Though advertisers’ plans during coronavirus are continually evolving, two things remain constant: budgets are being readjusted and partnerships are being tested.
While some are equipped to conquer the financial hurdles posed by COVID-19, others have paused ad spend indefinitely. We spoke with Ayzenberg chief financial officer Edgar Davtyan to understand how agencies and brands should navigate the financial landscape from now until the end of the year, how companies are adjusting budgets and what the current partnership climate looks like.
What does the current climate for partnerships look like?
I see partnerships as expanded pools of resources that you tap into all at once. With teleworking and a practically unlimited amount of people around the globe, the climate for partnerships becomes more fertile simply because partnerships now make more sense than ever. The challenges posed by novel coronavirus will be much better overcome with not one set of expertise, but a coalition of expertise together—this is what partnerships are all about.
Businesses need to figure out how to fuse pre-COVID-19 content that’s still relevant with something that’s a bit more reflective of the time via the social- and digital-driven muscles they’ve been flexing. In other words, work that has pre-COVID-19 content value but with the content distribution we’re seeing now. I expect there will be an uptick in partnerships after coronavirus because they will provide a higher output for the distribution of said content.
To me, partnerships don’t only mean two companies coming together. We also need to recognize the added need for agencies to better partner with three of their most important prongs—our own employees, our own clients and our own markets.
What partnerships do we need to forge in order to be better employers? Then what do you do to attract a better workforce? For our clients, that means better talent, better work and better results. And lastly, what does it mean for the market? As long as you remain agile, it means you are a better agency for your people and your clients. And that makes you a market innovator.
How do you think the pandemic is affecting brand and client partnerships?
The a.network has always focused on brands, consumers and employees who understand the value of a good idea. Before the current crisis, we were also fortunate to have already pursued technology and security systems that would strengthen working from home. Teleworking and the gig economy have been the silver lining for advertising professionals. When it’s all said and done, we’ll have plenty of solid data that will make it so that remote collaboration and the necessary tools are embraced much faster.
One of the advantages that agencies have is the knowledge and experience of the market. Our media business, for example, is really strong in user acquisition campaigns. When you’re an agency with a very specific remit, you understand the market. This allows us to provide valuable insight and leadership to a lot of the brands who are navigating the crisis purely from their vernacular, which is usually a very narrow vernacular.
People come to us with problems and we solve those problems. When you have that kind of relationship with a brand, you’re the ‘first call,’ no matter what. The role of any client-agency partnership is a bit more elevated during crises because we’re willing to venture into and navigate this unknown world together. If we were a level-two in terms of trust before the pandemic, where we have to be now is level-ten.
How are budgets being adjusted?
When faced with adversity and the unknown, typically the first thing that gets cut is advertising budget. However, I wouldn’t describe the budgets as “being cut,” but more as “being shifted” to different mediums.
A lot of live-action video content in our industry is being revisited and right now we are solving how to produce video in a socially-distanced environment. While we don’t know exactly what new form that production process will become, we do see that business coming back in Q4. The technology to achieve great cinematic results will be the same but with the added opportunity for our creators and producers to reinvent the process.
In response to increased viewership, we need to shift how we are going to set the budgets—not cut them. Even though that’s what it may seem like at first. Budget is not going away, it just needs to be molded into something else. For example, all of a sudden content is being produced via a combination of user-generated content (UGC) and creators, which is really relevant.
Music festivals and major events are being postponed or canceled. But are they really being canceled or are they being reformatted to a different medium? I think the latter is more true than being canceled. I believe that savvy marketers and agencies are going to quickly translate what may seem like budget cuts to budget shifts to produce content that’s more relevant in a post-COVID-19 state. That produces another big financial challenge for our business—how to price these offerings so that money is not devalued, but to get a better return for your dollar.
Some brands are sending products to influencers for them to shoot at home. Do you think marketers will continue to utilize these cost-effective processes after coronavirus?
