Full-Year 2020 Industry Summary

Executive Summary – Yearly Recap

As you spent hours locked up in an improvised home office, did you feel overwhelmed by the cacophony of industry news, and still felt underinformed? You were not alone. We created these quick bite-sized highlights of what’s going on in our world so friends, colleagues, and clients wouldn’t have to spend countless hours sorting through hundreds of announcements. We know how little time is available and yet how essential it is to keep up with a fast-moving industry. This is a summary of 2020.
Buzzwords in 2019 were “Brandformance,” “Storyliving,” “Snackable,” and “Hyper-relevant/targeting.” So, 2020 was supposed to bring a bit of maturity to an industry that is sometimes chasing change for change’s sake. In early 2020, was the agency business still facing a perfect storm of budget reductions, in-housing, talent shortage, and identity crisis? It sure was.  CPG giant Procter & Gamble Co., once again the largest advertiser in the world, was in the headlines. Is cutting creative and media budgets truly forcing agencies and marketers to produce higher quality work that has more impact? That’s apparently what led Ad Age (among other reasons, such as the use of disruptive and innovative creative tactics) to select Procter & Gamble Co. as its Marketer of the Year. The giant advertiser continues to experience solid growth at a time where it’s cutting its agency, production, and media budgets. P&G was also front and center at CES, the largest consumer technology show, with innovative concepts, inviting us to think about marketing and customer engagement in less traditional ways.
Later on, Super Bowl 2020 was another great display of the industry’s strength and focus with a sold-out inventory. There were complaints about too many movie references; others were moved, while some enjoyed the funny spots. Either way, no one was left untouched during one of the most televised events of the year. From Procter & Gamble’s “When We Come Together,” to Budweiser’s “Typical American,” Microsoft’s “Be the One,” Toyota’s “Heroes,” Audi e-tron’s “Let it Go,” Jeep’s “Groundhog Day,” Doritos’ “Cool Ranch,” Amazon Alexa’s “Before Alexa,” there was something for everyone. A reported four of this year’s Super Bowl ads were created in-house (Quicken Loans’ Rocket Mortgage, Google’s “Loretta,” P&G’s Secret, and Squarespace’s commercials). 102 million individuals also watched the 92nd Academy Awards, aka the 2020 Oscars, on ABC and enjoyed ads from the usual suspects, including Cadillac, Adobe, Verizon, Microsoft, Google, Rolex, McDonald’s, M&Ms, Colgate, Hulu, and Intuit.
Still in the early part of 2020, the headlines were initially centered around the impact on the advertising industry of the “Cookie Apocalypse,” or “Cookie-pocalypse” as some call it. But it’s the coronavirus (COVID-19) pandemic that ultimately became the center of our attention as it caused disruptions, cancellations, quarantines, and shutdowns around the world. How could it not, as the world stopped racing and the core of our global economic growth first became uncertain, and next, unstable. The advertising world took notice, eagerly listening to updates from the World Health Organization. As we learned to work from home (WFH), avoiding public events and physical, in-person meetings, we quickly embraced online forums, video conferencing, live-streaming, and digital events. We also realized the vulnerability of the advertising industry and the society on which it relies to exist and prosper. Yet, as always, the industry will prevail. Agility, adaptability, and flexibility are, after all, its foundational building blocks.
The Coronavirus (COVID-19) pandemic changed our lives, not only temporarily, but in some profound ways. This is an unprecedented event that our generation will hopefully learn from so it never repeats itself. It’s already changing the fabric of our culture (humanity, solidarity, philanthropic activities, travel, etc.), as well as businesses with greater innovation in ecommerce, live-streaming, community building, and marketing practices. From initiatives like #AloneTogether, the “Saving with Savings” campaign, Budweiser’s “Save Pub Life” campaign in the UK, and “The Great American Takeout Night,” just to name a few, brand advertisers and agencies around the globe are looking for ways to do right by their consumers and their community.  Without a doubt, the pandemic emboldened the strong and accelerated the decline of the weaker ones that were already struggling before the crisis, leading to massive waves of talent moves, reviews, agency consolidations, and various M&A activity.
Mid-year, it became clear that 2020 would be remembered as a year of humility, sacrifice, creativity, and global unity. “Crisis? What Crisis?” was the sarcastic title of a recent Media Insider post. When it rains, it pours, the saying goes. In the middle of COVID-19, the world awakened to intolerable injustice and racism and collectively rose to say, “no more.” Whether it is the health pandemic or current social crisis, they say that every cloud has a silver lining. That was also the title of an article by Cory Treffiletti at Cisco; a simple phrase to give us hope that the new world is one that we will shape and not inherit. I feel strongly about that as I think about the world of advertising and the client/agency relationships it relies on to exist. Many variables are out of our control: the economy, the new reality of social distancing, the uncertainty and talent mess created by layoffs. But there are many variables under our direct control: how we behave, act responsible, and take on these challenges head on. I am optimistic that we will shape an advertising world that is more open, more diverse, more inclusive, and founded on a new appreciation for what partnership and collaboration means. Welcome to the new world of advertising that is ours.
“Mask up, people!” The COVID-19 phenomenon not only altered our perspective, our way of working, how we attend events, and how we buy or consume content, for many companies it also accelerated their digital transformation in massive ways. It also impacted how we collaborate, how we create content, how we make decisions, and how we conduct agency reviews. The low representation of Black people in the advertising world opened our eyes to another great deficit in our culture: inclusion. We can no longer be silent about this topic—or inactive. The energy beyond the agenda of diversity is being felt throughout the advertising industry. We are already changing for the better. Agencies, once again, are tremendous forces and catalysts in this fight. But so are brands that truly care about the inclusion agenda and want to see positive change. Together, brands and agencies are joining forces to create a new kind of industry. One that we can proudly say we are part of.
The ad industry has been up and down most of the year. Mostly down, if you read the headlines of major industry publications -unless you are in the tech advertising industry. But it’s no “walk in the park.” Even for flourishing tech advertising firms, it comes with a certain level of scrutiny, corporate and social responsibilities. Tech giants—Apple, Amazon, Facebook, and Google—recently defended their business practices before the House of Representatives’ antitrust subcommittee, which has been investigating the companies for more than a year, collecting 1.3 million documents. That’s a lot of data to review. In a tech-driven world, how do we ensure an open, agile, competitive, dynamic, fair, and socially responsible marketplace? In the meantime, our attention has been focused on addressing the issue of diversity and inclusion, with much energy devoted to driving lasting change and providing more transparency. If social issues are changing consumer perceptions and culture, they must also be profoundly changing how brands and agencies come together to deliver responsible and effective work.
Summer 2020 didn’t feel like your typical summer. Winter wasn’t a typical winter either with the elections and COVID-19 restricting us from traveling or operating as usual. This is what we refer to as the “new abnormal.” Are we there yet? This common kid question during any commute or cross-country holiday journey feels quite appropriate. As we approached the end of 2020, we asked: When will this be over? Let’s face it. We have all been hurt in some way. In a recent PR week article, Civis Analytics/Finn Partners reported that our industry is feeling mood swings—anxiety (50%), sadness (32%), fear (27%), and anger (25%). Yet, we are also feeling appreciative (71%), thankful (67%), and compassionate (67%), more so than those who feel angry (51%) and annoyed (28%). Perhaps the US presidential elections didn’t help. Who would have thought that spending a lot more time in leisurewear wasn’t enough to counter the effects of isolation or bad politics? Whether you are wearing pajamas or business clothing, it appears that COVID-19 fatigue is real.  And the impact on our industry will be profound and long-lasting at many levels. The nature of the work people do will change.  Automation and AI will require new skills at agencies and clients alike. How else can we keep up with the increase of content and the need to operate more efficiently? 2021, here we come.
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Newsworthy Reports and Recent Developments

