Ad industry to bounce back

Entropia senior partner Prashant Kumar: “The true character of a team or organisation shows up in times of crisis. And Entropia has done the right things amidst all this – staying robust commercially, getting better strategically, and not overlooking the values of transparency, credibility and empathy, ”

PETALING JAYA: The advertising industry is expected to bounce back stronger and leaner after taking a blow from the Covid-19 pandemic. Industry players are upbeat that the industry is on its recovery mode, though slowly but surely, after grappling to stay afloat in the wake of the virus outbreak.

US-based advertising giant BBDO recently closed its Malaysian office after its business was severely impacted by the Covid-19 pandemic.

It was reported that the agency had laid off 21 of its staff in the country and would reduce its Hong Kong presence to a smaller regional team.

M&C Saatchi Malaysia CEO and founder Datin Seri Sharifah Menyalara Hussein told StarBiz that the ad industry has been put on pause due to Covid-19 and those who survive would come out stronger, leaner, more agile and operating with greater efficiencies.

On the agency front, she added: “Like many other agencies, we have seen our revenues dramatically reduce as a result of the pandemic. Fortunately for us we started downsizing naturally even before the virus outbreak and have taken stringent cost-cutting measures to prepare us for the year.

“When Covid-19 strike, we believed the agency was already on the right track in terms of managing our costs and didn’t have to impose further cuts.

“I guess you could say we had gazed into a crystal ball and somehow knew 2020 was going to be our toughest year, ” she noted. Describing the state of the industry amid the pandemic, Sharifah Menyalara said it is wrought with layoffs, hiring freezes and pay-cuts with many companies trying to stay afloat.

Hard times
She added that 10% of the agencies are estimated to have closed down, re-engineered their business and 20% of them are expected to be unable to continue operations if conditions do not improve.

This, she said, would have a ripple effect on the country’s labour market as this could end up with an oversupply-talent demand gap in the ad space.

M&C Saatchi Malaysia CEO and founding partner Datin Seri Sharifah Menyalara

Expressing his concern, GroupM Malaysia CEO Chanchal Chakrabarty said the environment created by this pandemic was something that the world had never experienced.

Hence, he said it is difficult to predict what the future holds, how the consumer behaviour would change and when the business would recover fully from the impact of the pandemic.

Thankfully, he said the recovery has already started in Malaysia and hopes this momentum speeds up without the resurgence of the second wave of the outbreak. On whether the agency was downsizing, Chanchal stressed that the people are its core assets.

“We have focused our efforts on cutting all other possible costs and have also cut as much of expenses as possible so that our talents are protected.

“In fact we gave out a pretty decent bonus to our talents in April and that definitely helped boost the morale of our people immensely in the midst of the pandemic, ” he said.

Strategy rethink
Entropia senior partner Prashant Kumar said it is time for businesses to go back to a white sheet and rethink their strategy, structure, workflow and skill sets.

“The virus is going to be the most powerful change agent. It is time to embrace that change and accelerate the transformation to lead the future. It’s time to tame the new normal. Good is not good enough.

“We decided to be highly transparent with our team in terms of communicating clearly and frequently. For example, how we were doing, in what ways were we affected and what measures the agency is taking to ensure confidence and credibility.

“The true character of a team or organisation shows up in times of crisis. And Entropia has done the right things amidst all this – staying robust commercially, getting better strategically, and not overlooking the values of transparency, credibility and empathy, ” he said.

Prashant, an industry stalwart, added that the agency was not downsizing. Entropia has been dynamic as it has instituted sharp cost control measures, reduced tolerance for underperformance and repurposed a lot of resources.

“I can see we are an even stronger and efficient organisation today than before the crisis, ” he noted.

“We also decided to honour all our commitments. There were dozens of people who we had already hired but they had not yet joined or confirmed, but we brought them all onboard.

“The agency decided that as a team, we will fight the fight together and share the pains. We actually ramped up our focus on services that could help clients handle the new normal, such as end-to-end e-commerce, extended reality launches and experiences, high context virtual sales advice, purpose consulting etc.

“Our digital transformation consulting area is seeing tremendous demand. In this month, Entropia has rolled back a big part of cost avoidance measures in a spirit of shared trust, as we saw the virus withdrawing gradually.”

Shoring up employment
Sharifah Menyalara said shortage of talents has always been a key barrier to achieving business growth for the industry even before the pandemic.

She said it is a perpetual issue especially with specialised skills. With the economic downturn, she said this could lead to an oversupply in the talent market but an under supply of the right talent that agencies need to propel them forward.

“Increased focus on digital and automation will also widen the demand-supply gap for skills. In other words, automation may require agencies to look for specific skills and become less labour intensive, ” she noted.

To shore up employment, she added that agencies need to work together to help those who have been laid off to find placement.

The perception that those who have been laid off are not good should be negated as it is a wrong perception.

There is a need to redirect resources to agencies and clients who can hire, she said, adding that agencies should also take this opportunity to hire young graduates as interns, give them jobs where possible.

Sharifah Menyalara pointed out that it is important to develop young talents, cultivate their mindsets and skills, and use this health crisis to open doors for them.

“It is our responsibility to help stimulate the industry by training these young talents, create a bottom-up approach that trains youth in creativity, technology, problem solving and entrepreneurship.

“If everyone works together, we can help to generate jobs and rebuild our businesses to become leaner and more efficient, ” she said. Chanchal said the current unemployment is linked to revenue decline in the ad industry. Hence, the only way employment could be boosted would be through government stimulus to the industry.

GroupM Malaysia CEO Chanchal Chakrabarty

Almost all the advertising companies would fall under the small and medium enterprise definition of the government.

Therefore, he said any aid which could be linked to protecting employment in the industry would help the companies retain their employees thus helping to shore up employment.

Entropia’s Prashant said there are agencies that are closing down and then there are others who are downsizing.

Hiring seems to be on a freeze almost everywhere, he said, noting that this would rive up unemployment in the ad industry.

“The virus has suddenly removed the buffers and exposed the weaker links. The government needs to step in to help the industry in such times, as it’s a critical industry towards the vision of a creative and knowledge economy.

“At a macro level, GDP growth is an important driver of the advertising sector, as advertising is a derived demand. Up-skilling and re-skilling of the unemployed is another important need.

“I also believe that Malaysia can be the hub of Asean digital economy, but it requires a stronger incentive regime for investments as well as local job-creation.

“The 25% of profit that goes in taxes in the fast growing industries and companies could be redeployed to create 33% higher revenues driving 50% more jobs, for example, ” Prashant added.

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