Advertising companies took a downturn as coronavirus bangs on ad spend

cnbc | April 16, 2020

At a Glance:
  • As the impact of the coronavirus pandemic hits businesses and their ad spends, advertising holding companies are preparing for a drop in demand and some are telling their employees to expect staff cuts and furloughs.

  • The advertising industry is bracing for a wider impact of any economic fallout on client spending since marketing is often one of the first items that businesses cut during a financial downturn.

  • Omnicom Group CEO John Wren wrote in an email to staffers Tuesday that the company’s response will include furloughs and staff reductions across many of its agencies.


As the impact of the coronavirus pandemic hits businesses and their ad spends, advertising holding companies are preparing for a drop in demand, and some are telling their employees to expect staff cuts and furloughs.
 

The advertising industry is bracing for the wider impact of any economic fallout on client spending since marketing is often one of the first items that businesses cut during a financial downturn. Some brand advertisers have said they’ve already dramatically reduced spending.


Learn more: Olive Garden’s parent beats on earnings but pulls outlook and dividend, draws down credit line


In an internal weekly email to employees Tuesday that was viewed by CNBC, Omnicom Group CEO John Wren wrote that the pandemic has had an impact on the economy, clients’ businesses, “and in turn, on ours.” He wrote that the company has solidified internal measures to meet the changing needs of its clients. The holding company operates agencies across the advertising world, including BBDO, DDB, and TBWA.


“Regrettably, this will include furloughs and staff reductions across many of our agencies,” Wren wrote. “We are doing everything we can to limit staff reductions, and to take care of those who are affected.”


A spokeswoman for Omnicom Group declined to comment further on the memo.


Wren said agencies will use furloughs rather than permanent reduction “so we can bring people back if, and when, conditions improve and client demand recovers.” He wrote that agencies will also participate in government subsidy programs to reduce the reductions of permanent staff.
 

Wren also wrote that the company will move people into areas of business that are growing, like Omnicom Health Group. He said the company’s executive leadership team is reducing salaries by a third, while Wren is waiving 100% of his salary through the end of September. The company “with few exceptions” has stopped new hires, frozen salaries and has reduced freelancers. It also suspended its share repurchase program.


Publicis Groupe, which reported its first-quarter earnings Monday, said it was implementing a 500 million euro ($550 million) cost-reduction plan with “full impact in 2020, to adapt and be recovery ready.” Its management team members are taking cuts to their compensation as well.


“There is no doubt that we are going through an unprecedented health crisis that will lead us to the greatest recession in living memory,” the company said in a statement. “It is too early to predict the full impact it will have on our clients and our business, so we will not provide any guidance.”


Learn more: how advertisers can be more innovative during trying times


Other holding companies in recent weeks have told employees and investors to expect a hit to their business. Another major holding company, Interpublic Group of Cos. withdrew its financial performance targets for full-year 2020 amid the increasing spread of COVID-19. Adweek reported over the weekend that IPG CEO Michael Roth had sent out a memo telling employees about reductions in staff, salary cuts, furloughs and other cuts in spending.


In late March, WPP, the world’s largest advertising group, pulled its dividend and share buyback and withdrew guidance for 2020 after clients canceled marketing booked with the company due to the coronavirus. Dentsu Aegis Network, another ad group, said it is also doing cost-saving measures, including salary cuts with executives taking higher reductions. A company spokesman told CNBC that the company has also used furloughs.

Spotlight

Follow the step-by-step tutorial about how to create a new Display advertising campaign in 4 easy steps. Learn more about Display advertising

Spotlight

Follow the step-by-step tutorial about how to create a new Display advertising campaign in 4 easy steps. Learn more about Display advertising

Related News

ADVERTISER CAMPAIGN MANAGEMENT, PROGRAMMATIC ADVERTISING, SOCIAL MEDIA ADVERTISING

Marin Software Announces its Amazon Ads Advanced Partner Status

Marin Software | December 12, 2022

Marin Software, one of the leading providers of digital marketing software for performance-driven advertisers and agencies, today announced it achieved Amazon Ads advanced partner status. MarinOne’s integration with the Amazon Ads API allows brands to easily manage, measure, and optimize their Amazon Ads campaigns - including Sponsored Products, Sponsored Brands, Sponsored Display, and Amazon DSP. The new partner recognition program from Amazon Ads gives partners the advanced partner status based on the growth they deliver for their advertising clients and their level of engagement and expertise with Amazon Ads products like sponsored ads and Amazon DSP. “Our longstanding relationship with Amazon Ads and our expertise in the online retail space have helped us drive maximum performance for many Retail brands, We are thrilled to be recognized as an advanced partner and look forward to helping our clients further their selling and advertising efforts with Amazon Ads and deliver more return on their ad spend.” Chris Lien, CEO of Marin Software. Marin has helped advertisers manage and optimize over $40 billion in digital advertising spend since 2007 across search, social, and online retail for some of the world's biggest brands. MarinOne provides customers a single platform for paid search and social advertising as well as retail media, marketplace, and shopping campaigns, delivering a cross-channel view of performance. MarinOne customers have a comprehensive suite of reporting, automation, and bidding tools to activate and help amplify their entire Amazon Ads campaign portfolio, both in and outside of Amazon’s stores. Advertisers can also leverage Amazon Attribution to connect their non-Amazon upper funnel ad spend across search and social channels with purchases in Amazon’s stores to measure every conversion. About Marin Software Marin Software Incorporated’s (NASDAQ: MRIN) mission is to give advertisers the power to drive higher efficiency and transparency in their paid marketing programs that run on the world’s largest publishers. Marin Software offers a unified SaaS advertising management platform for search, social, and eCommerce advertising. The Company helps digital marketers convert precise audiences, improve financial performance, and make better decisions. Headquartered in San Francisco with offices worldwide, Marin Software’s technology powers marketing campaigns around the globe

