GYDA Member Hub Monthly Q&A Seminar - August 2020

In August's Q&A Robert had a bumper session including some BIG names in agencies. They discussed:

• Back to the office

• Bad debt collection

• Business development

• Demand for digital transformation

• How to train nowadays?

• Reasons to be cheerful

• The economy and demand is not just B2C

• K-shaped recovery curve

• Brands are in-housing or reducing budgets?

• Opportunities in small business and start-up clients and in larger clients and Digital transformation

Transcription:

Robert Craven  00:07

Anyhow, we have Wednesday but now it's Thursday night Q&A session, a motley crew, we've got half a dozen. And really this is just a general chit chat question. What's going on? I had a couple of questions thrown at me, but they're the usual ones about winners and losers and what the best are doing. But I'm really just happy to chat through what's going on? What are you seeing, Paul, at the moment?

Paul Stephen  00:36

In some ways, a return to normality in terms of people started making inquiries about stuff and talking about projects. But I'm sort of questioning if they're ever going to convert, because even clients, and we've got projects that were told to us about, they're not quite sure when they're gonna get their own budgets approved and stuff like that. So my confidence in the pipeline is sort of, I'm not sure what I'm thinking, how confident I should be or shouldn't be. But actually, our sort of turnover in August is a little bit down, which is always quite friendly every year. So it goes back up again in September and October. So I'm sort of right. It was normal for me. But after having been on a few other things with other agency owners, I know that I'm fair, that's not necessarily normal for some, but not for others. Nobody wants to get back to work, though. No, nobody gave it back to the office, I should say. And that means I'm sort of hanging when I was sitting on some offices, just because even if I want them again, in a year's time, I might as well save in the meantime.

Robert Craven  01:36

Offices or barking prices at the moment.

Paul Stephen  01:43

 18 grand a month on offices.

Robert Craven  01:46

And people aren't going to come back. And the last people aren't using offices.

Paul Stephen  01:51

The challenge I've got is that some of them know they want to come back soon. And some of them want to come in some of the time. But if they do come in, they only want to come in if we want answers there. So I'm having to have these offices there. If you really want you'd have a nice office certainly come into on the odd occasion.

Robert Craven  02:07

So why don't you just look out the waiting room at the Hilton with desks all the way around and just book it once a week on a Monday afternoon or somewhere?

Paul Stephen  02:21

That's where I'm coming from. I'd rather do something that suits people rather than make the square peg fit in the round hole if you like. And if you'd like to say that's more frequent, but smaller gatherings that are in you know, locations that are on mainline stations rather than having to get on a tube and stuff like that, I'd rather do that. But what we're sort of discussing is when you look at the mental health side of it, and there's been some discussion on the news today about there is quite an important mental health issue around people becoming sort of danger of becoming agoraphobic as a result of this and how you know, and it makes it difficult for people who are joining the company, or how young people don't get to learn off their peers and all that sort of thing. It feels like even if there's a bunch of us, just looking around screen sizes, middle aged people doing this, I actually think that I know my 20 odd year old daughter and looking at him in a very different perspective, the fact that they can't be with their friends, all the rest of it, and I challenge anyone who's trying to get their first job or whatever, this would be a horrible way to start your career.

Robert Craven  03:31

I mean, you can't learn on the job. You can't pick up company culture, company values down the line. And then I mean, the reality is that there are lots of these, and I can say it because we're in an old room today. The reality is that these kids probably got their laptop on the ironing board while sitting on their bed. And we do actually have the duty of care, or at best they're sitting on their bed, or their sofa, in their apologies, with their laptop on their knees. And that's just I mean, that's just wrong.

Paul Stephen  04:09

I think there is a cost, you know, as much as we operationally can work quite effectively and efficiently. I think there'll be a long term cost, which we've got to watch out for.

Robert Craven  04:19

How do you do that? Philipa, How do you deal with dealing with the youngsters and yourself?

Speaker 3 04:31

Yeah, hi, sorry, I'm late. Thanks for giving me that one. I presume you're talking about returning to the workplace or not. So at the moment, a couple of my clients have actually decided to open the office, work at how many people they can have at max. And, you know, to do it safely, distance and all those sorts of things. Do not insist that people have to go In at all, but it's very particularly they've done it for the younger guys, because actually, it's the younger guys that have really been struggling. And so what they've done is Spacelygiven them a choice, so if the younger guys want to go in, then actually they can and Did anyone else who wants to go in, they can, at least to create a bit of a sort of bringing, even if they're not all in it, they're in a sort of a central, they're in a place where they can, you know, interact with a few other people in the business. So because of what you've been talking about is that challenge. And certainly, what I'm finding it's the younger people in the businesses are starting to find it the hardest, Blinky if they're on their own, or living in a flat share or something like that, or even sort of stuck at home.

Paul Stephen  05:44

I mean, that's the same way that it's either that all they've got is nearly the other end of the spectrum, maybe where they've got a family with three kids hanging off there. That's exactly right, as whilst they're trying to get stuff done.

Speaker 3 05:53

And that's the other one Exactly. That would almost without exception, those the two main programmatic ones. And on the second one, that's a hard one to solve. Again, another client of mine, who actually has decided to shut down the lease on their Soho premises, in fact, instead, what they're doing is taking space with business space. So that actually, again, because people with kids, hopefully, particularly when schools go back, you know, actually, if people just need to get away, and want to be somewhere that actually I then come back into. So with some clients who've opened their offices, they can go back there. And or actually, what they're doing is making space available through this business space set up. So that actually, those who need to use it can.

Paul Stephen  06:45

Yeah, that's what we were looking at, we already kind of got membership with the Office group. And they've got quite a lot of offices and a lot of places and they're all gyms, a lot of them are in railroad railway stations, because they took over the lease from, I don't know what it was British Rail or whatever, a long time ago. So actually, you can get to a lot of their offices without just coming straight into Victoria or Waterloo or complaining.