At AMS, we approach the agency management discipline as four distinct but complementary practice areas – TalentWorkFinancials, and Performance — which is how we categorize the following developments:

Table of Contents

Executive Summary:  Yearly recap……….4
TALENT: Securing the right talent and rescources……….6
Year-end summary……….6
Finding talent……….7
Organizing for success……….8
Employment in advertising industry……….9
The rise of AI and automation……….9
New partnerships for new means of collaboration……….10
New agencies, capabilities, or reorganizations……….11
The prevalence of in-house agencies……….15
The importance of diversity and inclusion……….17
Training and new ways of working……….18
A freelance revolution……….19
2020 Agency profiles……….19
TALENT: Noteworthy quotes……….21
WORK: Producing great work and outcomes……….23
Year-end summary……….23
Creativity and noteworthy work……….24
Fight against racism……….30
Business and digital transformation……….30
Other/miscellaneous work-related news……….32
WORK: Noteworthy quotes……….34
FINANCIALS: Driving efficient use of resources……….36
Year-end summary……….36
Industry stats and projections……….37
Key client budget moves……….41
Payment terms and compensation……….42
Digital giants……….43
Mergers and acquisitions (M&As) activity and reorgs……….44
Holding companies’ financial results……….52
Agency financials and budget cuts……….54
FINANCIALS: Noteworthy quotes……….55
PERFORMANCE: Driving stronger performance and value from the partnership……….56
Year-end Summary……….56
Awards and recognition……….57
Industry performance-related stats and projections……….61
Importance of agility/speed……….62
Other/miscellaneous performance-related news……….62
PERFORMANCE: Noteworthy quotes……….63
COMvergence data……….66
Agency reviews……….70
Disclaimer: The AMS Monthly Industry Update is a summary and analysis of newsworthy agency/client developments picked up in recent trade-related publications and news media.
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