Read More

AD TECH AND MARTECH

ID5 Releases 2022 State of Digital Identity Report

ID5 | November 24, 2022

ID5, the market-leading identity provider for digital advertising, today released its 2022 State of the Digital Identity Report, which provides a comprehensive analysis of the developments made by publishers, advertisers, and ad tech platforms when it comes to the evaluation and adoption of alternative identity resolutions. ID5 found brands around the world are missing out on reaching cookieless audiences, with 87% of respondents identifying as such, and are restricted to competing for the same, limited portion of consumers reachable via cookies. Of those surveyed, 69% of advertisers want to be able to reach cookieless audiences today. This year’s report looks closely at a number of elements that shed light on how businesses are preparing to navigate a cookieless future going into 2023. The findings present insights into testing success rates, the most favored alternative solutions, time frames in which players expect to have their cookieless strategies in place, and more. By surveying 164 respondents globally, the report found that first-party universal identifiers are believed to be the most viable and scalable solution to replace third-party cookies, with 38% of respondents identifying them as the primary alternative. A mixture of deterministic and probabilistic first-party IDs take the top spot (54%) for the best methodology alternative to generate and reconcile IDs across websites. “Between cookieless browsers and people refusing third-party cookies, 50% of the global traffic is already unaddressable with traditional identifiers,” said Mathieu Roche, CEO & Co-founder of ID5. “Between cookieless browsers and people refusing third-party cookies, 50% of the global traffic is already unaddressable with traditional identifiers,” said Mathieu Roche, CEO & Co-founder of ID5. “Advertisers want alternative IDs now to enable addressability at scale, maximizing the opportunity that cookieless browsers offer today.” The report found that the adoption of alternative identity solutions is on the rise industry-wide with 63% of respondents having at least one solution or more. Of those that have not adopted a solution yet, 57% stated that their unfamiliarity with the various cookieless alternatives in the market is what holds them back. Nevertheless, 50% of survey respondents have already run tests to measure the effectiveness of these solutions, and another 35% are currently testing or are in the planning stages of doing so. With more education and knowledge sharing on the benefits of taking action on cookieless, these numbers will continue to rise. Overall, the report found that 75% of respondents are satisfied with testing. The research indicates that, though many advertisers are behind on testing, those who have are pleased with the results and are effectively positioning themselves for the future. “With this report, we not only wanted to highlight where companies are today, but we wanted to better understand what the industry is doing to support advertisers and publishers, as well as what challenges they are facing or are anticipating to face.” added Roche. “This success in testing across the industry provides hope that we are coming close to determining the solutions that have proven themselves as industry standards.”

Read More

AD TECH AND MARTECH

Hivestack Partners With mc R&D GmbH for Programmatic DOOH Advertising

Hivestack, mc R&D GmbH (mcrud) | February 01, 2023

On January 31, 2023, Hivestack, the world's top independent programmatic digital out-of-home (DOOH) ad tech firm, has partnered with Germany's biggest passenger TV network provider, mc R&D GmbH (mcrud). mcrud's 5,800 displays on 2,000 public transportation vehicles (subway, bus, and streetcar) may now be purchased programmatically using Hivestack's supply-side platform (SSP). Hivestack will provide local and international advertisers, agencies, and omnichannel DSPs the ability to create, activate, and assess programmatic DOOH campaigns across mcrud's DOOH screens in two major German cities with the integration of mcrud's inventory. The biggest passenger television provider in Germany, mcrud, shows high-quality programs on Berlin and Munich's public transit. Berliner Fenster station serves more than two million people every day in Berlin alone. The agreement with mcrud would enable advertisers to reach a potential weekly audience of 20 million people. Managing Director at Hivestack, Will Brownsdon, said, “We are thrilled to announce our partnership with mcrud in Germany. Our goal at Hivestack is to connect buyers to audiences on the move and across a wide range of OOH environments. mcrud represents just this, offering incredible reach in a unique and captive environment.” (Source – ExchangeWire) Germany's expected DOOH ad expenditure for 2022 is €708 million (£622.5 million). Digital outdoor advertising has grown consistently, sometimes at double-digit rates. In 2018, DOOH's total sales were still €410 million (£360.4 million) (source: Nielsen Media Research). However, this is a 72.5% increase within four years. Programmatic DOOH technology provides marketers with unparalleled reach, enabling global companies to target their customers precisely through large-scale DOOH displays. About Hivestack Hivestack is the most prominent independent, worldwide, full-stack marketing technology firm that enables the buy- and sell-side of programmatic digital out-of-home (DOOH) advertising. On the purchase side, marketers leverage the demand-side platform from the firmto design quantifiable campaigns that activate DOOH displays in real-time, depending on customer behavior and audience movement patterns. On the sell-side, DOOH media owners use the supply-side platform and ad exchange from Hivestack to generate programmatic income. Additionally, DOOH media owners may use its ad server to support audience-based, directly soldcampaigns.

Read More