Gap halts global media review: Will the pitch delay trend cascade into SEA?

 

As fears mount over the uncertainty around COVID-19, questions have arisen as to if clients are tightening purse strings and halting pitches. Just today, news broke that American apparel brand Gap will be reportedly halting its global media review, according to Adage. This comes following the increase of cases in the United States and Europe. Several brands Marketing also spoke to are saying that a wait and see approach is also being taken, with outdoor activation and events taking a backseat.

While Gap's halt of global media review could be the start of a trend with many global companies now shutting offices, and ceasing travel to minimise the risk of infection, here in Southeast Asia, pitches are not as heavily impacted due to the virus outbreak, explained R3's co-founder and principal Shufen Goh. In a conversation with Marketing, she said that the team has not observed any delay on the pitch front as businesses still needs to be planned ahead and contracts still need to be reviewed. 

Shufen Goh will be speaking at Marketing's inaugural MADex 2020 conference in 21 May 2020 about channeling her energy into promoting inclusiveness and speaking up despite the haters. 

"Of course, process and methodology will need to be tweaked to overcome barriers," she added. According to Goh, agencies should now divert any spare time to retrain their people and reimagine ways of working.

In the midst of this unprecedented situation, agency heads share with Marketing on whether pitches are indeed impacted in Southeast Asia, and what their mitigation measures are like. 

David Haddad, CEO, IPG Mediabrands Singapore

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According to Haddad, with the escalation of COVID-19 since the Chinese New Year festive break, the agency's read on Q1 is that business confidence and consumer sentiment in Singapore is down and likely to remain depressed. He explained that this will be the case until the global inflection point of fewer daily new cases versus daily recoveries, to then conclude that the spread is on a decline. Given that, IPG Mediabrands is currently observing a more cautious approach in the marketing sector with advertising and media budgets which includes; the delay of releasing ad-marcomm spend and the delay of some pitches.

"We do not believe this will be a prolonged situation and that clients are merely adopting a wait and see approach as the weeks progress. Whilst cautious behaviour is understandable, we are encouraging clients to continue with planning and pitching activity, and being prepared to execute when the time is right, rather than having to play catch-up later in the year and starting from scratch," Haddad added. 

Lara Hussein, CEO and founding partner, M&C Saatchi Malaysia

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M&C Saatchi Malaysia's Lara Hussein said the virus outbreak has without a doubt caused "a major disruption" in its business as it has in all other industries. According to her, the agency has experienced delays, spending cuts especially in the hospitality industry, and cancellation of overseas meetings. COVID-19 has also led clients to cancel their key events, which Lara said has impacted spend.

Domestically, Lara said the team is hoping that pitches will continue at least within certain sectors. It is trying its best to service clients with minimal interruption in work flow and is focusing on its existing business. Lara added that the agency also advised employees to minimise travel to affected areas, and its clients have also mandated this.

"We are just trying to hold on tight, stay above water and take all necessary precautions as mandated by our global HR. I have absolutely no idea [how long this will last]. It is hard to predict but I understand that strict measures are taken to contain it globally especially in Europe, and when the weather gets warmer, hopefully there will be an outbreak decrease," she added.

Paul Soon, CEO, MullenLowe Group Singapore 

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Soon, on the other hand, said that at this point in time, the agency has not experienced any major delays in pitches. In fact, he added that there was more desire from clients to complete the process at a quicker pace, and ensure work starts and eventually launching it ahead of time. However, according to Soon, the COVID-19 outbreak should not impact pitches as "life goes on". He also said the slow business will probably go on for another six to 12 months. 

Regardless, the team at MullenLowe is taking proactive measures in terms of focusing more on its existing clients to help them better get through this tough period and beyond. 

Chanchal Chakrabarty, CEO, GroupM Malaysia 

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Chakrabarty too said that there has been no delays in local pitches or reviews, as the COVID-19 impact on Malaysia has not been "as serious" as of yet. However, he added that global and regional reviews would be impacted due to the travel restrictions, to and from multiple markets. Presently, Chakrabarty said if face to face presentations for pitches have already been done prior to the COVID-19 restrictions, pitches and reviews should then boil down to commercial negotiations. However, if there are delays, he said incumbent agencies should work with the client on contract extension for at least short term.

Jacqui Lim, group CEO of Havas Singapore 

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Meanwhile, Lim said on the pitch front, the action has not slowed down significantly yet and the teams have been busy with a number of ongoing pitches. She added that It is important to continue to monitor the situation closely as things are changing rapidly.

"These are difficult times, however we constantly need to remind ourselves that advertising and marketing communications has a tremendous power to transform business and we hope to continue the momentum safely and meaningfully," she added. Since the outbreak of the COVID-19 epidemic (pandemic now), Havas Group has been making efforts in keeping everyone safe and combat the spread of the virus. "That is our first priority. Secondly, now, more than any other time, it is important to stay confident and determined and we are committed to conveying the same message to all our staff," she said.

Bala Pomaleh, CEO, IPG Mediabrands Malaysia

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Pomaleh too said there has been no major delays on reviews or pitches. "Business is as usual on the pitch front, though we and the clients are taking all necessary steps to ensure cautionary measures are being taken. These include health declarations, quarantine periods or work from home initiatives for those who might have been in contact with people or areas that have been contaminated," he added. 

As the outbreak is evolving daily, the repercussions across the Malaysian ad industry remains to be seen. According to Pomaleh, the agencies are taking a collaborative approach with clients with proactive and constant updates on the situation. Similarly, Pomaleh and the team continue to ensure there are no wasted opportunities during this period.

"Everything will depend on how quickly normality returns, or what becomes the new normal that gets factored into economic growth and business expectations, so as a network we are continuing to stay on top of the situation," he added. 

Irfan Ramli, president director, Hakuhodo Indonesia 

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Ramli was of the view that in Indonesia, the months January to March are usually quiet for pitches. He told Marketing that these three months is no different as compared to the first three months of 2019. "January to March is always slow and there is not a drop in pitches because of the coronavirus situation. I predict that until Ramadan, clients will still think about pausing campaigns," he said, adding that the Ramadan period is when big campaigns tend to roll out. 

With new cases every day in different parts of the world, the economic outlook is looking bad, Ramli said. According to Ramli, the victim numbers in US and Europe are increasing, and if Europe is impacted, Indonesia will take the hit too.

"I think the export from Indonesia to Europe will be impacted, if the effect in Europe worsens. If the economic situation in Europe slows down then it will impact the buying power in Indonesia. I still hope we can find a solution in one to two months to eradicate the virus," he said.