Speaker 3 07:08

The person who's closed who's not renewed their contract or their lease, if you like, what they're doing is they're using that as a starting point actually, do invite everyone to come in. So there's an initial set up sort of regrouping, if you like. Those who aren't for doing so, as a starting point, then to work out how to move forward, whether it's rotating, whatever it might be.

Robert Craven  07:35

David Gilroy, if he's there behind that shiny photo, we'll soon find out at the moment. He's got to ease back to work, I think aren't you, David?

Paul Stephen  07:43

T-shirt on?

Robert Craven  07:44

He's always got his orange t-shirt on.

Speaker 4 08:00

I'm just driving past shifnal. I'm currently on the A 41. It's taking me three hours to do 100 miles. So I won't chip in very much. But I'll treat this like a podcast.

Robert Craven  08:15

Just tell us what you're doing with back to work, David?

Speaker 4 08:17

Yeah, so we've got 40 people set office in Bristol, we've got two in so far. And that's because their work from home was particularly suboptimal, their setups, and were counselling views next week on who else is desperate to get back in now. They've been in as a pilot for the last six weeks, make sure we've got temperature checks, antibacterial stuff, all sorted. And just knowing how the buildings were in a five floor building. So we'll probably let 10 to 12 back in. And it will be the same 10 to 12. So we're not going to do a rotor. I think that's the worst of all worlds to have 10 in today, or 20 today and 20 and tomorrow. And I reckon at 40 people, we've got channel 15, who just aren't bothered about going into the office yet. So what we've done last week, this week, and next week, is we're doing three locations around the city and we're doing social distance face to face for a couple of hours in the afternoon catch ups. In our infinite wisdom, we've bought a six metre by three metre orange gazebo, which sounded perfectly big enough, it turns out it's so heavy, I can just lift it into the car by myself. So we're kind of doing that as an alternative for at least some face to face now, because we've got some people you know, happy to do that and generally taking a little bit more risk in their lives in terms of going out including the 23 year olds, who in the first week of II tend to help out to three breakfasts, three lunches and three dinners in the first three days.

Robert Craven  10:03

What's your pipeline like? What's going on with biz dev? In general terms. What is the market smart?

Speaker 4 10:09

Well, we're single sector business as some of you know, just illegal, we've had a pretty consistent flow of smaller projects. You know, we've, if a big website project for us is 50 grand, we're getting projects 15 to 20. Lots and lots of small projects for existing clients. I mean, just this week alone, we've opened seven and a half 1000 pounds worth of small projects. And in the first three weeks of the month, we'd only open seven and a half 1000 in total. So that's the one bit that we're really focusing on.We're still down 40 grand a month in retainers. But in actual revenue terms, this month, we'll only be down about 25,000. So we're in effect 15,000, a month ahead of where our low point in retainers took us at the end of April. And that's a combination of new customers and a little bit of increased spend from existing customers that didn't pull this in the first place.

Robert Craven  11:18

And if you don't mind my asking, David, were those new customers kind of already in the pipeline? Or are they kind of post March customers?

Speaker 4 11:26

Now these are all postmarks, Rob. So in there, there'll be a few early on, but the ones in June, July, and August. They're all stuff that has just come in through. You know, we've always had a lot of strong pipelines from an SEO perspective. We've doubled our own paid advertising spend. And I did that on a pilot basis for three days. And then at the end of day three, brought my new business guy back off furlough, because I was having to do too much sales work. It was that incident and effect.

Robert Craven  12:01

Nice problem to have.

Speaker 4 12:04

So he was the happiest man alive. Because he actually thought he was never coming back. He admitted to me at some point in the last two months. So I don't have specific numbers than I could get for that time we speak but it's actually a pretty consistent flow. And even a couple of old leads coming back that we thought died pre COVID. And they've kind of got back on saying, well, actually, we didn't do anything. Could we restart the conversation? That's been good. Because we all know, lawyers are bastards, they can make money in any market.

Robert Craven  12:48

Cool, nice. Peter.

Speaker 5  12:51

I just wondered what everybody was doing about bad debts, doubtful debts, unbilled worthy. Now catching up with your, you know, going back two years and saying, Well, actually, under our T's and C's, we can now build this. And we're going to build it all that sort of stuff? Or am I the only person with these sorts of issues? So you will Vestal virgins in the correct billing department?

Paul Stephen  13:20

Unfortunately, we've had to stay really tight with people and get a bit bullish about not continuing unless they pay the one that's already three months old and stuff like that. But fortunately, probably some of what we do to them is mission critical enough they've had to weaken. But I think every FD in the land is probably pushing, trying to pay Peter and Paul at the same time at the moment. So we've just got really bullish and it's not being unkind, it's just being professional. Fortunately, we haven't got any sort of long standing old debt, we actually do have insurance for that. Not that might help you now after the fact but it's something we took out a year or so ago. Actually, when we were starting to work with the Middle East, we thought it was a wise thing to do that then we'll pay out if the client is not paid after 90 days. We can claim that it's sort of like almost a bit like factoring but not quite the same. What's nice is as part of that service, they then the companies that you're doing, they monitor and then you get an update on their credit rating. So if a customer does owe you money, kind of lowers on their credit score or whatever, then you get a bit of a heads up about it as well.

Robert Craven  14:29

And any other thoughts on debt collection?

