The recession's impact on agencies and 'Adapt or die' mindset to Instagram's pivot to video

In this week's Media Buying Briefing:

It’s going to be a bumpy second half of the year for the marketing and media landscape. No one sector will escape some brush with depressed numbers or client loss — and that includes the broader agency landscape.

In this week's Marketing Briefing:

You can get a taste of these member-only features below and subscribe to Digiday+ to stay ahead with exclusive briefings, original research, reports and guides, tutorials, unlimited stories and much more.

By Michael Bürgi

Batten down the hatches, because it’s going to be a bumpy second half of the year for the marketing and media landscape overall.

No one sector will escape some brush with depressed numbers or client loss — and that includes the broader agency landscape. In fact, some are already feeling the pinch, both within the somewhat secure domains of holding company environments, but also across the swath of independent agencies serving up media, digital, experiential, performance and creative work.

In at least one case, an independent media agency lost clients who could no longer afford to market because of supply-chain issues. The head of strategy and planning, who declined to speak for attribution, confirmed client losses. “We’ve had clients who said, we literally can’t sell anything, we don’t have any more product to sell, we have to shut off advertising,” said the exec.

Meanwhile, other agencies have experienced client pullbacks on spending, or had clients award RFPs, only to pause any work that was supposed to be started. Said the head of investment for one major holding company: “The economic uncertainty and continued supply-chain issues and now new spikes in COVID have major categories pulling back,” including automotive and telecom advertisers.

The CEO of an independent mini-holding company said about half of all independent agencies just don’t take the time to read the tea leaves of economic uncertainty, and those are the ones who may struggle to survive. “Inevitably clients are going to peel back 10, 20, 30 percent of brand advertising and peel back some social,” said the CEO. “What they’ll peel back last, of course, is the acquisition media because that’s the bread and butter. But especially for the independents, who might be working on a 10% margin, if their clients simultaneously are 45 days late on cash flow, while their employees have gotten raises and budgets roll back 30 percent, It doesn’t take a whole lot to create a lot of uncomfortability very fast.”

By Kimeko McCoy

In the span of just a few days, Instagram rolled out, and rolled back, its most recent pivot-to-video strategy after pushback from major influencers, and even celebrities like Kim Kardashian, asking the Meta-owned platform to “Make Instagram Instagram again.”

As Instagram looks to get a leg up on its presumed arch-rival TikTok, the social media platform announced it would prioritize its video products, namely Reels, over still posts. The move left influencers who have built their businesses on the photo-sharing platform disgruntled. But social media strategists say the changes have opened a window of opportunity for emerging creators.

As Instagram aims to incentivize the usage of Reels, the newer feature has been prioritized, and now generates more organic reach than other long-established features, including photos, said Brendan Gahan, partner and chief social officer at Mekanism. This means that if creators want to win at Instagram (at least for now), they’ll need to feed the beast, by creating and sharing more video content.

“Savvy creators and brands caught on to this quickly and capitalized on this. You’d have to be living under a rock to not notice that shift,” Gahan said via email.

Influencer Ashley Gross, who goes by @ewdatsgross on social media and has more than 36,000 Instagram followers. Gross has shifted to regularly posting Reels content, and has even joined the Instagram Reels Play Bonus Program. While the move hasn’t significantly increased her follower count, Gross said she’s noticed better engagement as a result.

“We’re exactly seeing that — people who solely invested in photos instead of video content are setting themselves up for failure as passive content (like video) becomes more popular,” Gross said in an email to Digiday. “Adapt or die, right?”

More member exclusives

Marketing Briefing: Flexibility, contingency plans are ‘biggest ask from clients’ amid economic uncertainty

Media Buying Briefing: Meet the People hopes investment in blockchain-based zero-party data pays off

Digiday+ Research: Have social platforms’ brand-appropriateness peaked for agencies?