holding company will also work to move people to growing areas of the business, like Omnicom Health Group, rather than furlough or cut staff, according to the memo. Wren also said in the memo that he will be waiving his entire salary through the end of September and that Omnicom’s executive leadership team, “including our Network and Practice Area CEOs, are reducing their salaries by a third.”

Dentsu Aegis Network confirms cost-cutting measures

Dentsu Aegis Network confirmed that it has initiated salary reductions and furloughs across the holding company and its individual agencies, which include 360i, mcgarrybowen, Carat, Isobar and iProspect. The furloughs, a Dentsu Aegis Network spokesperson told Ad Age, were implemented “as a means to protect jobs and safeguard livelihoods.”

The cost-cutting plan follows Publicis Groupe announcing that its executives took a 20 percent salary cut, while Chairman-CEO Arthur Sadoun said he took a 30 percent reduction in salary. It also comes as layoffs begin hitting agencies including IPG’s MullenLowe—which Ad Age learned cut 10 percent of its U.S. staff last week—as well as Giant Spoon and Anomaly.

Publicis Groupe reports earnings early

Publicis Groupe released its first quarter earnings early, after the close of the French stock market, reporting a net revenue increase of 17.1 percent but an organic revenue decline of 2.9 percent for the period. The holding company’s first-quarter earnings release was originally slated for April 23.

In the release, Publicis Groupe Chairman-CEO Arthur Sadoun also announced that dividends to shareholders would be reduced by 50 percent, to 1.15 euro ($1.25) from 2.30 euros ($2.51), and payments would be delayed to Sept. 28. Sadoun also said he had taken a 30 percent salary reduction and members of the management board and committee took 20 percent salary cuts. Maurice Lévy, chairman of the supervisory board, took a 30 percent salary cut, according to the Publicis release.

In a video memo sent to staff, Sadoun says the company has tried being “as transparent as possible” about its decisions related to the coronavirus pandemic. He says the holding company’s initial initiatives were to freeze new hires worldwide (although BBH New York did recently hire a new chief creative officer) and cut its freelance budget, but that “it is clear now we have to go further,” explaining the reasoning behind the executive salary and dividend payment reductions.

Cannes pulls plug on rescheduled festival

The 2020 Cannes Lions Festival of Creativity is officially canceled. The announcement revises previous plans to postpone the awards to October, when organizers had hoped the coronavirus pandemic would be less of a threat.

“It has become clear to us our customers’ priorities have shifted to the need to protect people, to serve consumers with essential items and to focus on preserving companies, society and economies,” organizers said in a statement.

Prior to the decision, holding companies and agencies had been reevaluating whether they would attend the festival in October. “One person close to the matter who spoke on condition of anonymity said WPP and Omnicom Group have pulled out of the festival,” Ad Age’s Lindsay Rittenhouse wrote yesterday. Sources also said Wieden+Kennedy had decided not to attend, though the agency declined to comment.

The 2021 festival will run as scheduled, Jun. 21-25 of next year.

WPP issues update on financials

WPP provided an update on its financials for the first two months of 2020, due to the impact of the coronavirus pandemic on its business. The holding company said the health crisis led to a 16.1 percent decline in revenue-less-pass-through costs in China during the two-month period. WPP said the overall holding company saw a decrease of 0.6 percent in revenue less-pass-through costs, which was in line with expectations. In the U.S. during the first two months, revenue less-pass-through costs improved compared to 2019, declining 0.9 percent compared to the 4.4 percent decrease in revenue less-pass-through costs reported for the first two months of 2019.

The company said close to 95 percent of its employees are working remotely, and noted how it’s “seen outstanding examples of creativity from our people as they support out clients, governments and NGOs in the fights against COVID-19. … Our global media network Wavemaker, for example, helped the Cabinet Office to launch its coronavirus information service on WhatsApp to reduce the pressure on the NHS [in the UK].” In China, the company said 55 percent of its workforce is back in the office.

In March, WPP said it began to see “a range of different responses from clients globally” including an increase in media cancellations, causing the company to expect its performance for the month to be weaker than it was in January or February. WPP said it launched a review of its costs, with protecting its people a top priority—so far, it has introduced a hiring freeze; is reviewing its freelance expenditure; stopping discretionary costs including travel and hotels and the costs of award shows; and is postponing planned salary increases for 2020. The WPP executive committee also took a 20 percent pay cut for an initial period of three months. WPP will issue its trading update for the first quarter on April 29.

One Club launches COVID-19 Jobs Board

To support the industry through the pandemic, The One Club for Creativity launched a free service for connecting job seekers with agencies, design studios, production companies and brand marketers looking to fill positions. The One Club COVID-19 Jobs Board is free to use and open to any person or company in the industry; a One Club membership is not necessary. The service will span full-time positions, project work, freelance assignments and internships across all levels of experience. The One Club said companies worldwide can submit job postings for immediate openings, as well for opportunities expected in the future once the pandemic is over.

“We needed to act quickly to help people whose jobs have been affected by the pandemic, and this was the easiest, fastest way to connect people with job openings,” said Justin Epstein, One Club corporate member and chapter manager. “It’s a simple, no-frills platform that can make a real difference for both parties.”

