Although a large proportion of marketing budgets are on ice, the initial shock of the downturn appears to be subsiding among agency and in-house chiefs.
In a study by fintech lender MarketFinance of 678 agencies across marcomms – including PR and communications – 72 per cent reported that their clients plan to freeze marketing spend to shore up cash flow due to the impact of the coronavirus.
This has left 85 per cent of agencies concerned they will run out of money by June, and 75 per cent predicting it could be a year before business returns to normal.
Almost half (48 per cent) of the agency leaders polled believe they would not be successful in applying to the government-backed Coronavirus Business Interruption Loan Scheme because they have existing business loans and fear that additional debt could cripple them.
These concerns are consistent with what agency leaders tell PRWeek, particularly those who specialise in harder-hit areas such as tourism, travel and hospitality.
However, another notable market sentiment in the communications sector is that confidence is slowly returning after the initial shock.
The PRCA’s latest confidence tracker, which measures the sentiment of in-house and agency bosses, reported higher net levels of confidence about their organisation’s prospects than at any point since the start of the COVID-19 crisis.
Net confidence has increased from +28 two weeks ago to +56.
Ready 10 founder and managing director David Fraser recently told PRWeek that for his agency: “There was an initial shock and pause of some bits (of work) but then everything has stabilised.”
Fraser stressed the situation is changing frequently, but there appears to be “a new normal” where some clients are returning to consumer and brand messaging.
The PRCA’s director-general, Francis Ingham, said the confidence tracker results are very encouraging.
“From speaking with dozens of industry leaders every week, I believe that the initial shock of this crisis has now given way to a calm confidence in the fundamental strength of our industry,” he said.
“This is not to downplay the challenges we all face as we restructure, and make the case for continued investment in our expertise. But it certainly is a welcome statement of industry confidence.”