Over the past three months, as people have struggled to make sense of a world and an economy transformed by a global pandemic, one of the common reference points has been the financial crisis of 2008-09.
While the underlying factors are very different, there is one important similarity: a deep recession that could be felt across marketing, advertising and media in the months ahead.
The Message reached out to a handful of industry professionals who were in executive positions back then but are in different and more independent positions today, to ask them what stayed with them from the last economic downturn and what, if anything, it can teach us about this one.
How did the last financial crisis have a permanent impact on the industry?
Chris Stamper, consultant, then a VP of marketing with TD: I believe the lasting impact was a drive to marketing effectiveness and enhanced measurement. The best marketers are people with a finance bent, as they understand the business and P&L implications of what they are spending. Clients and agencies needed to do things differently and they responded. The 2009 crisis left a legacy of enhanced acumen and discipline around program spending and effectiveness.
Laurie Young, retired, then managing director at Ogilvy & Mather: Two trends seemed to gain traction: the rise of procurement in our industry, and the corollary “agency as supplier, not partner” attitude; and a return to repatriating global work to head office as everyone scrambled to replace revenue.
Nancy Marcus, retired/consulting, then VP of marketing for Kruger Products: In the last recession we started to explore and implement cost-reduction initiatives that seemed never to dissipate. The buzz term was “continuous improvement,” whether that meant an operational efficiency, product modification, media reduction, staff layoffs, etc. The term is really a euphemism for cutting costs. This prevailed post recession, and began to be an everlasting part of the budget process and executive mandates.
Andy Macaulay, now advisor, then CEO of Zig: As Paul Romer from Harvard Law School said, “A crisis is a terrible thing to waste.” The 2008-09 crisis forced a fundamental examination of everything, including where we create value for clients, how we spend our salary budgets, and how go-to-market strategies needed to change.
Tony Chapman, host of the Chatter That Matters podcast, then CEO of Capital C: The last crisis was financial—the tentacles of this one spread much further. It is impacting everything that motivates human behaviour. A renewed interest in safety and security, including how far our supply chains stretch beyond our border. Our economy and whether we can sustain our debt. Our sense of belonging in a world where masks and distancing might become the norm, and the experiences we seek often denied. Our sense of purpose as we move from working in teams to working remotely, and self actualization where we might rethink what is important to life—is it materialistic or spiritual, is it the finer things or simpler? All of the above is less to do with money and more to do with this sudden change that has turned the foundation we have come to expect into shifting sand.
Do you think any good changes came out of that crisis?
Stamper: The financial crisis forced us to develop a deeper understanding of customer needs. That was a good thing, and organizations that applied that learning emerged from the financial crisis as better organizations. Our current pandemic can teach us things about how customers shop, research and buy. A deeper understanding of how to best connect with customers will enable an acceleration of the customer experience.
Young: 2008 and 2009 saw some clients demanding new agency models. For example P&G’s Marc Pritchard started a conversation about the need for innovation, for finding new ways of doing things. This became an integral part of the industry’s modus operandi, particularly because digital platforms were more for experimentation (best practices came much later) and offered those types of opportunities.
Marcus: I guess some positive ramifications were that we cut away “fat” and—I like to believe—operated the business as marketers always pondering whether our product innovations, advertising campaigns and overall marketing programs were truly making a difference to the bottom line. We sharpened our marketing strategies and had a singular purpose more than ever.
Macaulay: I think our industry is wading through unprecedented margin challenges, which necessitate that we find new ways to do what we do. A crisis accelerates the urgency of doing so.
Geoffrey Roche, co-founder of Disruptincy, then CEO of Lowe Roche: Because we’ve had recessions before and we’ve come out of them, there’s been a kind of rulebook. Yes, some people pulled back and people got laid off, but it always came back. It wasn’t like anybody learned a whole lot. This, on the other hand, is so dramatic, and there’s no playbook.
