Agencies already feeling economic impact of Covid-19 crisis

Survey of PR and marketing leaders reveals snapshot of the current state of the industry

The Covid-19 crisis has spread not just worldwide health challenges, but also fear and economic impact. To begin to understand the effect on PR and marketing agencies, we ran a survey from Monday March 9 to Wednesday March 11.

The survey link was distributed through several online communities of agency owners, as well as email lists and social media. The survey was completed by 63 agency leaders, and the results show that many agencies are already feeling some sort of impact.

Those with the greatest concerns tended to be those who focused on event marketing and related activities, while firms with a strong crisis communications practice have actually seen increased workloads.

Let’s look at the individual results.

Agency Travel Reduced

The most obvious impact is on travel. It comes as no surprise that 70% of agencies have seen travel reduced because clients canceled (27%) or the agency itself cut back (30%) or eliminated it completely (13%).

 

More Agency Employees Working from Home

We have heard of many large companies allowing or requiring individuals to work remotely. Agencies are doing the same.

The survey found that while 51% of respondents already operated a virtual agency, those with employees shifted to that model, at least partially. Just 5% are closing offices and requiring employees to work from home while 24% are giving employees that option. Of the agency leaders who responded, 21% are not giving office workers additional work from home opportunities.

Some Agencies Already Losing Revenue

Among the agencies surveyed, 19% have seen a decline in revenue from existing clients and 17% have lost potential new business. Others aren’t certain if they have lost revenue or not, with 16% being unsure about lost revenue from existing clients and 33% questioning potential new business outcomes.

Agencies Somewhat Pessimistic About the Future

A clear majority (57%) of agencies expected the Covid-19 crisis to have a negative impact on agency revenue over the next 12 months, but so far 49% think that will be a small impact. Only 8% foresee a substantial revenue reduction on the horizon based on what they know now.

There are opportunities for some, with 14% believing they will see a positive impact on revenue, likely because they work in industries that are directly engaged in the crisis and require additional communications services.

Additional Comments from Survey Participants

Survey respondents were invited to provide additional comments on the impact of the Covid-19 crisis.

Here is a sampling:

  • The business loss is not totally gone – just postponed so hopeful!
  • I think the main impact has been the opportunities which I see as a result of COVID-19.. the main one being, of course, that businesses are totally unprepared. And here I come with my lovely crisis communications knowledge!
  • The nature of our work for many clients (particularly those in transportation or the live entertainment space) has shifted dramatically in just the last two weeks.
  • Clearly will be negative impact however difficult to quantify at this stage.
  • Those of us who work virtually as a routine practice should position ourselves as well prepared to serve concerned current or prospective clients. Business as usual for us.
  • We’re hosting an event in April and currently have no plans to cancel unless the state requires it. We’re full steam ahead!
  • IMO… this is overhyped thus far
  • We are very much in wait-and-see mode. We have some clients in travel and hospitality and are anxious for them.
  • Fortunately, as a remote-only company, we don’t have to change any of our routines.
  • We’ve been in a state of flux right now with some clients due to event cancellation as well as production for new products out of China being delayed and I’m hoping that it will be a small pause then become busier once this passes. However, I’m planning for the worst.
  • I am concerned that the event cancellations will directly and negatively affect nonprofit clients since they rely on fundraisers for budget wiggle room. I’m also deeply concerned that the stock market shifts and trade slowdown will lead to lack of confidence among the private sector. It’s too soon to tell, but it’s on my radar.
  • I am waiting on a client in Italy to respond to a proposal. Coronavirus has delayed this.
  • Less concerned about virus itself than in the recession that it could help create.
  • We’ve not yet felt the panic, but we are being watchful. Our clients are largely local, so travel isn’t impacted. We’ve not yet had any meetings cancelled.
  • We have had a major expo that was to take place the first week of April cancel and are planning on at least two more events to postpone or cancel. Now, for our healthcare partners, our workload has significantly increased.
  • Event planning is core to our business, and we’ve had large events cancelled or postponed. The postponements will affect all of our projected billings.
  • We’ve been in “mini crisis” mode helping out clients understand how to communicate the decisions they are making. We are focused on helping communicate to their stakeholders with the right channels, in the right order, at the right time. And gently reminding them, putting out a press release isn’t the way to communicate every piece of information 🙂
  • At our own agency, we are nimble. Employees are empowered to make their own decisions about what is best for their help and equipped to work remotely if they so wish.
  • We have work from home capabilities and currently allow staff to work from home one day per week. We can easily expand that to multiple days or full-time if we find that it is necessary.
  • The biggest impact is pivoting marketing for when conferences or meetings are cancelled as well as taking the loss of budget spent on materials and airfare/hotels/tickets for those events.
  • We are taking a step back from becoming a sponsor of events until we know events will stop cancelling due to this outbreak.
  • Our model ties us into longer term agreements that should provide some stability till the virus shakes out
  • Our core clientele operate globally especially in China, Germany and other COVID hotspots, so it’s affecting their sales & operations and will impact our budgets/PR activities for them. If more shows/conferences are cancelled, this will reduce our work as well.
  • We are completely ready to begin working remotely, once coronavirus arrives here. (Right now, we have a handful of cases but expect the number to grow.) Staff know they can work from home just about any time they ask. This is a day-by-day situation, so my answers could be completely different tomorrow.
  • Only one of our clients (who is in the travel industry) has modified marketing plans at this time.
  • We do a ton of events and cancelations have begun. Scared but hopeful.
  • I’m worried about triggering a recession.
  • As crisis management pros, this has actually increased our workload.

Background on Survey Respondents

The survey included a good mix of solo consultancies (14%) as well as agencies of 2-10 employees (57%), 11-50 employees (24%) and more than 51 employees (5%).

The survey included a broad selection of agency types, including those who describe themselves as public relations (41%), digital (19%), integrated communications (14%), marketing (13%), and public affairs (3%). Just under 10% of respondents would use a different label for their firms, including a combination of the other labels, consultancies, or data firms.

Chip Griffin

Chip Griffin

Chip is the Founder & CEO of Agency Leadership Advisors and a longtime agency owner and executive. He helps PR and marketing agency leaders build better businesses.