Speaker 4 14:32

We got really stretched really quickly. I mean, I'm talking back in March. And just by phone every single customer had no standing invoice to make sure they have it. And I had my account managers do that. So when we went into collections mode the following week or two, there was no excuse. We made half a dozen threats to shut down websites, we actually did shut down them for approximately 20 minutes before the tax payment arrived with a comment that I've heard once before, which was, we never actually thought you'd do it. And again, these lawyers remember. So for people who are consistently bad payers, they pay it 90 days, not at 30. As long as they are consistently paying it 90 days, and we're not talking about massive invoices, we're talking about four or five grand a month maximum, then we have been able to absorb it, but have told them, that's what we're doing. And they're probably 10 year old customers. So but anybody new, we have stopped work on two projects until they pay the outstanding invoices.

Robert Craven  15:57

Like it. I can, I think there was one of the interests is going back to the biz dev debate, I had a conversation with Gary Sullivan Equator at Glasgow and London. And he was saying that pre COVID They would run a webinar and they'd have 100 people at the webinar in a hotel, and they'd feed the people and give them coffee and give them goodie bags, and they send them handwritten invitations, and then they follow up all the 100 people by phone and then by email, and then they spend, let's just keep the numbers really, really simple. Let's just say they spent 10,000 pounds on the event for the 100 people and they end up getting sales call at 10 sales qualified leads out of that, and out of that they get five pieces of work. And he's saying that post COVID, you know, now it's just you send out to your network for a webinar that you're only get 100 people turn up, you get 10 sales qualified leads that you convert to five, so the actual cost of those sales qualified leads has crashed from you know, 10% of 10,000 quid to 10% of a couple of 100 pounds. Now the difficulty, of course, is as demonstrated by the number of people on this call, is that everyone is just totally webinar it out. Everyone's just the last thing anyone wants to do is stare at their own face on screen or most of the mediums of call. But I think they're really interesting thing that cost of customer acquisition technically can be much lower. In that sense? I just wonder what people thought about that. How are you getting your customers these days? Because it changed.

Speaker 6  17:54

 So I was gonna say we're in North America, and probably pick up pretty quick from the accent. We're getting a lot of business from people wanting to move online in order to sell online that hadn't been selling online before. And a lot of the council's are offering grants that support, you know, getting businesses getting ready for continued COVID Or for a second lockdown. And E-commerce has been loaded as part of the grant. So we're getting a lot of inquiries through that. I don't know what's happening. You guys getting that and England? 

Robert Craven 18:32

Not quite the same.

Speaker 7  18:35

We actually almost need to last two months for the largest amount of leads we've been getting ever. And especially from people moving from offline to online. Really, I was thinking of starting sort of lead generation, but we just been trying to keep up with just the natural leaders coming up out of that element. I don't know how long that will last and how sustainable that is. But we're getting quite an amazing amount of inquiries from people or businesses that suddenly are switching over. And so that's actually allowed us to pretty much grow on. We actually exceeded the numbers and before COVID. So I'm just hoping that the existing clients, as soon as they pick up to pre levels, and we shouldn't be actually flying actually.

Paul Stephen  19:29

Can ask both of you, are they kind of what sort of just give me an idea what sort of project sizes they are? Are they small startups or they medium and what sort of kind of things are they a bit of everything?

Speaker 7  19:40

I mean, this is Africa. So these are companies which turn over multibillion because what we're finding out is a lot of companies are moving the strategy. A lot of relationships are broken down between distributors and hotellers, because of COVID. I mean, so I think it's the usual thing, a lot of them. I mean, I don't know how successful they're going to be, there's a lot of optimism in the approach. But I mean, that's what I'm saying, I'm not sure how long this is going to last for, but it's definitely, there's a massive amount of interest. It's been almost everyone has talked over here, I've seen a very similar trend. So from small people too big to fail a big company, we generally deal with big companies. So we generally tend to get leads fairly large.

Paul Stephen  20:39

Sorry, where are you? Where are you in the UK?

Speaker 7  20:43

Cape Town.

Paul Stephen  20:44

All right. Sorry. Yeah.

Speaker 7  20:46

Yeah. So yeah, so I must say the video has been quite surprising. And I'm thankful for that as well. But yeah, so it's been quite interesting. The interest level, I'm gonna just link to the previous question as well. I mean, in terms of the I haven't been in the office by myself for the last four months, everyone's working from home. Although we made it available for everyone who wants to come, they can come. Everyone was chosen to stay at home. Even now the traffic is so large, it's actually quite easy to get to because something to do an hour to drive here, another could do it in 20 minutes, but everyone still chooses to work from home. And it's going to be a bit more challenging. Now, with the training. I'm trying to figure that out. Because that's something that we'll have to discover in terms of how easy it is to train the will to answer and actually sort of has been working. But it's also I don't know if it's been working, because we cannot monitor as closely. So that sort of thing.

Speaker 6  21:48

 I remember just answering your question for me, I am probably talking to smaller projects. You know, 10 to 20 grand projects on the council are funded. So 50% of those.

Paul Stephen  22:04

 I have seen there are grants like that for that sort of smaller size. So maybe we just haven't seen it yet. Or maybe I'm not seeing it because of the size of the agency we are.

Speaker 6  22:14

It is also paying in with the time and the Magento, Magento Two, we're getting a lot of people coming off Magento 1.9 over the Magento Two. So I know that's something that we happen to do with Magento.

Robert Craven  22:29

 I got a question for Ariel, which is, and for everyone really which is: Is more of the work about digital transformation, rather than pure digital marketing?

Speaker 7  22:41

Started to get me although we've been doing a lot of digital transformation and strategy as part of our marketing. It's actually now we actually starting to get purely consulting on digital transformation as well. It's actually big because of that element. Yeah. So it's been quite interesting. It's quite nice, actually, to get it on a pure strategy level. So we got a couple of clients, which approaches to like, let's hold, can we hold the end? Basically, from the process of luck, now I had to run one plant. They asked me, the CEO of the group asked me to help convince all the other CEOs of all subgroups in terms of how do you need to help them hurry along the digital path. So they want someone that they can talk to that has been through the process that helps them sort of map out what rational strategy. So yeah, so it's actually so that the interesting thing is that the strategy element is playing a bigger part, which is quite satisfying. And I was, for a long time, trying to convince people of the need to do it, and no one actually wants to do that. Now suddenly, it just seemed to be happening by itself. So that's actually quite interesting.