Advertisers need to be told, or at least think, ‘What is it we’re saying and why is it relevant, and how does it differentiate us and what’s it going to do in terms of us selling more ?’ Everybody has something to lose, but there’s an immense amount to be gained right now with the right messaging.
What did you personally learn from 2008/2009?
Stamper: There was a few key learnings for me from the 2009 financial crisis. Here are two: People are resilient, and economies do come back, be patient. Find ways, new ways, to be ready for your customers when and where they need you. Those that can be there for their customers in tough times will have their customers when better times return
Leverage times of turmoil to make demonstrable change—it is typically an opportune time to accelerate change, take on projects that have been idle and looks for ways to do things differently—it is a great time for reinvention
Young: I think I gained a better sense of the volatility of our industry—we’d had a pretty good run up until then. Downsizing was very hard.
Marcus: Personally, I fought for every cent and understood that cuts were essential. Marketing was always seen as an “easy cut,” and I found myself justifying expenditures to those that may not have fully understood the relevance of the investment. Fortunately at that time my CEO understood, but he also faced significant pressure.
Macaulay: It’s not so much what I learned, but what was reinforced. At Zig, we were in the latter stages of the integration with ACLC, a smaller company with a very different culture. The value of culture was driven home to me. People with shared values and a clear understanding of what their role is will pull together to overcome any crisis.
Chapman: Small business owners and entrepreneurs are resilient. They find a way if given even a quarter of a chance. We just have to let them compete.
Roche: Just that [downturns] are going to come, and you’ve got to always be prepared. I think you always have to be backfilling in the advertising business, simply because clients get bored and/or CMOs change, and before you know it their brother-in-law’s agency is the one that gets hired. Be prepared, even more so now.
Was there anything you wish you had done differently?
Stamper: Hindsight is always better than foresight—coming out of the crisis was the rise of the FANG (Facebook, Amazon, Netflix, Google) companies… I wish I had dug deeper, sooner, into what these companies were doing and how we could learn from their business strategies.
Young: It’s inevitable that in hindsight we could have done bolder, bigger things, but uncertainty can hold you back. Feels very true right now.
Macaulay: We moved too slowly on some things we needed to do. I’m an optimist by nature, so I figured if we buckled down and worked hard, we’d get through it. But it was more painful than it needed to be because of that.
Chapman: I wish I had been more honest with myself. I thought I could save the day, be the rainmaker. But when a drought sets in, it sometimes requires a strategy of preservation.
What advice would you give to a chief executive working in marketing, media or advertising today?
Stamper: I would tell any senior industry leader four things: 1) Focus on the customer experience and ensure you are delivering something true and unique that the customer values; 2) Look after your people—help them develop, challenge them and give meaningful opportunity; 3) Be a better business partner, clients and agencies need to work more closely and collaboratively, invest in being the best partner you can be and drive great work together; 4) Have fun at what you do and remember life outside of the office.
Young: Canada was somewhat isolated from the 2008-09 meltdown—this pandemic is a much more difficult and pervasive crisis. And while it’s easy to offer advice from the bench, I think that leaders should do whatever is possible to manage that uncertainty: frequent, transparent communication, taking action when necessary versus deferring decisions, and always being present. Maybe that will encourage some risk-taking that will pay out.
Marcus: My advice to a CMO today during this pandemic is to seize the opportunity, continue to invest in reaching your consumer with relevant messages. Work collaboratively with your agency partners who are under significant pressure right now: show loyalty and pay your bills. Modify your plans with agility and speed. Mobilize your internal and external teams and persevere, as this too will be over.
Macaulay: Play offence when most of your competitors are playing defence. There’s a myriad of opportunities to be had right now, but not if you’re an incrementalist. COVID-19 has been so earth-shattering, it should be the birthplace of new models, new processes, and an unprecedented appetite for risk during the recovery.
Roche: The luckiest thing that’s happened to the industry is the fact there’s not going to be a Cannes this year. Boy is that going to be a money-saver.