Episode 234

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US and European based agency owners are fighting vigilantly as the coronavirus pandemic unfolds in their region of the world. It’s affecting agencies and their clients in significant ways. I’ve been talking to agency owners non-stop for the last two weeks and one thing is for sure – one agency’s experience is not like another’s. For some, business and AGI has never been better. In others, 50% of their AGI has walked out in less than ten days. I wanted to connect with an agency owner who had already experienced everything we are going through today and could tell us what’s coming next.

Kiri Sinclair owns the 50-person PR shop aptly named Sinclair. They’re based in Hong Kong with hubs in several cities in China and they are about three months ahead of us in dealing with the coronavirus. Needless to say, there are some good lessons for us to learn from her experience.

Hong Kong and mainland China reacted differently to the initial outbreak than European countries and the US have reacted so our experience may not be perfectly parallel. However, the timeline still provides us with some idea of what to expect moving forward. The good news is – there’s good news.
Two and a half months in, client business in Hong Kong has picked up and things are moving back to normal. Every country and every agency is different, but Kiri’s story serves as a beacon of hope and helps us anticipate what is coming next.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here.

What You Will Learn in This Episode:

  • How agency owners across the globe are responding to the COVID-crisis
  • The experience of Hong Kong-based agency owner Kiri Sinclair since the outbreak first occurred there over two months ago
  • How clients responded to the global pandemic in Asia
  • How to be proactive in protecting client relationships and the team amidst the crisis
  • How to consider handling internal changes such as pay and lay-offs
  • Mistakes our guest made and what she would have done differently if she knew then what she knows now

The Golden Nuggets:

“Agencies in the U.S. and Europe are very lucky to have an additional two months of knowledge to make difficult decisions.” @SinclairTalk Click To Tweet “Get your contingency plans in order. Then, communicate what those contingency plans are, how your business is operating at this moment in time, and how you are supporting the community to contain this outbreak.” @SinclairTalk Click To Tweet “There are so many ways all of us can either personally be of service or, and most importantly, enable our brands to be of service.” @SinclairTalk Click To Tweet “As an agency owner, it's on my shoulders to find every single piece of business so I can bring in enough work. I have to generate enough revenue to ensure that my teams have enough to live off of, and that's what I'm going to do.” @SinclairTalk Click To Tweet “If we need to reduce the calories across the team, that's what we'll do. But we will ensure that everyone who wishes to remain with us has the opportunity to keep that job.” @SinclairTalk Click To Tweet

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Tools & Resources:

Speaker 1:

Welcome to The Agency Management Institute Community, where you’ll learn how to grow and scale your business, attract and retain the best talent, make more money, and keep more of what you make. The Build a Better Agency Podcast, presented by White Label IQ, is packed with insights on how small-to-mid-sized agencies survive and thrive in today’s market. Bringing his 25-plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew:

Hey, everybody. Drew McLellan with another episode of Build a Better Agency. I know that across the world all of you are watching what is happening with COVID-19 very closely. For many of you in North America, it has come to roost on our land and it is effecting our businesses, in some cases in a very dramatic way. For some of you, I literally am talking to agencies from 7:00 in the morning until midnight most days, and it’s remarkable the wide range of experiences that you guys are having.

So for some of you, it has actually been great for business. You have clients that are in essential services or industries and they are busier than they’ve ever been, which means you’re busier than you’ve ever been. On the other end of the spectrum, some of you have literally watched 50% of your AGI walk out the door in less than 10 days. Most of you are somewhere in the middle. I think one of the things for all of us that makes this so frightening is that so much of it is unknown. We have never experienced anything like this, and we feel like we are sort of walking in the dark.

Certainly at AMI, what we’re trying to do is shine a light into that darkness and help you find your way, and try and help you with resources and tools. I have mentioned and I will mention more than once in this podcast probably, we’ve got the survival resources for agency owners on our website, so go check that out. Every week, we’re updating it with stuff that we’re creating, best practices, guidelines for you, and also things that we’re curating we think will be helpful.

But one of the other things that I’m trying to do is I’m trying to help you see what’s coming next. So last week I was fortunate enough to sit in on a webinar where an agency owner from Hong Kong named Keri Sinclair talked to us for almost two hours about what they experienced. They’re about two months, three months ahead of us, so the Coronavirus showed up in a way that was significant in Hong Kong the last week of January. I’m recording this with her on the 25th of March.

So they’re two and a half months into it. So in the webinar, she sort of walked us through some of the things they learned and how she responded as an agency owner and how it impacted their employees and clients. So right after the webinar, I reached out to her and I asked her if she would be willing to come on the show and have a conversation with me because what I’m hoping to be able to do is give you a look at what’s coming.

Now, is your country’s experience, wherever you are, going to be exactly the same as Hong Kong? No. How they responded to it, particularly because they had already had experience with a deadly virus when SARS hit their country, is different and was more extreme than many of the other countries around the world are responding, certainly more extreme and rigid than the US is responding as a state. But it will at least give you an idea of sort of what came and now where they’re at.

One of the things that I really walked away from the webinar feeling was hopeful. Kari and her team were back in the office. Now they’ve had a little outbreak again, so this last week they’ve been working from home again, but she is confident they’re going to be heading back to work again. So two and a half months after all of this, they’re back in the office, client work is picking back up, and things are looking stronger and better.

So my goal in this conversation with her is to really talk about what her experience was like and get her to sort of walk us through the timeline starting at the end of January up to now and some of the decisions they made, and some of the ways they are helping clients, some of the ways they hung on to business, so that you can be thinking about what’s coming next and you can plan a little bit. Again, it’s not going to be exactly prescriptive. I’m sure there are going to be elements of your agency that don’t match up to her agency and certainly every country is handling this a little differently. But I know it will be insightful. I know it will be hopeful and I’m certainly hoping that it will be helpful.

