During the COVID-19 crisis, not many sectors of the economy are growing, including the advertising industry. In fact, many advertising agencies are looking for ways to trim back as clients postpone projects or cut advertising dollars. This crisis has also caused agency owners to rethink their company structure and to find ways to trim expenses by outsourcing their media department.
To help agency leaders capitalize on these outsourced cost savings, I sat down with Jack Miller. Miller is CEO of True Media, a media strategy and communications firm that helps corporate clients develop efficient, effective advertising plans. True Media specializes in traditional, digital, social, and mobile media throughout the United States and Canada.
Miller’s take? It’s the ideal time to bring in new resources through partnerships.
Crises Highlight Challenges
Crises like the coronavirus outbreak have a way of bringing existing issues to the forefront. The growing complexity of media is a great example.
“As media has become more fragmented over the past several years and data has become a bigger piece of the puzzle, it has become harder for full-service agencies to do it all,” Miller says. “Agencies’ media teams are struggling to keep pace with staffing, software research, and analytics needs.”
As agencies look to trim overhead, they’re having to make hard choices: Should they scale back on SEO experts, or should they instead make cuts to the creative department budget? Which media research subscriptions are worth keeping, and which can be done without?
Larger cuts aren’t always better, Miller cautions. He brings up McKinsey research that shows companies that succeed in recessions aren’t those that tightened their belts the most; they’re the businesses that accept lower short-term profits for long-term gain.
In other words, successful leaders refocus rather than merely react.
Refocusing Your Resources
To Miller, refocusing is a two-step process: “Slash expenses associated with research tools, subscriptions, platforms, and other technology. At the same time,” he recommends, “broaden access to resources and tools available by partnering with a media agency like True Media.”
The data backs Miller up. A CMO survey found that companies that report the greatest increases in profit, sales, and customer acquisition also report the greatest boost to marketing outsourcing.
Start with areas outside your specialty, Miller suggests. Most agencies were created and developed around their creative prowess and understanding of branding. Very few were developed around media planning and buying. Agencies should use this time to double down on their core expertise and partner with other firms who have focused expertise in complimentary services. “We’ve even created partnerships with agencies where we have embedded media personnel into their office so it feels like you still have an “in-house” media department,” Miller said.
Steering into the Curve
According to Miller, now is the time to steer into the curve: Identify the media channels that will drive business once the pandemic passes.
News media is doing well, in particular. Visits to news sites spiked from 417 million in early February to 523 million in mid-March of this year. Local network television viewership in the nation’s top 25 markets grew by a similar 11%.
In addition to television and digital news media, Miller suggests social networks. “The time is now for your brand to make a splash on social media. People have come out of the woodwork on platforms like Twitter and Instagram.”
Influencer marketing experts attribute double-digit increases in social media activity to the coronavirus. Between Q4 2019 and Q1 2020, Instagram campaign impressions rose by 22%, while TikTok engagement jumped by 27%.
Mobile is also faring well during the pandemic. Compared to the same time last March, mobile phone data usage has grown by more than 50%. “Think of it this way: You’re going to get 50% more from the same mobile ad spend,” Miller explains.
The View From the Other Side
Refocusing your agency’s resources now may be painful. But if you do, you’ll be in a prime position once the economy rebounds.
“Outsourcing helps agencies run more profitably,” Miller says. “It lets them provide their clients with deeper resources.”
Those advantages don’t disappear once the crisis does. Larger profit margins leave more room to grow the team, chase leads, and invest in new technologies. A broader bank of resources lets agencies cater to a wider range of client needs.
“In every economy, including this one,” Miller says, “the best policy is proactivity.”