Crises generally benefit large corporations. They tend to have deep pockets, longer breaths and are generally more diversified. But in this op-ed Gerard Ghazarian argues that we tend to overestimate market leaders. Challenging times represent great opportunities for challenger brands.
Earlier this spring, Facebook started history's biggest home-working experiment. It closed its office doors around the world to more than 50K non-essential staff in an effort to help stop the spread of the C19 virus. A big step for a company that, prior to 2020, was known for actively discouraging any form of working from home.
The first few weeks were, euphemistically speaking, not a huge success, as was captured in this New York Times article. One passage stood out to me:
To communicate, Facebook employees were told to use BlueJeans, which provides technology for video conferencing calls, they said. But they quickly found that calls were frozen, or the video quality so bad that it was hard to make out who was speaking. Many employees instead turned to Apple's FaceTime feature, Google video hangouts or Zoom conference calls. Some even built their own version of a video conference call, according to two employees.
I find this fascinating. Facebook, one of the biggest and most powerful tech companies in the world, relied on a relatively obscure and (at the time) independent piece of videoconferencing technology to connect their massive workforce. This is a company whose product, Workplace - a communications tool set for businesses which includes video conferencing - is a key part of its long term strategy.
I had to think about this when I analyzed the response to the C19 crisis by the big agency networks. We tend to overestimate the capabilities of industry leaders. And within that mindset, consolidation becomes a self fulfilling prophecy. But when you realize that the big players in any industry are sometimes winging it as much as the next guy, the path to competing with them becomes clear.
In the days after the global lockdown almost all leaders of agency networks scrambled to put out statements - some to calm the market, some to prepare investors for the storm on the horizon and some, I presume, because people just like to hear themselves talk.
You could see the entire information rollercoaster play out between March and June with Publicis. When the CEO hinted at layoffs, global then had to walk this back, only to see the French making cuts anyway just a short time later. The inconsistency that's revealed when the masks of these vast networks slip allows me to put things into perspective. To that end, when Publicis Groupe announced a money-back guarantee to marketers early May - an admirable power move in the midst of recession that can only be performed by industry leaders with access to the capital markets - I was able to take a step back and see the bigger picture.
It's logical to conclude that economic crises, like the one that we are currently on the precipice of, are a recipe for consolidation. After all, it's the big companies that have the scale and the cash reserves to weather big storms. Conversely, small shops are suffering - all it takes is a couple of anchor clients to pull a campaign and the overhead quickly becomes too much of a brunt to bear. When the same thing happens to WPP, Dentsu Aegis or Havas there's enough meat on the bones to make some strategic cuts and continue.
As the leader of a challenger brand myself this thought can be intimidating, but over the years I have come to realize that overestimating the competition is as unproductive as underestimating it. As soon as you know that multi-billion dollar companies are being held together by BlueJeans video conferencing, you also know that economic downturn, no matter how painful, provides enormous opportunities for smaller more nimble businesses like Candid.
You see the same phenomena in technology as well: in times of crisis the world order is challenged. Google was born after the internet bubble burst at the end of the last century. Whatsapp, Instagram, Airbnb and Uber came out of the 2008 global financial crisis.
What these companies have in common is that they managed to capitalize on the destabilisation of the old order. They exploit the fact that the legacy industry - whether that is print media, hotels or telecommunications - is too dependent on existing streams of revenue to change and is not able to adapt before it knows what hit them.
Up to a certain level this can be replicated in marketing. At Candid we hire talent with entrepreneurial mindsets and give them the autonomy to quickly roll out new initiatives and find better ways of working. By making small iterative changes that can be amplified or dialled back depending on success we are able to constantly improve processes that are stagnant in the legacy industry.
Candid, and with us the entire industry, has had to make some hard decisions over the last 4 months and we might have not seen the last of it yet. But I am convinced that we are in a unique position to come out of this stronger and challenge the status quo even more effectively when the pandemic subsides. Our ability to shift our focus quickly and to repurpose teams to meet the demands of the C19 world allows us to tap new markets while simultaneously strengthening bonds with existing clients.
So instead of fretting about Publicis' money back guarantee or any other muscle flexing that our friends on the other side of the aisle are partaking in, we are paving our own path to go to work in ways that will change the industry forever.
Call me on BlueJeans if you want to discuss.