Robert Craven  23:58

So two questions, firstly, what's the headcount of the agency? And secondly, when you say strategy, are we talking about the marketing strategy? Or are we talking about the transformation strategy?

Speaker 7  24:12

It's both that the initial thing to sell the agency we are 25 People, the strategy has been both in the marketing but what you find people who are transitioning to especially like wholesalers or distributors who are transitioning, you actually need to give them a bit of a product strategy just in terms of understanding the problems of moving online in terms of just the scale of things a little bit different. So it's a different set of problems that they're not familiar with in terms of dealing with customers, rather than businesses. So there's a element of it is about helping this just because we've got expertise in that as well as that element of moving from that you can manage your system which you may be at In a big organisation, they're based on accounting system one and an Excel for other stuff to the fact that now you'd actually need to have an integrated system. So there is that element of the digital process that you have to map that out, because otherwise, they're going to hit roadblocks almost as soon as you start marketing. So we need to deal with that first otherwise, it would be a done project in the past. And if that's not sorted out, it becomes dead in the water. As soon as you start advertising, the volume goes up, and they cannot. If they're not used to this level of distribution, it's a different game, selling to 1000 customers versus small one versus 10 Week one. So there's that element of digital transformation that they have to take it more seriously than they used to.

Robert Craven  25:52

Cool. Good. What else? What other questions have you got here? Coming for q&a. So there must be some questions looming in your minds about what's going on?

Speaker 4  26:06

Who thinks it's gonna get worse in q4 2020, in q1 2021 terms of the overall economy?

Robert Craven  26:16

Is the economy going to be worse in q4 than it is in q1 Is your question?

Speaker 7  26:28

Going to get hammered over here is in South Africa, because the government is bankrupt on all the short term money and all the unemployment found that there was not much but it was something so we can already see on the leading indicators in terms of debts, you know, going debt ratios, all that sort of stuff is actually there's been a little bit of a euphoria in terms of people pent up demand, which was for a month or two was pushed it up. But now we can have even on a macro level, we can start seeing the numbers starting to dip. So I think it's going to be really, really challenging. It's going to be really, really tough. I don't think there's any magic money available for the government to actually keep on propping, anything. So. I can imagine that now, the reality is either businesses have scaled down and people's savings have drawn, you know, the middle class savings disappeared. So it's going to start heating up quite hard.

Robert Craven  27:34

We work with a lot of engineering, manufacturing clients, and also construction and from talking to the owners, managers there. And ultimately, there's a lot whenever the furlough ends, there will be a lot of redundancies, and that will obviously slow the whole thing going, but I'm nervous about saying that we're not going to stay and at some stage obviously.

Speaker 4  29:05

 So we know other businesses and other sectors, you've kicked a lot of debt down the road, which is going to come back to haunt them in q4 and more likely into q1 next year. And we're talking corporation tax bills from last year, where Turker talk about personal tax liabilities, and crown debt, so HMRC, pay VAT, all those things. And I'm just wondering whether other people have gotten a sense of either just in their businesses or if they've heard their customers talking about those kinds of issues as well.

Paul Stephen  29:45

I know all I can tell you this what we did for a few months and now we've started having a plan to make sure we get it up to date by the end of the year, really, so we don't enter into that period. But that's I don't know if anyone else is what they're up to.

Speaker 5  29:59

We've paid off the February thing. Absolutely not taking loans to pay the VAT, just old fashioned and just wondering where I am. But I don't think situations as black as some people say, because I think, sure there are going to be some sectors that were exposed to tourism, that's going to be not for six. But the tech sector, FinTech, all that sort of stuff. I think it's still going to be it won't be growing at 40% per annum, but it's still going to be quite hot.

Paul Stephen  30:36

Yeah, I heard someone call it the other day a K shaped recession. Kind of goes like that. There'll be loads of people who go down and other people go up.

Speaker 5  30:47

Like Martin Sorrell said that.

Robert Craven  30:52

There is a version of the future, which is quite optimistic, which has come out kind of via the economist and a few other people. And a few people heard me say this before, but I'll just rattle through some of these stats. And I know you can select stats. So it kind of means everything in nothing. So group M, who are the world's largest advertising firm by billing, that expected global ad spending for 2020 will be 10%, lower than 2019. So when you look at the 12 months, overall, global ad spending will be down 10%, according to them. And they go on to say that, despite our quote, despite a slump like no other ad spending may fall by less this year than the 11% drop that followed the financial crisis in 2009. Add to that, so they're just add the bits to the story. Google's q2. So to the end of June, the Google revenues on search, and ads were down a tad over 10% year on year. So their q2 was 10%, down on the q2 the earlier year. So that's kind of a lot for digital agencies, you know, if you're above that 10%, you're literally above the line, if you're beneath that 10%, you're fine. And if you're in the 10%, it's kind of like the average.

Paul Stephen  32:26

Line on advertising has really suffered the most.

