Clouds gather over the summer of rebound

Business is back and brands that were in trouble a year ago are spending on marketing again. But the threat of the COVID-19 Delta variant looms large.

Some of the world’s largest advertisers have reported earnings this past week with rosy results — especially when compared to the pandemic’s economic trough a year ago.

Coca-Cola’s organic revenue shot up 37% in Q1, for example, as venues reopened and on-premise dining resumed. PepsiCo grew 13% organically in the quarter, with North America up 21%, offsetting declines from the year prior.

On the CPG front, Unilever posted 5% organic growth. I’ll have my eye on what Procter & Gamble reports on Friday, as its ad spend strategy is often a bellwether for not just the CPG category, but also the entire industry.

Over in travel, which has been decimated by the pandemic, there are signs of life. JetBlue turned a profit in Q2, and American Airlines’ revenues grew 361% over last year’s Q2 low. Its load factor, or the number of full seats on its aircrafts, rose from 42% to 77% year over year.

As major global brands start to even out their balance sheets, they’re ramping up ad spend.

Unilever, which is still pitching its global media business, spent €206 million ($243.5 million) on marketing in the first half of 2021, after cutting spend by €257 million ($303 million) in 2020, bringing it almost back to 2019 investment levels.

PepsiCo grew ad spend by 30% over last year’s lows, and Coca-Cola, which is still running a $4 billion global creative and media pitch, has already doubled marketing spend year on year, with plans to return to 2019 levels.

Agencies are enjoying the rebound, with IPGPublicis and Omnicom all reporting second-quarter results last week that suggest a wipeout of last year’s losses and a return to organic growth - something they were struggling to achieve even before the pandemic.

But as advertisers return to the market, they’re trying to be savvier and more strategic about how they spend.

Coca-Cola, for instance, will aim to “improve the quality of [ad] spend, and allocate the spend in a more targeted manner,” CEO James Quincey said on the earnings call. E-commerce is an increasing focus, with the segment up 54% year on year at Coca-Cola. PepsiCo referred to e-commerce as a “new normal” in consumer food buying habits.

As client priorities shift (content, commerce, data, experience and health stand out to me as the big five), agencies are realigning again. IPG HealthVMLY&R CommerceWPP Choreograph and Mediabrands Content Studio are just a few examples of how agencies are beefing up and repackaging their offerings to keep up with client needs.

After culling thousands of jobs last year, agencies are now in a position of staffing up to meet client demand. People with non-agency backgrounds are percolating to the top, and those with technology and data skills who can help brands navigate shifting priorities are in high demand.

As talent who were dismissed from the industry a year ago now find the welcome mat rolled back out for them, agencies are finding the market is tight. Conveying stability will be key to talent attraction.

But that will be difficult, because as we close out Q2 and head into the late months of summer, and global companies iron out their office reopenings and hybrid work schedules, the Delta coronavirus variant looms large.

COVID-19 cases are up 65% in the U.S as Delta, which now makes up 83% of new infections in the country, rips like wildfire across unvaccinated communities and even puts some vaccinated people at risk. Masks are back, per the CDC, and that’s sure to complicate not just office reopenings but also client willingness to continue jumping back into the market in a big way.

Things may seem on the up and up for now, but COVID-19 has taught us to expect the unexpected and always be prepared.

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