Jay Pattisall, Principal Analyst
The COVID-19 pandemic has forced marketing organizations to cut both short-term budgets and long-term spending plans. Forrester’s latest forecast predicts a 23% reduction in marketing spend this year as a result of the COVID-19 pandemic, with many cuts directly focused on marketing agencies.
In this episode of What It Means, Principal Analyst Jay Pattisall discusses the latest changes marketers are making to adjust to reduced revenue this year and how those changes are having an impact on the agency landscape.
So far this year, agencies have reduced their workforce by an average of 12% through both layoffs and furloughs. Pattisall explains that creative agencies have been hit harder, while media and digital agencies have seen less-severe cuts.
“What this represents, when you play out this type of layoff across a long period of time, is really a hollowing out of the CMO’s agency resources,” says Pattisall, adding that the trend of agency cuts will continue well into 2021.
So what can marketers do? Pattisall says that better use of technology can help fill the gap. Technology can better identify what creative and copy are resonating with your target audience and make your marketing organization more efficient. Leveraging design templates and AI-enabled software can help expedite and amplify digital advertising efforts.
All of these issues change the way CMOs evaluate digital agency partners and may change how they pay agencies. In addition to considering the traditional capabilities, CMOs must now evaluate agencies’ technology experience and capabilities and what technology access they may provide.