Robert Craven  32:29

Well, that's the version that we hear in webinars. That's what's so interesting. And my argument is, as I look around, I kind of probably commune with 100 Odd agencies, there's 50% of agents are above the line and 50% beneath the line. So there's 15%, who are doing really, really, really well. There's 35%, who are surviving, those who are above the line. And then beneath the line, there's 10%, who are dying, and 40%, maybe 15%, who are dying, and there's kind of 35 - 40% that are struggling. And my version with my grey hair is that lots of the stragglers are kind of doing it to themselves, because they've never seen a recession before. So they don't know what it's like to have to work really hard for three years. They don't know what it's like to work for a year and be in the same place as you were before. They don't know what it's like to see businesses going bust all around them. They don't know what it's like to make people redundant. And there's a kind of another narrative that's going on in parallel to that, you know, which is that lots of agencies I talked to have never been so profitable because they've got rid of all the fat people who aren't sitting around the watercooler chatting. And they've got good people doing good work for their good clients. So even though revenues have gone down, the revenues have tended to have gone down, right, that wasn't the most profitable revenue as often from the pond life type clients. So a lot of agencies embarrassingly so we've just kind of had our best month ever, you know, in terms of profit and dividends we can take anywhere. Just going back to this art, this Reasons to be a Cheerful argument. As the dust settles, a reshaped advertising world may appear. So offline ad sellers are long in decline. And the creative agencies whose middleman business is being pinched from both sides by the advertiser and the clients. They face gradual extinction they are no longer fit for purpose. They're like dinosaurs, you know, dinosaurs. You think about dinosaurs in the ice and the ice age, think like dinosaurs earlier on. So that prediction from Moffat Nathan's and another one of the big players is kind of as follows. So the other logic is this most advertising dollars were pulled in the 2001 so the advertising dollars that were pulled in 2001, or 2009 recessions, they never came back. Okay. And that's primarily print and a little bit of TV. Now there's a lot more TV, this time, they may return to pre pandemic levels as early as next year advertising levels, no quarter graph, which I can share with you, which shows everything, I'll just share my screen with you. So you can see the slide. It's that slide. So you should be able to see that slide. And that comes from the Economist. So use advertising spending as a percentage of GDP, they see that goes, we go from 20 to 24, coming back up, but not to 2000 levels. And this is kind of contrary to what they say in the drum control what they say in Beamer, but it's a viewpoint and more generous viewpoint. Another kind of piece in this argument is that digital advertising is the new rank, people are no longer paying property rent now paying rent, digital rent via digital advertising. And therefore the place you want to be right now is in and around digital advertising. Because digital advertising is the money you have to pay in order to get customers buying from you. And then continuing the argument, there's a decline of offline, offline is suffering at the cost of online, we've all seen these slides loads of times. But I think the differences in the past downturns TV advertising to pick up this time TV advertising may well not pick up as it did before, during that's the economist. On the other This is really interesting. This comes from Mary Meeker from Bond, digital advertising spending right now is incredibly resilient, more than it's ever been before. Because if you look at this graph, okay, what it's showing is consumer time spent on the medium versus where the advertising spending is. And you can see that in 2010, like on the black on the far right, you had, you know, 5% of time spent looking at print, but 30% of advertising spend was in print. So there was a mismatch of where advertisers were spending versus where consumers were. Whereas if you look in 2018, there's an almost perfect match and almost perfect alignment between where advertising is being spent, and where customers are spending time, which means that advertising is more effective. And if you look at that, again, you'll see that 30% of time and advertising is now in the mobile arena. And then there's another 20% on the desktop. Roughly 50% of time spent on advertising is digital.

Paul Stephen  38:19

Well, but that one's I mean, there's a two year old status on the best.

Robert Craven  38:23

Two years old. I totally acknowledge that. I would argue that if that was probably what I would imagine though, the digital thing would be even further.

Paul Stephen  38:35

Yeah. What we've seen is a real shift away from mobile to desktop in lots of areas.

Robert Craven  38:41

 Yep. Totally go that about two more slides. And then I'll stop. And MoffettNathanson again, they're arguing that TV is finally going to crack. Google Facebook is going to continue to grow. And they have loads of capacity to display more ads even if that means I'm switching platforms and going into gaming or going into other like other lanes of whether digital is. So the kind of conclusion from publishers is that the pandemic has been like an asteroid strike, but there are reasons to be cheerful. Earth will survive and some dinosaurs will die. Agencies are like cockroaches, and not like dinosaurs. We scurry around and figure out the new world. I think the difference between the earlier recessions is that the last six months has really accelerated digital transformation. As you know, Arielle suggested and we all kind of seen that businesses have moved way faster than they ever were expected to get digital in every sense. And that digital advertising therefore is a place to be. It's a pretty sexy place to be and that's kind of what well that saying that there are reasons to be cheerful. I just think that we were very sensitive to the b2c world. So the BBC everyday Marks and Spencers 7000 People go bus cost a group shutting down a third of their stores, blah, blah, blah. We're very sensitive to that, I don't think and yet activity is still going on. So I spoke to an influencer agency, who have never had themselves so busy, and whose clients are the NHS, they are the UK government, they are passport control, and they're doing cool stuff. And that's a thought that's a 50-60 person agency and growing. They're doing cool stuff for those people. So it doesn't have to be that beat that b2c place where digital agencies are doing well. And I think that one of the challenges for us is whether we stick to it, we stick to PPC SEO, we stick to digital marketing agencies, or whether we do more strategy, do more digital transformation, do more cutting of what I call colouring and brand stuff. And I think that's all this debate has always been thus. But I think that appears now as much as ever.

Paul Stephen  41:35

I kind of like some of that stuff. Rob, I think you're right, we're all in the right business. I think there's some things we're seeing that are kind of puzzling. And so for example, we worked with quite a few manufacturers as well who are kind of trying to go online and at the moment, they're still holding back and not investing in it because at the moment, they can't almost make it quick enough as it is. So they're kind of, you know, they don't want to do more marketing, or finally more routes to market because actually, they can't get the steel from China or the assemblies in the assembly line in Italy's not working or whatever. So that's kind of putting the brakes on some of the stuff for us, which is really frustrating. And then coming back to the K shaped sort of thing I mentioned earlier, I just, you know, went into London last week. And when you look at the massive amount of restaurants and bars, and all the different, you know, all those sort of industries that feed off of us tech giant, the you know, the tech giants, the banks and all the rest of it, that business is never coming back, let alone the offices or you know, going to never go. So those people have got a go. So as much as our money has to go somewhere else. So now we spend it with Tesco online instead of the coffee shop. Those people have lost their income and they've got to go somewhere. So that's the bit that worries me is that those people have lost their jobs, those businesses would have failed, therefore, that money is not swimming around, you know, the money they would normally spend is not in the economy. And that's the bit that worries me. I'm not an economist, by the way.

