No agency likes to lose its biggest account. Sometimes it knocks the stuffing out of an agency – it declines, sells, or folds. But we have also seen cases where a big setback energises an agency. The team pulls together, the agency becomes hungrier for new business, it begins to question outdated practices and ways of working. The pandemic is similar. Not just for one agency, but the whole agency sector.

From A Crisis, Comes Opportunity
Clients are spending again – they must invest to rebuild lost sales. Marketers are looking for new solutions, new ideas, new uses for technology and data, more agility from their professional services providers – all of which means opportunities for agencies –especially for independents. We have been forced to modernise our ways of working. We have the Cloud, instead of that big old server cupboard and those filing cabinets stuffed with paper. We have Zoom – and Teams, Hopin and Slack – and if life gets a bit too serious, we have TikTok. But ultimately, agencies are not driven by technology. They are driven by people. Sixty percent of the revenue of every agency goes on people costs. And people’s lives – expectations and demands – are changing.

We Are the Lucky Ones
Today’s social divide is between people who NEED to work ‘in person’ – nurses, hospitality workers, delivery drivers and cleaners; they are the new working classes, cynically rechristened by politicians as ‘essential’ or ‘key’ workers, to make them feel better. And then there are the professional classes – lawyers, accountants, admen and PR consultants, who can choose whether to work in person or at home or remotely from a dream location. We are the fortunate ones because we can choose.

But choice can also be a curse. Laurence Olivier, the world’s greatest Shakespearean actor defined Hamlet, Shakespeare’s greatest play, as “the tragedy of a man who could not make up his mind.” To be, or not to be? To return to the office, or not to return to the office? That is the question. If we, as agency leaders, don’t make that choice, other people will make it for us. Our clients, for example.

At the beginning of the pandemic, many clients who kept their staff in their offices, excluded external people from visiting. Out of sight, out of mind: there is little doubt that this accelerated the progress of in-housing. Sometimes this enforced distancing helps agencies. Agencies that asked to pitch virtually no longer have many of the non-recoverable travel and presentation costs associated with a competitive review.

On the other hand, last week, I heard from an agency in Paris that their Swiss clients had asked for a reduction in fees because the agency was saving money by having their people work remotely. They asked directly for a 10% hourly rate reduction for people working from home. Yes, you read that right. People working from home are worth less. I heard of an agency in Germany, who has ‘let go’ the 10% of its staff who did not prove to be ‘trustworthy’ when working from home. And we hear of many more, preaching the importance of KPIs and other performance metrics for home workers. Those people leading ‘the Great Resignation’ in the US, asking for more money to come into the office, should think carefully. As Mark Read, CEO, WPP, said so nicely: “If you want your own office, work from home.” Was that a threat, or a promise?

Arguments Either Way
Behavioural science has long shown that people working in the same physical space collaborate better, and people working at home focus better. But where are they overall, more productive?

Recently, a study was led by the University of Chicago’s Booth School, among 10,000 professional workers in a large Korean company who had moved from office to home working. Output increased by 10%. This was achieved because the employees voluntarily spent 20% more time doing their work. Is this a productivity increase or not? It depends on your point of view. Zeno and Edelman recently surveyed a large-ish sample of PR firms and found that (from memory) 90% of bosses favoured a return to the office, while 90% of regular employees favoured home working.

Alice Enders, Research Director of Enders Analysis, has suggested that countries where companies and authorities are more often mandating a return to office work, like the US and China, are more authority-driven cultures; European firms who tend to offer more choice to their staff, are seen as coming from more ‘consensual’ cultures. As ever, beware of the one-size-fits-all global approach. As Neil Davidson, Deltek’s VP of Europe and APAC put it, “one in three of my employees will walk if asked to return to the office full-time.”

We have to make those decisions clearly and present the rationale carefully. Reality and perception are equally important – as communications professionals, we know that. We have to think smart and watch for new trends.

New Trends
We at thenetworkone are offering our office for rent through a company called Three Plus Two, set up to facilitate office shares by two companies, which only want their people in the office two or three days a week.

We are intrigued by new companies like Vicoland, a German firm that creates multi-country virtual companies (ViCo’s) from freelancers to sort out the technology, tax and legal issues and offer their services to corporate clients, on flexible terms, at competitive rates. But here is our biggest problem of all. And it’s a new problem, we hear reports from agencies all over the world.

Agencies in a Talent Crunch
We let people go. We furloughed them. We asked senior people for salary sacrifices. We got loans from governments to pay the salaries of our people who weren’t working. Now the clients are back, we want our people back. But they have gone! Worldwide, it is estimated that 10 to 15% of agency people have left the business altogether and many more are seeking new jobs. ‘The Great Resignation’ is not limited to the USA.

Why Is This? 
Agencies have long been tough places to work; long hours and low job security. But they used to be fun places: lively and sociable people, smart fashionable offices, meals out, parties. But what if all this is stripped away, leaving only low salaries, long hours and the isolation of working alone?

We spoke to a PR firm in Glasgow which told us that more than 20% of their employees were suffering from mental health problems. The CEO of a martech company in London told us that the majority of applications he receives specify that they will not even consider in-office work. A Dutch consultant told us that more and more people in communications agencies are fleeing to the relative security of ‘the client side.’ As Mark Read put it at the Caples Awards, “I’m not worried about the economy, I’m worried about keeping our best people.”

Clients Are Back
It is not yet fully apparent, but we can already see our clients have had a good pandemic, professionally speaking. Both PR professionals and marketers.

PR professionals have the ear of the CEO, because the company’s policy on sustainability and work-life balance not only influences their customers, it determines their ability to attract and retain good people and survive the talent crunch. Marketing professionals have the ear of the entire Board, because unlike the finance people who tell you what happened yesterday, and the salespeople who tell you what is happening today, the CMO and her team proved to be the only people who could tell the Board what would happen tomorrow. Clients will still want agencies because they still need an external perspective. But they want small, agile, fast responders.

What they will not want is the old WPP growth strategy of agencies trying to replace the client’s people with their own. However sharp and creative they are, they are always struggling by being removed from the thick of the reputational battle. Data may be the new oil, but third party data is the commoditised stuff you use for container ships, whereas first-party data is what goes in the tanks of SpaceX and Virgin Galactica. And first-party data isn’t in the agency people’s offices, or their apartments – it’s in the client’s office.

Julian Boulding is Founder and President, thenetworkone. julian.boulding@thenetworkone.com