We’re still experimenting but we know that ‘bite-size’ content is easy to consume. There will still be room, as there has always been, for high-end finished, marquee-style video content. For example, a launch trailer for an amazing game. I don’t think television or big video content is going away. But what is being questioned right now is, where does this content live and what will be the most effective measurement tool for it.
I believe that a lot of the real-time content that is being produced remotely will allow marketers to analyze their methods in a new way. They can look back on their spend and sales during this heightened crisis and go, well, what is really working? Today’s specifically-coronavirus content serves a different purpose, but we’ll need a little bit more time to determine whether or not this new purpose is more effective.
Per-unit price on the content being produced now is lower than a highly produced video piece; for that marquee content price, you can produce 10 pieces of content that incorporate UGC or influencers. As a result, the lift you’re going to get as a brand, as measured by your sales and your KPIs, is perhaps going to exceed the lift that you had with one high-production piece. That’s certainly my hope.
What are your thoughts on brands who just simply can’t pay agencies right now or must pause their account?
The biggest misconception here is that budgets will be thrown out the window. Don’t get me wrong, there are brands cutting spending, and that is the unfortunate reality of where any business is. But oftentimes the savvier marketers are the ones that are going to ask themselves the question of how to shift the dollars versus cut the dollars.
In between now and the end of the pandemic, there is a light at the end of the tunnel. The worst thing anyone can do is be stagnant, especially when the whole world is changing. So if I had one piece of advice to those who are being impacted by the financial implications of COVID-19, as we all are, it’s to be flexible and more open to what’s out there. When you’re flexible, you’re going to find that things are not being dried up… they’re just taking a different shape.
So it’s not doom and gloom. I’m an optimist. I believe that in about two or three months’ time, we will see some signs of our new normalcy. From there, it’s really a long recovery period to where we think the new norm is going to be awesome.
For brands/agencies, what will be the most challenging part about navigating the financial landscape from now until the end of the year?
The biggest challenge that I see is, how do you go from recruiting a lot of really talented people remotely to doing really kick-ass work while being remote? What this means for agencies of our size is that we can be even more agile, more nimble and more strategic in talent recruitment because all of sudden the entire globe just became our talent pool.
By no means does this imply that staffers are going away or will become irrelevant. At Ayzenberg, our full-time staff form the core of our operation. That won’t change post-COVID.
What I anticipate evolving is the way in which we expand these flex models and how we exercise some of the same principles that we used to recruit this talent, with our existing staff.
For example, how do you navigate existing staff to make them flexible in the way they work, interact and create? We’re following the state’s steps to transfer people back to campus, and this becomes a finance discussion because these kinds of arrangements have different financial implications.
With freelancers, you pay them differently and you’re able to attract them differently, allowing you to diversify certain talent effectively because you don’t have to keep them on these accounts 24/7 like you’d need to on a retainer account.
I believe that the agencies who actually figure out how to adjust to this flex pool model for the betterment of the work for their brands are going to be the ones with a bit of an edge. And I’m certainly committed to figuring out what that looks like at Ayzenberg.
What has surprised you most about your team’s response to COVID-19?
I’ve been with the a.network throughout several economic slowdowns, all of which taught us valuable lessons and allowed us to go from a small creative boutique to a communication supergroup. During the pandemic, our leadership team has positioned itself for deconstruction and rebuilding to come out of this smarter and stronger.
I was also very inspired by everyone’s ability and willingness to respond quickly, from our interns to our staff; everyone came together, and after seven weeks, we’ve acclimated to our new normal. The pandemic has taught us that we’re a closer-knit organization than we thought we were. It’s a good feeling to know that the organization you’re driving can swivel on a moment’s notice.
The analogy that I usually use is a super sports team where every unit needs to fire off at its optimal time for the whole thing to work; if one thing doesn’t work, you won’t have optimum performance. But when everything clicks at the same time and that engine revs, it’s all systems go. That’s what happened in our situation. I want to use that analogy to rally agencies and brands to look for that in their current and future partnerships. Because ultimately, partnerships are defined by these moments of crisis.
(Editor’s note: AList is published by a.network.)