Robert Craven  43:10

Two bits of pushback, normally, two bits of pushback on that first one is you know, the economic textbooks say that, you know, supply and demand and those people will find somewhere else to go, even if they're all on Google courses, learning how to do PPC, or design websites, but these people will eventually go somewhere. And as you know, as most of you know, I'm quite heavily involved in a chain of 12 cocktail bars. And we went from the fabulous valuation in March, early March to this pretty, pretty poor valuation, you know, by the end of March, and then sea bills kicked in and furloughing kicked in and then it was like, so you got to survive for months without trading. And now, you know, we are trading in some bars. But what the difference is, now we're trading our capacity is down to 40% of what it was. But we're trading four times the number of hours. Now you're doing breakfasts and lunches, afternoons and evenings. So there's a bit of reframing, which is I mean, just to do the numbers, if you have 100 seats, you're down to 40 seats. If you triple the number of hours you can serve 120 seats, and does that increase or decrease your variable indirect costs? So I'm not for a minute saying it's easy. But there are some inverted commas winners.

Paul Stephen  45:04

So it tells you something that you know they found that even if they can keep their Monday, Tuesday, Wednesday busy, is life changing for them?

Robert Craven  45:12

Yeah. And where are we? I have to say, well, we got a village down the road from us. We got a delicatessen. Never had it so busy because they're doing home deliveries. We got a proper old fashioned organic kind of a proper old fashioned and organic butcher. Never had it so good. You know, got buying extra vans to do home deliveries, hardware store. Everyone's doing DIY. Everyone's in there. We've got a cafe which is shut but they've opened a shed pub garden cocktail bar drinking area behind it. So there is a movement there is some people are doing okay. In fact, the guy from the delicatessen is totally fed up because he's way too busy. It's like there's not enough hours in the day. But going back to David's original question about q4, my real concern is that in all recessions, the damage is done after the recession, by which I mean, where we are now that 50% of businesses are struggling and dying. By now they have maxed out their credit card, their mortgage holidays, as long as it could possibly be. They've downsized the car. They've taken the kids out of private school. And it's still not enough. You know, it's just not enough because there wasn't a decent business there in the first place. Their pockets weren't deep enough, they didn't have a decent biz dev mechanism in the first place. And they're going to run out of runway in q4. So I think there's going to be loads and loads of businesses going pop in q4.

Paul Stephen  47:14

Coinciding with the furloughing just kind of we can't give you any more money, guys.

Robert Craven  47:20

Yeah, so I think it's a really long game. And I think the only, again, the grey hair argument, you know, when you've been through these kinds of things, you stop looking at the individual little ups and downs day by day, and you start looking at it week by week, month by month. So, you know, I think q4 is gonna be really tough.

Speaker 3  47:44

One, again, it says looking at sort of positives coming out of negatives. The other difference that I've spotted, a couple of my clients are actually in the recruitment business, which you can imagine taking a huge hit in this process. And but actually, and interestingly, the ones that both of these two have actually completely redone, we weren't their business model. So actually, they are now in the process of rebuilding their business in a way that actually shouldn't mean their business is much more sustainable. And it's very interesting, right. But importantly, they are finding for the first time in a recession that there are an awful lot of people coming free available in the marketplace that would never normally get unstuck, particularly in a recessionary climate, people stay put, they get very, they're very reluctant to move. And both of these businesses are finding that actually they are persuading their clients to give them exclusive contracts. Because they can literally guarantee that within two weeks, I'm gonna have a shortlist of people who all of whom can do the job, because a combination of either people fell through the gap at the very early stage. And so they maybe had just been given a job and then they hadn't really started properly. So they fell out of it again, or they are still with businesses, but they are concerned about seeing redundancy coming down the line to actually have decided to move before it happens. You know, and so actually they are looking sooner than they might otherwise. And the other one is actually because they really, really have been pissed off, disaffected by how their businesses have actually performed and behaved as businesses through the period. And literally he said, This is anyone I know, it's I know people have been furloughed and have had to make them redundant. But if anyone is looking for some really top skills and capabilities, don't I mean, look now it will be a short window, but it's there.

Paul Stephen  49:45

Yeah, we're seeing that with some of us recruiting and getting some cracking candidates to come forward to who you say we wouldn't normally expect. I mean, some of the roles, even some of our digital product managers, which we really struggle for, we actually get decent inquiries for. So yeah, we're doing that. And equally we're on an acquisition journey as well, because you've got some agencies that are genuinely struggling. We kind of suspected that was the case. And we've actually instructed SI Partners actually m&a guys to proactively do that. So we drew up a list in a brief and we've sent out stuff anonymously, and now we're getting some good conversations.

Robert Craven  50:24

Or someone spoke to someone else in this group. And we're getting roughly 10 requests for agencies to buy to one agency that's actually putting its head above the parapet and the agencies we're seeing that are saying they'd like to consider being bought or joint ventures and stuff. On the whole, they're not fit for purpose. That's the only way I can describe it.

Paul Stephen  50:53

That's why we're taking that proactive approach really is kind of, you know, we've written around briefly not what we want we're looking for, and they are out there.