IPG withdraws financial outlook for 2020

Given the uncertainties around the coronavirus pandemic, Interpublic Group of Cos. withdrew its previously issued financial outlook for 2020.

“The impact of COVID-19 has continued in recent weeks to grow around the world in human tragedy and macroeconomic cost,” IPG CEO-Chairman Michael Roth said in a statement. “We remain focused on protecting the health and safety of our employees around the world, serving our clients, and supporting our communities.”

Roth said that “in the current environment, visibility into marketing and media spend is extremely challenging,” but assured that the company’s liquidity and balance sheet are “strong.”

“Our company has a long track record of navigating successfully through uncertain economic periods due to the strength of our talent and operating disciplines that are in full force, servicing our clients and rigorously managing our flexible cost base,” Roth added. “We have multiple cost levers to align expenses with changes in revenue and our operators are executing as appropriate on both the revenue and expense sides.”

IPG previously forecast 3 percent organic revenue growth for 2020.

Media Bridge waives fees for ‘pivoting’ creative

Media Bridge Advertising in Minneapolis implemented a radical strategy to combat the impact of the coronavirus pandemic. Noting how “some advertising agencies are taking advantage of their clients by charging them exorbitant rates to create ‘pivot plans’ to adjust,” the creative and media shop said it will instead waive client fees. CEO Tracy Call is urging other shops to take the “COVID-19 pledge” that includes offering no on-boarding fees; free media and marketing audits for new clients; free development and execution of “pivot plans” for clients; and free consultation for any advertiser who needs to talk to leadership or members of the agency.

“If it feels like COVID-19 has changed everything in an instant, it has,” Call says. “Unfortunately, the one universal in this crisis is that advertisers feel paralyzed. And that’s not sustainable. I’ve made a lot of decisions in the last week for my company and my clients. And I’ve made one in particular that I want to share in the hopes that it will have a positive influence on other leaders in media, marketing and advertising.”

Update from Omnicom Group

Omnicom Group provides an update on the current impact of the coronavirus pandemic, anticipating that “the impact of related government actions such as travel restrictions, limitations on public gatherings, shelter in place orders and mandatory closures” could “pose a risk that clients may reduce their demand for our services and could result in a reduction in our revenue, which would adversely affect our operations.”

The holding company said “a major priority for us is preserving liquidity” during this time. As of December 31, 2019, Omnicom reported cash and cash equivalents and short-term investments of $4.3 billion.

Omnicom said it has “strengthened existing measures to mitigate the effect of COVID-19 on our business, including with respect to our discretionary costs, cash position and liquidity” but it cannot “at this time predict the impact of COVID-19 on our operations and liquidity, and depending on the magnitude and duration of the COVID-19 pandemic, such impact may be material.” The company said an update will be provided during its first-quarter earnings call.

Webby Awards cancels gala, takes celebrations online

The Webby Awards, which celebrates the best of the internet, has canceled its 24th annual event honoring this year’s winners. It was originally scheduled for May 11 in New York.

This year’s nominees will be announced in the coming weeks and winners will instead be honored through an online celebration, giving them the chance to still deliver their “Webby 5-Word Speech.” The International Academy of Digital Arts and Sciences, the judging body that puts on The Webby Awards, also said it will be launching The Webby People’s Voice public voting in the coming weeks.

Claire Graves, executive director of The Webby Awards, said in a statement that the online celebration “will engage our community all over the world and will aim to be as inspiring as the winners themselves.”

This year’s nominees were originally slated to be announced on March 31 but Graves said “a new announcement schedule will be released in the days ahead.”

Cannes Lions moves to October

Cannes Lions International Festival of Creativity has been rescheduled to Oct. 26-Oct. 30, from June 22-June 26. The festival said in a statement that the decision follows “much deliberation” with partners, customers, public health officials, French authorities and the mayoral office of Cannes where the event is held annually. Cannes said it would continue to have conversations with all parties as it adopts its contingency plans.

The festival noted that it is working with the City of Cannes “to make sure that the move from June to October is a smooth transition for everyone. If you are an existing Cannes Lions customer, all passes, sponsorship arrangements and bookings will roll over and remain valid.” The Lions will be awarded in October and Cannes said it is finalizing plans “to extend the deadline and eligibility date … with an update coming soon.”

“The global situation is dynamic and changing rapidly, we felt it was critical to provide visibility on June as soon as possible,” Cannes Lions Chairman Philip Thomas said. “We will continue to liaise closely with our customers as we develop our plans.”

Creative Digital Agency (CDA) implements WFH

San Francisco-based full-service shop Creative Digital Agency implemented a work-from-home policy for all employees due to the county’s “shelter in place” mandate. “Our clients remain our No. 1 priority, and our staff will continue to be reachable via phone, email and/or video conference,” says Kevin Almeida, CDA managing director. “In the meantime, if you need assistance getting the word out to your audience about COVID-19, we are here to help. We are already engaged in Covid-related content production and media outreach on behalf of a number of our clients during this time of national crisis.”

