VIDEO: 4A's CEO on ad agencies thriving (not just surviving) during pandemic

Marla Kaplowitz talks future planning, payment terms and the most valuable agency components right now.

If there was ever a time in recent history that advertising agencies needed third-party support from an industry body, it’s now.

And if there was ever a time in recent history for the 4A’s to truly step up, it's now. 

CEO and President Marla Kaplowitz has spent the past however-long-it’s-been (what year is this?) mobilizing her team scattered across America to help agencies not just survive, but thrive during this period of isolation as COVID-19 continues to take hold. 

Future planning, virtual pitches and chokehold payment terms from brands are just a few burning topics the 4A’s is navigating with shops right now. 

How’s WFH going for the 4A’s and does this signal a new way of working for the orgnization? 

We have to find the right balance. I’ve always been quite sensitive to the different types of extroverts and introverts -- so I’m an extravert at work, I like to work with people and I get energy off that, and I also have very introvertive qualities where I need time to recharge and refresh. I’ve always been aware of those people who like an office and need that time to close a door and have hated open-office plans. 

We should all be open to new ways of working and thinking. It’s about flexibility. Because the benefit of it is fantastic talent. If you remove the physical barrier of needing people to be in one location, you can have much greater diversity and inclusion. You can tap into people who are differently abled who maybe can’t get to an office very easily, part-time workers who have other needs but are incredibly valuable, you can increase your racial and ethnic diversity within your own team. It opens up a lot of possibilities. And because we had to rip the Bandaid off, we had to prove it fairly quickly. 

How are agencies handling this pandemic from where you stand?

Everyone’s experiencing it differently depending on what city they’re in and what their composition of accounts look like. So people who have a lot of travel, tourism, hospitality, energy clients -- that’s really challenging right now. There are some other agencies that have heavy CPG, certain retailers that are doing well, even certain QSRs that are doing really well as it relates to delivery. 

So there’s this interesting dichotomy where I talk to some agency leaders and they’re saying, ‘I think I’m going to be flat for the year.’ I have to say this: ‘Flat’ is the new ‘up.’ That is great if you can be in that situation. But there are many which are not and they’re having to take those measures. It’s not just advertising, it’s affecting every business.

People are going to be remembered for what they did during this pandemic -- how they behaved, how they not only treated their employees but they behaved with their customers. We need to wake up every day and think about how our actions reflect positively on that. 

What do you think about the sweeping cost-cutting measures many agencies have put in place?

I’ve been through this before -- the industry is a bit of a roller coaster. I saw some agencies taking action very early on, particularly the smaller independent agencies because they really had to focus on their cost and think about what they needed to do to protect their business. They’ve been pretty aggressive about the scenario planning. 

It’s the same for the larger agencies -- they recognize that their budgets are going to be down, they’re not making money on production as it’s come to a halt, although I’ve been really impressed by some of the scrappy creative ways people are putting things together. 

But cash flow is challenged, there’s pressure on payment terms in a number of areas, so I’m not surprised. We’re hearing a lot about what agencies are doing and not so much about what larger companies are doing, but they’re taking similar action, it’s just not as public. 

What agency components and planning strategies are best for future-proofing at this time?

There are some [leaders] who are looking much more into the long term. I’ve talked to some people who have said, ‘what are going to be the valuable capabilities that I provide not only today but in the future for where marketing is going?’ There’s clearly an acceleration on e-commerce right now, so how do you make sure you have the right people to help address those needs moving forward?

Looking back on the recession, there’s a lot of data around brands that sustained advertising during that period fairing better on the other side by maintaining brand equity. What they did well included having the right leadership and conviction and a longer term plan and vision, opposed to thinking short term. There are many who are being reactive, but there are those who are not just thinking about today but into 2021. This is not a short term hit -- this will carry over into 2021.

It’s leadership from the top and how they’ve viewed this as more long term [that will benefit agencies]. The ability to invest in the right areas, so not cutting everything but making sure they held onto the areas that they saw would carry them through and would be services that marketers really want to take advantage of in the future. Agencies have always been very good about being lean and knowing how to be nimble. So when it comes to these sorts of situations there aren’t a whole lot of areas to cut. 