Robert Craven  51:03

And just so you'll be pleased to hear Bain did a report, I don't normally go on about these kinds of people. But I just hadn't been on the same deck that I showed you a minute ago. It's quite interesting as your shirts use, it's quite interesting. So they did this piece around, what do the high performers do? Those who perform well in a recession perform well, after a recession, those who are the winners are the ones who haven't shut their doors and are aggressively trying to grow themselves, and they grow proportionately faster, after the recession, if they go through the recession, being aggressive in marketing, okay, and all these, all the top line are always the ones who have this resilience or this aggressive versus Bain, McKinsey, they all support the same thing. So Bain came up with this pretty little two by two matrix. On the up and down, is your strategic position about market share customers large, Is it strong or weak? And across the bottom is it: What's your financial strength, in comparison with your peers, actually, this kind of fits a conversation that you and I have poured a couple of weeks ago. And so if you're in the bottom left hand corner, which means you're not very strong in terms of your customer loyalty, or your market share, and you're not getting any money, it's like, get our hot, get rid of most of the business or radically change the cost transformation. If you don't have those deep pockets, but you've got a good bunch of customers and you've got a decent market share, you've got notoriety, then get the cost transformation sorted out and cut the fat. So that you're selling muscle while you're making money. That's the kind of logic that makes sense. Again, a strategic weak position. So your market share and customer loyalty isn't great, but you've got deep pockets, you know, invest to grow a profitable core cost transformation, figure out that defensible core and make it happen. And the interesting ones is this top right hand corner, deep pockets and a strong strategic position, which is proactive acquisitions, investment to enhance the product and the market share, get out there and do stuff and make stuff happen. And so the logic of this is, you know, it's about restructuring, ideally before the downturn, getting the financial house in order. And you know, if you're a good model agency, you'll have done that, in any case, be offensive about reinvesting for commercial growth. That's about looking for opportunities to deepen your customer relationships but deepen your skill set. Proactive m&a pipeline, identify m&a targets early, have those conversations and make it happen. Start with the end in mind, stress test ap & l and manage the costs now it's all kind of the obvious stuff. Those charts, these winning companies, were all on the front foot and they were all in an acquisition mode, whereas the losers were stalling and the same again with this McKinsey stuff. The non resilience were the ones who just closed down. So there's a kind of the winners win even more, you know, and why would you have a strong financial position going into the recession, because you are pretty good at business development, you're charging the right prices, so you have deep pockets. So it's kind of the winner's win. And I think that the recession just emphasises the ones that didn't have that, but didn't have the deep pockets. And the reason they didn't have the deep pockets is because they didn't have decent biz dev and pricing strategy, there's a kind of a vicious cycle.

Speaker 3  55:28

I would actually add to that, so I'm gonna have to shoot any second. I'd also add to that, it's also, again, I've encouraged several of my clients to, you know, be really smart about looking at the capabilities and skills that you've got in the business and look really hard at the shift that's happening. Ariel was talking about, you know, people looking for more strategy, clients coming from more strategy, for example, and ensuring that actually within the business, what you've got, is the capabilities that you need to meet the future demands, as opposed to what meets the current demands. And it's a really good opportunity to do sort of a, it's like a skill, you know, a skills check of what you've got against what you can see you're potentially going to need would have you to either developing people in the business and or, you know, bringing in people so sort of being ahead of the curve from a capabilities point of view, because actually, you know, the people in the business are, you know, where the potential is potentially as well. So that's what it's worth.

Robert Craven  56:27

And we've had three months to do it. Four months to do it.

Speaker 3  56:34

But easier to say when you can't quite see where the market is shifting, I think a number of businesses are starting to see a sense of where actually what is the shift and the sort of work or clients that they might be working with. So a really good time to do it is head into the autumn. I've got to go. It's very nice to see you all. Take care, everybody.

Robert Craven  56:54

Okay, cool. So any other things people want to discuss or share? While we're all online?

Speaker 7  57:02

I'm just wondering if this trend is going I'm not quite sure if it's happening, and I'm suspecting it might start or see a little bit of it is as skills are going to stop be available in the market in terms of company selling is anyone seen that in housing, have, for example, as a way to save this case now effectively, like digital skill and a little bit in short supply, or the good ones are now there's a little bit more availability. So companies as a way of cutting the cost, they say, well, let's hire someone rather than because it's more availability. The reasonable, but I'm not sure. But basically, I'm seeing nothing convincing so far. But it's something I'm trying to watch, at least in the market over here. If it's going to happen to happen into a really extent.

Paul Stephen  57:54

 We're starting to see potentially a reverse where marketing departments are being cut. And I got a smaller team. And now that people are left and more interested in us filling the gap back up again, when they need it in a short term, sort of things, we tend to send a Sagittarius who's quite often sell our services as a sort of retainer or you know, so many hours or days or whatever, a month, and then it's solo. So it is genuinely an extension of the team. And that was sort of starting to seem more interesting. And that's the stuff that's kept us going as well through COVID. So I don't know, that redundancies has is guaranteed to sort of create a sort of a landslide in housing. I don't, I'm not seeing that anywhere yet. We say our pitch is you know, right, or rather than have to employ an in house SEO person, or PPC or whatever, or a bit of UX or designer, you know, rather than having what you couldn't deploy five people and trying to put big put sort of buyer sort of jack of all trades that won't work well, why don't you buy a, you know, day, a week of SEO specialist a day a week of a PPC specialist day a week of a UX design, you get the best of everything then and there, you're you know that they're regular, they're part of your team, they know your product or whatever. And that's kind of the way we position it anyway.

Robert Craven  59:18

So I think what's happening is that people are buying brain power, and then they're buying grunt work. And the brain power bit, you know, they don't necessarily need that five days a week. You know, they can probably get away with depending on how big they are and what the project is they can get away with a day a week of that grunt work. You know, everyone knows what the day rate for that is. And does it really matter whether that grunt works in the house or not?

