R/GA chief Sean Lyons on why agency is so vulnerable to market pressures
R/GA global chief Sean Lyons shares how his agency has been affected by ebbing client demand – and its plan to weather economic uncertainty.
R/GA’s Sean Lyons explains the reasoning behind its recent job cuts
Though few agency leaders are content to admit it, inflation and a possible global downturn are already motivating clients to trim their marketing budgets back.
Inflation in the Eurozone sits at 8.6% and in the US at 6.3%, the highest rates in decades – prompting advertisers to cut spending.
At creative agency R/GA, the impact of smaller client budgets is already being felt. The week before its executives and leaders met in the sunshine of the French Riviera, the agency made 18 redundancies in its New York office, representing 5% of its local headcount.
Speaking to The Drum in Cannes, chief exec Sean Lyons says the agency ”had an amazing 2021,” but is now seeing ”clients start to pull back a little bit now. There’s more caution happening in the media space, but we can adapt to that.”
He says that R/GA’s business model – it works with most clients on a project-by-project basis, rather than on retainer – means it’s more vulnerable to market pressures. ”With that, you find you have a real feel for demand. So, the pullback we have seen has not been significant, but enough to be seeing that clients are getting a little more conservative. That’s natural [for clients], to look at the stock market in the US and inflation and ask if you can justify a project from a business perspective.”
R/GA’s work, Lyons suggests, means it’s often first in the queue for clients rearranging or pulling spend. ”Some of the work we do for clients is often some of the more innovative stuff, some of the things that might get put in the bucket for, ’Hey, can we wait a quarter for that?’”
Last month’s job cuts were due to slowing client demand (”half of what we saw was moved, half was pulled back”), and though he says ”we didn’t want to get to that point,” the decision went ahead ”to make sure we’re protecting the business and everybody else we have in the company.”
International fortunes
Though he says he’s witnessed ”nearly every market have some sort of hesitation,” Lyons says he’s ”comfortable with where [they] are” ahead of a potential downturn. In Cannes at least, the agency was at the festival in force with about 30 staff.
Lyons says they come to meet old and potential new clients, as well as scout further talent. ”The people who show up here, from a recruiting perspective, it’s an amazing place for connection. And you get a real feel for what’s happening in the business, both from a work perspective and other perspectives. At the awards ceremonies, you see super high-quality work on show,” he explains. ”It always pays off.”
Although its New York office has shrunk, its London and Sydney locations are growing, according to senior vice-president and managing director Rebecca Bezzina. Remote working has enabled the team to expand its headcount by 10%, she says. ”It means you can attract talent in a different way.”
Working with Nick Pringle, senior vice-president and executive creative director, Bezzina was drafted in to return the London outfit to form. ”It was our second office ever, some of the most iconic work we’ve done as a company has come out of that office ... our job was to get in there and get refocused. It had lost its mojo a little bit,” she explains.
Part of that work meant ”refocusing” the business back on to its core specialties; digital products, comms and brand-building projects. Two years on, she says ”that focus has allowed us to get momentum, win clients and get our mojo back. We’re in a great spot now.”
Recently, it helped to launch Kuwait’s first digital-only banking service, Wejay. The quality of the work, she says, confirmed the progress R/GA London has made. ”We did the strategy, the branding, designed it, everything. It’s a beautiful piece of work.”
Other sectors of the economy that saw rapid digitization during the pandemic, such as telehealth and digital healthcare provision, have boosted demand for R/GA’s design expertise.
Healthcare has been a particularly hot client area for the agency in Europe, says Lyons, and the company has seen success in the space fronting its design expertise, rather than specific healthcare chops. ”It’s pretty interesting to bring a design-driven creative company into that space, where we‘re seen as outsiders. Our biggest advantage is that we’re not what they normally buy.”
”Healthcare apps are terrible. They need to be redesigned,” he says. ”There’s a need for a human design sensibility in that space, versus the business and medical side.”
The pandemic provided a chance to reset R/GA London‘s working practices, as well as its business priorities. Most staff wanted to work remotely, so it’s opted for a smaller physical office. And it’s trialing an away-day scheme called R/GA Outside. ”Each month 25 people from R/GA go to an art exhibition or Tate London,” says Bezzina. Another trial, R/GA Away, will take the entire studio out for a day of practical crafts such as screenprinting or pottery (candlemaking is apparently the most popular choice).
”The money that we’re not spending on physical real estate, we’re putting into creating natural experiences for the staff,” says Bezzina. Lyons says the agency is creating localized versions of the schemes at each of its offices. ”It’s nice to put some of these rituals into practice. Meetings ... are fine, but you’ve got to spend time with each other ... to build trust with each other, to have familiarity because the things we do aren’t rote, we invent it as we go along.”
”If you can’t rely on process,” he says, ”you’ve got to rely on the connections you have with people.”