What’s your plan for upcoming 4A’s events?

We were supposed to have two events this spring and three in the fall. We’ve postponed them. They are all going to be virtual. We’ve made the decision not to convene people physically -- we don’t know how much longer this is going on and we recognize that business travel will be down and people won’t have money. It’s about how we can provide education and connection. It’s forced us all to think creatively about what events look like. 

Has 4A’s membership taken a hit as agencies looks to save money?

Our fiscal year is April through March, so we’re in the renewal phase. To date, we have lost two agencies. One was due to an acquisition that was happening before this was going on, and the other agency had communicated with us that they were probably going to be leaving membership due to financial concerns before this hit. I’ll knock on wood, but obviously retention is really important to us and we want to work with our members. 

Our role is to advocate and champion on behalf of our members. I believe the team has done a really good job in stepping it up and being there for them right now and ensuring that we’re helping them through this. It’s reaching out and making sure we’re connecting our communities, committees and forums, bringing people together across all different disciplines, providing research and guidance such as webinars around the government stimulus money, for example.

It’s not only to make sure they survive through this period but can hopefully thrive during this period.

How are agencies finding the virtual pitch world?

I see it streamlining the pitch period already. We’re seeing new business pitches are shorter, people are more decisive, there’s fewer in the room -- they’re able to actually get to the heart of what really matters. I’m seeing that spill over with the marketer and agency relationship; they’re focused on really hard business problems right now, they’re not worried about all the extraneous and miscellaneous things they used to get distracted by. 

There are some agencies who have postponed the pitches altogether because they don’t want to be vetting agencies unless they can meet them in person, but the majority are moving forward and that’s so important -- it’s the lifeblood of an agency. There have been technical issues, but that happens in person by the way. 

People really have to come together as a team ahead of time. There’s far more connection and collaboration in the curation of the content. You can’t have someone in the meeting unless they have a role. You don’t have those bystanders any more. People have still managed to be very creative in the process too. 

I was a little worried when I realized people were going to start virtual pitching. There’s this one search consultant out there that asks agencies to do a video before every pitch, and when I used to have to do that with my team, I didn’t necessarily pick the people who were going to work on the business -- I picked those who were the most comfortable on camera.

How are you protecting agencies against oppressive payment terms some marketers are demanding?

I’m connected with my finance committee in having this conversation and peers at trade associations globally. There are people who are asking to extend the payment terms -- there will always be people who will ask. We’re very clear that if you do agree to something like that, it needs to be short term and you need to get it in writing -- it cannot be permanent. It is an exception, not the rule. That’s really critical right now. 

All agencies, but smaller ones in particular, have real cash flow issues. You have to be sensitive to that. I commend Unilever saying they would pay their suppliers on time, if not early, recognizing some of the challenges. We’re out there supporting our members. Agencies are not banks, they have the same needs at the businesses who are asking them for relief; they have people to pay, vendors to pay. And it’s a trickle-down effect and ultimately it’s not a good experience for anyone if they’re not being paid on time. 

What’s the 4A’s doing to help the next generation of talent during this period?

A lot of these young people have not been through something like this before, so we have to help them through that. We’re creating a program right now aimed at young professionals and how we can help educate them. But we have our MAIP program. We were to have 395 fellows and had 90 finalists who were not placed, so we have bundled all of them together and created a virtual engagement program because we recognize that we could not house them on college campuses like we normally do -- that was not an option for us. 

For young people currently in agencies we have a robust MAIP alumni program and we’re doing content for them every week to make sure we’re connected. It’s everything from fun things like yogi to making sure they have guidance on their career development. We’re also trying to make sure that people who have been laid off or furloughed continue to get access to learning. 

What’s going to make agencies thrive in a post-pandemic world?

It’s what they always do; it’s helping marketers solve their greatest business problems and challenges with creation solutions and guiding them, whether you’re in media, creative or PR. Helping them focus not just on today but on the future and where they need to be going and not getting caught up in the minouser of it all.

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