Speaker 5  59:53

Big agencies are really suffering, because large corporations can take on staff in house and are increasingly doing so. And cutting costs very dramatically. I don't know if anybody's just putting it out to you about whether that perspective is a factor you'll find.

Robert Craven  1:00:19

I think the story somewhere of McDonald's buying a marketing agency, you know, why don't we buy them? Because after all, it's only a 70 person agency, buy them and put the Golden Arches outside. And they can work for us full time. I think obviously, there's an opportunity for large people to do that. And then SDSU is about how well independent agencies have who've sold a proposition which is always going to be about independence, unique, different, understand the marketplace, understand the technology up to speed up to date, isn't it better to have that independent and you can make the cost savings that we actually offer? Having said that, you know, John Robins making a dang good fist of selling in housing and motor 25 upsetting lots of people on the way which is fine. He didn't. I don't think he minds that. But he's created a really compelling proposition, which is, you know, why would you want to be paying for Paul Stevens guitar collection? You know, when that money can be going back to your shareholders? Because you're not having to pay the management fee. And I think it's like that discussion about, you know, pure niche, versus generalist agency. It's like one of those discussions, which kind of runs hot and cold. And the reality is, we're all pretty small. And what we see is our own bubble for a better word. And that's not the same as the whole world. So the 10, 20, 30, 50 clients that we see are the sorts of people who've been attracted to us who found us attractive, but that's not the real world. Heisenberg's Uncertainty Principle of looking at something changes the way it behaves. Lovely, anyone wants to leave us? There's a little thing to actually think about.

Paul Stephen  1:02:40

I think, actually area and dirty some sort of accent, actually highlights the issue for me is you've got great opportunity, the entrepreneur, new businesses, startup, smaller projects, people going local, like you say, that whole sort of swirl of change there that's happening. And then Ariel's got it at the other end, where you've got big companies, you know, doing the digital transformation, which is our market as well, though, I have to say, we haven't been overwhelmed with inquiries, maybe like you have that I haven't had to get a biz dev person in. And maybe that's something about the maturity of this asset.

Speaker 7  1:03:19

To maturity, or symptoms of the curve that Robert showed earlier. I mean, in South Africa, for example, it's a little bit opposite. It's still like the 10 years ago, on the UK into the service spending, that's why I'm not too worried for the next six months a year because of that shift of over money to digital, because it's been overly reliant on where people are not up, you know, the eyeballs have been on mobile and desktop and the money was still going to traditional. So that shift is accelerating. So digital should be okay here because we are still shifting. That's my concern for the long term. And that's also why some of the digital or the wholesale as well, they've been probably a little bit behind the curve.

Paul Stephen  1:04:04

Just my highlights, as an agency, there's loads of opportunity out there, you've just got to work out what your proposition is going to be, and which bit you're gonna go for. If you don't want to be all things to all people, but it's just choosing what it is you want to be. And even though I don't consider myself a cockroach.

Robert Craven  1:04:28

There's an interesting interview on the memberhub with Barry Hamilton, I mentioned it before from equator. And what they did, about three years ago, at about 100 people, they stopped and thought, hey, we need to kind of rethink what we are and who we are and how we keep the engagement and they switched from being a to Office digital marketing agency to being a digital transformation business that happened to do digital marketing. So of the 180 people, they probably got, I guess, I don't know what it is, but maybe 20 or 30 people are doing digital marketing, and everyone else is doing the bigger picture stuff around digital transformation. Partly I suspect because there's more money in the strategy, head stuff. And partly, I think, because they saw how digital marketing was becoming commoditized. And partly because they just saw supply and demand as an opportunity there, they were big enough to either have big enough clients that they could upsell into those clients going up into the boardroom. It's really interesting interview. Good guy, right.

Paul Stephen  1:05:44

So our vision with the acquisitions earlier is because of this is to not actually just bind them into such areas, but let them retain their proposition. So you know, okay, there's, if we can identify a weakness or maybe an opportunity, but then we feel pulling Sagittarius towards that would possibly damage the proposition we already have, then is do that as a separate brand, or do that as part of a group of companies rather than pivot the one we've got.

Robert Craven  1:06:10

What you can bring to them, if you can bring it takes you to get 50 people to understand what good systems, processes models, Pricing Proposal systems is, and you can take your machine or your engine, whatever you want to call it. And you can acquire it, you can apply it to businesses that don't have it. And then they're in a better state to do it.

Paul Stephen  1:06:38

So yeah, I don't really know what he's up to there.

Robert Craven  1:06:41

In an interview with him coming out in September, he reveals all.

Paul Stephen  1:06:43

I look forward to that.

Speaker 7  1:06:47

Which is the one you've talked about now, Robert, about which interview?

Robert Craven  1:06:49

So the first one they're both on the member hub. Email me if you haven't got access to it. The first one is Gary Hamilton from Equator. Scottish guy, so that'll be Glasgow in London, I think 180 people, 200 people. And the second one is Johnny Tooze. Lab, which I think is coming out in September. And yJohnn is creating a hub of our hempire we're not sure what the best a group is, a group of agencies that have the benefit of each other by being part of a larger group. But he's very keen that the agencies maintain their independence, but they benefit from the experience that the mothership has and I think that's a really healthy model to have. You get the best of both worlds. Otherwise you get you know that thing where the Den Sue or censure come in and they kill the small business because they just make it a mini me. Not clever. Right. Thanks very much. Lovely to see you all. Drop me a line. Just drop me a line. Have a brilliant weekend. And see you all very soon been great talking to you and have a great weekend. Thank you. Thank you. Thank you. Thank you. Okay, Jerry. Bye.