If you’re wondering what the communications industry will look like when we finally exit this horrendous coronavirus pandemic you can do a lot worse than consider how the world’s largest PR firm is handling it.
First… well, Edelman is the largest PR firm in the world, so it’s clearly a good bellwether for the overall industry. Second, it is an independent family owned operation that has the relative freedom to make decisions unencumbered by rules laid down by centralized holding company mandarins.
CEO Richard Edelman has a tried and tested formula for coming through recessions that takes advantage of this freedom.
As much as possible, his stated aim is to avoid laying off people. It’s what he tried to do in the dotcom bust and 9/11 terrorist attacks at the start of this century. And he repeated that strategy during the financial crisis of 2008.
From what I gather it’s something he believes in personally and emotionally, in that he wants to do right by his people.
But he also believes it can help his company rocket its way out of recession faster than its competitors, because it will still have a deep bench of talent and will have picked up new blood from holding company operators that had to make cuts to hit higher margins for their overlords.
Edelman admitted as much when I spoke to him recently for PRWeek’s upcoming 2020 Agency Business Report.
“We’re not having any layoffs, we’re going to stay the course,” he said. “We did this in 2001, 2008. In both cases we rebounded out of it strongly and took share from competitors who made cuts. We’re a private family business with zero debt and cash reserves.”
It’s a nice position to be in, but that doesn’t mean there is an ever-stretching elastic band that can be deployed indefinitely.
“We’re prepared as a family to make lower profits,” added Edelman. “We don’t want to get into loss-making, but we’ll go along until we can’t and that’s our intention.”
It’s a strategy I’ve noticed other firms employing that aren’t weighed down by holding company ownership, such as Gary Vaynerchuk’s eponymous Vayner Media enterprise, which can also win business by going in with lower margins and pricing.
By the way, this isn’t an anti-holding company rant. There are many advantages in being part of a marketing services network in terms of financial security, domestic and global scale, and the opportunity to work collaboratively with sibling agencies in other related disciplines within the group.
Agencies are all people businesses at the end of the day, whatever their ownership structure, and the primary concern of most leaders during COVID-19 is looking after those people – and, by extension, the clients they serve – and ensuring they can continue to operate effectively.
Imagine trying to work from home in your closet while conducting strategic and reassuring calls with your clients if you’re personally concerned about the future of your job. It’s not easy.
Last week, I wrote about how the universal WFH experience we’re going through will fundamentally change many elements of day-to-day business life post-pandemic. I still believe that’s true and some holding companies are apparently reassessing their future office portfolio plans as we speak.
But this current period is not a completely scientific experiment given that, frankly, nobody has anything else to do apart from work. External distractions are few at this time. On the other hand, imagine how easy those people with kids will find WFH when they no longer have to practice homeschooling in addition to their day jobs.
On the client work front, while there are certainly industry sectors in the doldrums, such as travel, events, hotels, tourism and hospitality, others have never been busier, and I’m not just talking about crisis and employee engagement work.
Whether you’re an independent or a holding company firm, if your client roster includes supermarkets and grocery retailers; home entertainment; remote working technology; supply chain distribution; health, wellness and lifestyle apps; or remote learning you’re probably operating on WFH-fueled overdrive at the moment.
Of course, I’m fully aware that if you’re a small or medium-sized firm reliant on two or three clients that happen to be in sectors where budgets have been frozen, these are really tough times and I have the utmost sympathy for you.
And, even if you’re an Edelman, Weber Shandwick or BCW-sized agency behemoth, if one large client serviced by a big group of PR pros at your firm hits the pause button for any length of time it’s going to test leadership’s resolve not to make layoffs.
For the time being though, leaders such as Edelman are sticking to their guns for at least the next two or three months, which will take the firm up to the end of its financial year.
“We’re going to keep the team intact and fight through it,” he said. “We’ll reevaluate the picture in June, but that’s where we are now.”
Let’s hope those who stick to their guns are rewarded with a bigger rebound when we do finally emerge from the coronavirus nightmare.