A lot is riding on the presidential election for Americans, including the comms and marketing firms that will vie for federal contracts over the next four years.
The winner's agenda will shape agency initiatives and budgets, and government contractors will have to adapt their business development strategies accordingly.
The threat of the largest federal budget deficit in U.S. history has not impacted the candidates' spending proposals which, if enacted, would be record-setting federal budgets. Of course, it's impossible to predict how successful the winner will be in transforming proposals into policy.
The state of the market
The landscape of federal spending on marketing comms services changed in important ways under Trump. Spending is up, but the money was largely funneled to fewer firms and different agencies than the previous administration.
All but four of the executive departments increased spending on marketing communications services. But some of the biggest expenditures funded specific, one-time communications contracts, such as the 431% increase to Commerce for the massive Census 2020 campaign or awards related to COVID-19.
Removing these outliers, funding for marketing communications contracts largely mirrored the president's legislative priorities, with increases at agencies like the Small Business Administration (111%) and the Drug Enforcement Agency (375%), while spending on marketing comms at Housing and Urban Development was cut by more than half.
As the federal departments of the funding changed, so did the firms selected to fulfill these services. As government spending flowed through fewer agencies and new policies loosened restrictions on federal contractors, a few leading firms increased their dominance.
Nearly 60% of the money from marketing comms contracts awarded in fiscal year 2019 was dispersed among ten firms, with holding companies like WPP and Omnicom Group experiencing massive growth in public sector revenue. Meanwhile, the majority of firms that were leads on the accounts last year (65%) pulled in less than $100,000 per contract.
So what will the government market look like in 2021 and beyond?
If Trump wins
Trump's proposed economic plan suggests he would largely continue the policies advanced in his first term, with increased spending overall and the largest increases at executive departments such as Defense, Veterans Affairs, and Homeland Security.
With the Census in the rearview mirror and major military recruiting contracts already awarded, there would likely be significantly fewer opportunities for small and midsized firms.
If Biden wins
A Democratic victory, however, could offer a very different landscape. The current economic situation closely resembles what Biden inherited in 2008, and his recovery plan echoes many Obama-era policies.
Following the Great Recession, the Obama Administration sought to revitalize the economy with adoption of the American Recovery and Reinvestment Act (ARRA) which funded domestic projects spread across government agencies.
Several pillars of Biden's economic proposal — including the "Buy American" provision that calls for a $400 billion increase in federal spending on U.S.-based products and services — resemble ARRA initiatives.
If Biden wins, expect more spending on infrastructure, energy, and climate initiatives and a renewed focus on hiring and outreach within some agencies that have seen sharp reductions the past four years.
In particular, the Environmental Protection Agency, Housing and Urban Development, and the Federal Emergency Management Agency, among others, are likely to seek contract assistance for marketing communications services.
How to play it
Now is the time to seek new leads and reconnect with old contacts. If you know former government employees who moved to the private sector when Trump won, ask them if they plan to return.
If you have agency contacts, inquire about new initiatives planned for the coming year. The more intelligence you gather ahead of the election, the more prepared you'll be to compete after Inauguration Day.
Mike Kapetanovic and Tommy Benz are principals at GrowthLab, a growth consultancy that secures federal contract dollars for marketing communications firms.