BBDO opens ‘hundreds’ of new offices with a logo generator for WFH staff

In an effort to reassure all its employees stuck working from home because of the pandemic, BBDO New York created a new logo generator that incorporates staffers’ addresses into the agency’s mark. Employees can use it in new email signatures and some have even placed it on pictures of their home workspaces. The idea got so much love internally that the agency rejiggered the generator so team members around the world can now use it.

AICP postpones its annual awards

The Association of Independent Commercial Producers (AICP), the U.S. nonprofit supporting the advertising production community, is postponing all of its in-person events and programming, including its annual AICP Show typically held at New York’s Museum of Modern Art.

The news comes as other major industry shows have curtailed or altered their plans in the wake of the coronavirus epidemic (The One Club recently announced that the One Show and other Creative Week events would now be streamed online) and as New York City has announced measures that included the temporary closure of cultural institutions, including MOMA and the Metropolitan Museum of Art.

The AICP Week events, which also include the AICP Next Awards and educational talks as part of its “Base Camp” programming, were originally scheduled for June 9-11. The organization’s AICP Post Awards, honoring the best in post-production, was previously set for May 6 and will be paused as well.

“The AICP Awards programs are an opportunity to celebrate craft, thought leadership and above all else, community. At this time, protecting the community is paramount,” said AICP President and CEO Matt Miller in a statement. The AICP will issue updates on rescheduling as they become available.

In light of the events, the AICP also created a Coronavirus/COVID-19 resource blog to help the industry navigate through production issues that may arise with regards to the pandemic. That will be updated regularly as well.

Curiosity assures clients

Cincinnati-based independent shop Curiosity issued a notice to its clients assuring that “we will be conducting our business.” The agency’s chief client officer and president, Trey Harness, said in the note that employees were instructed to work from home but “you can rest assured that the service and output from us will not change.” Harness said the account team leaders “will proactively communicate any changes in operations” to its clients although any changes “should be minor” and could include rescheduling an in-person meeting to be done via video conference. “If a meeting must take place in-person, our account teams will work with you on coordinating it,” Harness added.

“We are a business that relies on collaboration and teamwork,” Harness said. “Thankfully, we are also a business that already has a flexible remote working policy and is practiced in handling meetings with individuals in remote locations around the world. We have a simple and thorough business continuity plan and we have begun implementation of it across our business operations.”

Wren writes to Omnicom staff

Omnicom Group has advised all employees to work from home, beginning Monday, March 16. Chairman-CEO John Wren wrote to employees that only “essential staff” should be going into the office and should still “maintain the recommended social distance.” If any of those employees feel uncomfortable going into the office, they should speak to a supervisor to “accommodate your needs,” he wrote. “If employees feel sick or are around someone who is sick, Wren added those employees should also stay home.”

“At this stage, we feel a work from home policy is the right approach for our people,” Wren said. “In addition, we are encouraging all of you to follow the guidance of national, local and city regulatory authorities.”

Wren noted that Omnicom offices in China and Singapore have started to “get back to business as usual. Our people there did a great job in keeping their businesses functioning during the past couple of months. I want to thank them and all of you for your efforts now and what we know you will do in the weeks to come,” he said.

4A’s issues guidance to members

The 4A’s has implemented a work-from-home policy for its employees, restricted travel and in-person meetings; and postponed its annual Decisions 20/20 summit from April 20-21 to early 2021 and its Management Practitioners Forum from March 30-31 to fall 2020. It has also issued guidance for agencies navigating business in the wake of the coronavirus pandemic, while saying ultimately that “each of our member agencies must make the best decisions for their employees and businesses.”

The guidance includes resources such as an MIT Sloan Management Review on how companies can respond to the pandemic; an infographic from the U.S. Centers of Disease Control and Prevention on how to guard yourself from disease; and research from Forrester on employee sentiment around coronavirus (29 percent say they fear going into the office) and best technology to use to work remotely.

Bollore reassures Havas employees

Havas CEO Yannick Bollore has sent a memo to the network’s employees reassuring them that the company will weather the financial storm of the coronavirus. “I want you to know that Havas is a solid group with a strong financial position, and I am confident we have everything we need to get through this,” said Bollore in the memo. Referring to the Havas group as a “family,” he added: “Our people all over the globe are deeply innovative, agile and filled with creative spirit. Although many of us are separated and are each facing unique circumstances, we face this situation together.”

“Situations like these challenge us,” wrote Bollore. “They put us in a position of making decisions that we have never made before. All over the world our people are being pushed to adapt to fast moving and unprecedented circumstances. I couldn’t be more proud of the work that each of you are doing, to protect one another and your communities, and to be adaptive as we face uncertain times.”

WPP recommends ‘managed remote working’

WPP asks staff to work from home where possible, with CEO Mark Read issuing an internal memo saying the company would move to a policy of “managed remote working.” He added, “Where some functions need to be carried out in offices, your managers will work with you to determine how to cover what needs to be done and will encourage travel at less busy times and greater flexibility in working patterns.” Read also said that, going forward, WPP employees could not take part in either domestic or international business air travel without permission from company CEOs—and that permission would be denied except in “truly exceptional circumstances.”

Guest Author: AD AGE STAFF

This article first appeared in www.adage.com

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