Account losses

One of the key things is to talk to your staff, according to one industry stalwart who’s lived through many an advertising downturn. Faulds Advertising is probably one of the most famous victims of account loss disaster. In 2003, its biggest client, Kwik Fit, stunned Scotland by pulling its account out the agency founded by Jim Faulds, but which he’d sold some two years earlier. The agency almost immediately closed its doors. Faulds believes that the biggest thing to get right is communication. “We tended not to lose many big accounts, certainly not when I was there, the only one I can think of is Standard Life,” he says. “But we did do the flotation campaign for the merger of ScottishPower and Scottish Hydroelectric. That was a £16m account, which when we were handling £5m accounts was daunting. The key part of it, though, was, when the flotation campaign was over, so was the account. We knew it was going to happen so we sat down with our staff and said ‘this is what the figures are going to look like for this year’. We told them we knew this account was going, but given that we had money in the bank, we were intending to grow the business. Instead of losing money, which we thought we would, we actually made £1/4 million.”

Yvonne Balfour, managing director of Navigator Responsive Advertising, who has just experienced first-hand the pain of losing a big account, agrees. “The challenge is, when you’re in the midst of it, there is often an embargo on what you can say and what you can’t,” she says. “Basically through the whole Scottish Widows review process we talked to the team so they knew what was going on. We involved the staff in the work when we were pitching and ensured they knew they felt they were playing a part. The way we look at it, when you lose a client like Scottish Widows, you have to look at your overheads.”

It’s not known yet how many redundancies Navigator will have to make, but with an account of that size leaving, it’s likely that it could be as many as ten.

Ian McAteer, managing director of The Union, which lost Intelligent Finance in 2001, resulting in nine redundancies, believes that quick action is the key to keeping staff happy. “When we knew it was up for review, we pulled everyone together and were honest and upfront with them,” he says. “Instead of creating a negative feeling in the agency, it created an almost ‘Dunkirk’ spirit. Some agencies can deal with redundancy in drips and drabs, but if you’re in a group or PLC you have to act quickly. If you’re a privately owned business, you can take a bit more time. We had to make redundancies and although that was traumatic, most people understood that it was the account being reviewed that had led to it, not their performance. Virtually everyone who was made redundant found work almost immediately. I think because that happened, everyone who was left in the agency felt that little bit relieved.”

Again, one of the issues that account moves of the size of Scottish Widows and ScottishPower flags up is that there has yet to be a test case for the TUPE legislation that came into force in April. Balfour is sceptical that it will actually happen. “If you’re looking at something like TUPE, then there is an idea there,” she says. “But how do you apply it to our industry? Here, people buy people. And no one wants to be the test case for Tupe.”

She cites her agency’s ability to keep its people as one of its assets. “We’ve people who have been here nine or ten years,” she says. “They’ve watched the other agencies go through losing accounts and shedding staff. The last time Navigator lost a client it was eight years ago, so we have to keep the staff focused as we’re still finishing a project for Scottish Widows.”

Faulds believes saving money for the difficult days would benefit more agencies today. “Too often agencies take the easy option of losing staff when times are hard,” he says. “In good times you need to invest in the business so you can weather a storm. I think nowadays the agency model is quite different. I don’t think you’ll ever see agencies the size of Faulds again.”

McAteer agrees. “We were hugely reliant on Intelligent Finance, which is not a nice place to be,” he says. “I believe in the Law of Entropy, which means that everything decays, everything will crumble. That happens to clients and agencies and you just dread that phone call. The more pertinent issue is not the one-off loss, but when agencies are consistently losing accounts. The hardest thing for an agency is when there’s been a number of losses and when it’s heading for the rocks. But it’s amazing how resilient employees are when you explain to them what’s happening. Many will stay with an agency to the end, even if it’s failing.”

But it’s how you involve the staff in the process that can determine their loyalty, as Balfour’s experience of bad management in the past shows. “A number of years ago, when I was working in an agency, we lost a couple of accounts and we were told we wouldn’t get our salary for another week because they couldn’t afford to pay us,” she says. “I was lucky, I just left and got another job. But that’s the worst way of handling staff, full stop.”