Ad giants Omnicom and Dentsu announced layoffs and other cost-cutting measures as the pandemic blunts ad spending

Hi and welcome back to the Advertising & Media Insider newsletter, where we bring you the latest in BI Prime advertising and media coverage. I'm Lucia Moses, deputy editor for advertising and media.

The agency world braces for cuts

This week, the economic devastation caused by the pandemic sped up with ad giants Omnicom and Dentsu announcing layoffs and other cost-cutting measures across their agency networks as advertisers slash spending. Meanwhile, layoffs and belt-tightening continued to wrack publishers from Condé Nast to Group Nine Media.

The scale of the changes is unclear, but analysts say this recovery will be longer and harder for the ad industry than the last economic downturn, in 2008. For perspective, Omnicom laid off at least 5% of its global workforce then.

Everyone has a take on how the post-pandemic world will look, and we're starting to see the seeds of one change in how ads are being pitched and made, as Patrick Coffee reported.

Tech platforms like Tongal, Communo, and Mofilm and networks like We Are Rosie that help freelancers get commercial work are booming as brands scramble to make new campaigns. If the shift lasts, it could speed up the undoing of traditional ad agencies.

But don't cheer for freelancers just yet, since that work has traditionally meant lower pay and less stability than permanent gigs.

Read further: Freelance job platforms are thriving in the pandemic, and their rise could further erode ad agencies

Digital media's reckoning

Digital media, which was supposed to be entering a period of stabilization and profitability, is facing a reset. That has people asking which companies will be best positioned to survive.

Some of it's timing. Companies that recently raised money or are close to profitability are in a safer place, as are founders who have raised before and have a track record, media investors told me.

More vulnerable are those that haven't gotten funding in a while and were aiming to raise money this year. Those that are most reliant on advertising also face a harder road.

Investors said beyond cutting to preserve cash until the economy comes back, there are some proactive things media operators can do, like testing new forms of paid content and super serving advertisers.

"Be as creative and test as many different ways, like deep content to monetize, as possible," Rachel Lam of Imagination Capital said. "Are there ways to sell to a smaller percentage of your audience? How much would they pay? Or would they pay microtransactions? Use this window to try things in a limited test. You might be surprised and see things that do work."

Read more: Digital media companies are facing a major ad downturn. Here's what VCs including Lerer Hippeau and Comcast Ventures say they should do to survive

Sports authority

No one wants to appear to be capitalizing on a crisis, but one obvious opportunity for some of those media companies is to pick up some of the millions of ad dollars that would normally have gone to live sports audiences. NFL ad revenue alone in the 2019 regular season totalled $4.5 billion, data from analytics firm iSpot.TV found. The problem for advertisers is replicating the size and composition of those live sports audiences elsewhere, as Lauren Johnson reported.

Go deeper: This year was supposed to be a banner year for sports TV. Now advertisers are scrambling to figure out where to put their money as live events get scrapped or postponed.

Here are other great reads from media and advertising:

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