Apr 21, 2020 - Economy & Business

Ad agencies expect coronavirus-driven losses to be worse than Great Recession

Illustration: Rebecca Zisser/Axios

Many of the biggest advertising holding groups are forecasting that their clients will severely pull back on ad spend due to the coronavirus.

The big picture: In a note to clients Tuesday morning, MoffettNathanson senior analyst Michael Nathanson predicted the drop in organic growth during the coronavirus crisis will be steeper than the financial crisis for major ad agencies holding groups like WPP, Omnicom and Interpublic (IPG).

  • Yes, but: Nathanson says he also predicts "a more rapid, although still gradual, recovery with a return to prior levels of organic growth in 2021."
  • This is in part due to the fact that agencies are labor intensive and are able to adjust headcount as necessary to stabilize margins.

The state of play: Publicis Groupe chief executive officer Arthur Sadoun told investors last Monday that he expects a far worse ad decline than the 10% plunge during the financial crisis, after the company bumped up its earnings report.

  • Omnicom's CEO wrote in a letter to staff obtained by CNBC that it anticipates cuts and furloughs.
  • Dentsu has implemented 10% pay cuts, furloughs, and layoffs across the U.S. amid the pandemic, as clients are expected to further pull back spend.
  • WPP withdrew guidance for 2020 in late March, after experiencing an uptick in client ad cancellations. The company's CEO Mark Reed says the company has freezon hiring, and couldn't commit to avoiding layoffs, although he said it would be a last-resort measure.
  • IPG (Interpublic Group) withdrew its financial performance targets for full-year 2020.

Go deeper: Ad market expected to take a big hit in 2020

Go deeper

New York City to impose curfew amid ongoing protests

Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

New York City will be placed under curfew on Monday from 11pm until 5am Tuesday morning following days of protests over the death of George Floyd, Gov. Andrew Cuomo and Mayor Bill de Blasio announced Monday.

The big picture: Demonstrations in New York, like in cities across the country, turned violent over the weekend as protesters clashed with police late into the night. The number of police officers on the streets of New York will double from 4,000 to 8,000.

Family-commissioned autopsy says George Floyd's death was homicide

Police watch as demonstrators block a roadway while protesting the death of George Floyd in Miami. Photo: Joe Raedle/Getty Images

Preliminary results from an independent autopsy commissioned by George Floyd's family found that his death in the custody of Minneapolis police officer Derek Chauvin was "homicide caused by asphyxia due to neck and back compression that led to a lack of blood flow to the brain," according to a statement from the family's attorney.

Why it matters: The autopsy contradicts preliminary findings from the Hennepin County medical examiner, who found “no physical findings that support a diagnosis of traumatic asphyxiation or strangulation,” according to charging documents against Chauvin. The official examination is still ongoing.

Updated 1 hour ago - Politics & Policy

Trump lashes out at governors, calls for National Guard to "dominate" streets

President Trump berated the nation’s governors in a video teleconference call Monday, calling many of them "weak" and demanding tougher crackdowns on the protests that erupted throughout the country following the killing of George Floyd, according to audio of the call.

The latest: White House press secretary Kayleigh McEnany said at a briefing Monday that Trump's call for law enforcement to "dominate" protesters referred to "dominating the streets" with a robust National Guard presence in order to maintain the peace.