So with no further ado, let’s jump into the conversation because I want to get as much time with Keri as we can. Keri, welcome to the podcast. Thank you for coming on the show and being willing to tell us about what you went through so we can begin to anticipate what’s coming next for us.

Keri:

Thank you so much for having me. I’m coming to you from Hong Kong where we have been experiencing this since the end of January, Chinese New Year. So we’re a few months ahead of the curve for now. We’ve just passed the two month mark.

Drew:

So I want to go back to before the Chinese New Year, before all of this happened. Just give us a sense of your agency. How long have you been in business? What kind of clients do you serve? How big is your staff? Just as you’re telling us this story, we can sort of understand sort of the landscape a little bit.

Keri:

Yeah, absolutely. So the agency Sinclair, we’ve been in operation 10 years this year. We have offices in Hong Kong, Shanghai, Beijing and Singapore. We have a staff of 50 people across the four offices and we operate under one PNL, which means that we work as a cohesive team across all of our offices. We don’t actually call them offices. We call them hubs. That reason is to really make sure that we have a cohesive team because a lot of times client comes to us, or either greater China or Asia region [inaudible 00:06:50]. So as a team, we come together and we’re able to offer that without having to kind of split up charging between our hubs on the client side, which really gives them a one stop service to the region.

So our clients cross consumer, corporate and government, so we work for clients like tourism boards and central tourism boards, through to retail properties like malls and retail brands. So the shops within the malls or their online counterpart. We work on the corporate side, so managing brand reputation, for a number of large organizations that are either locally born and looking to kind of expand in the region or expand internationally, or are international organizations that are operating in the region.

As an agency, we are led, so public relations led, fully integrated agency. So, that’s my definition. What it really means is that we look after marketing communications across the full remit of digital, social, public relations, experiential on behalf of our clients. That’s us.

Drew:

So as I think about eventually countries being shut down and everyone being, what we’re calling here in the states anyway, sheltering in place. When you talk about the kind of clients you have, your clients were in the center of business disruption when all of that happened.

Keri:

Mm-hmm (affirmative).

Drew:

I can’t imagine, on the one hand, how busy you were helping that message, but also what it did to your business.

Keri:

Yes. We’ve had interesting times. Being ahead of the curve, but also not as quick to shut down shall we say. So in Hong Kong, Shanghai, Beijing and Singapore, we do not have stay at home order or shelter in place orders. We have restricted social interactions at different levels. So for example, in Hong Kong, as early as the kind of late January, entertainment parks such as Disneyland and so forth shut down. Anything that would cause people to come together.

Just remember that these markets are some of the densely populated markets in the world. So it’s really important that we were able to keep people somewhat separated as much as possible. So in our markets, we have been discouraging any form of events or gatherings, and had to kind of change that towards other forms of interactions, whether they be online or communicating in different ways. So the impact has been massive right across the remit of our clients.

The immediate of course was felt within travel and tourism clients.

Drew:

Sure.

Keri:

Anything like hospitality, restaurants and so forth, but also live events. So we have, as you know, Hong Kong is a hub for live events.

Drew:

Yes.

Keri:

This month of March, we would have had [inaudible 00:10:00] in Hong Kong. Last month was the [inaudible 00:10:03] masters of Hong Kong. We’re also missing the rugby sevens which is our biggest sport event of the year. So anyone working across these events had to start activating in January to start the cancellation process. So all the way from then, we’ve been dealing with everything from perhaps a pace at a retail mall. So someone has tested positive and, because we have a very strict government enforced policy on tracing people’s history of where they’ve been when they’ve been testing positive, that means that that tracing will link back to some of the brands or some of the locations that they’ve been in.

Then those locations need to be deep cleaned. People that they had interactions with need to either be put into government quarantine or self quarantine, which means they stay at home themselves. So in that sense, what it’s really meant is that we’ve been really on the front line of communicating on behalf of brands in all sorts of situations, whether that be a shop shutting down, a mall having to make announcements about someone testing positive and had then gone to their premises.

We’ve had office had to close. Obviously there’s been massive disruption within supply chain.

Drew:

Sure.

Keri:

So I’m sitting in Hong Kong right next to [inaudible 00:11:30] Province which is one of the mass producers of the world. When their factories closed, obviously that effected everyone from Apple through the whole remit of consumer brands that any of us work with. So then explaining why brands weren’t able to deliver product on time or such became also part of that communication.

Drew:

So it’s the end of January and all of the sudden the news in your region is buzzing about the virus. I would assume that your clients are calling you to find out how they should respond, if at all. Did you guys go as a country or region … you were not told that you had to stay home, or you were told you had to stay home at one point in time?

Keri:

Right. So we’ve never been told that we have to stay at home.

Drew:

Okay.

Keri:

In any of these markets specifically. I’m talking about markets because really I’m talking about cities. However, there are some cities in China, as we know that went into lockdown, and there were periods of time where cities in [inaudible 00:12:41] Province, which is the closest province to us here in Hong Kong, where cities also kind of closed … didn’t have orders, but had a kind of closed jurisdiction so that they could maintain the health of their people.

So looking at how this unrolls, really what happened was the first time we heard about this was the 31st of December. Anyone who lives in Hong Kong or China or Singapore would immediately have just thought … the announcement came out as a SARS like virus has been reported in China.

Drew:

Got it.

Keri:

That immediately sent alarm bells. So as an agency owner and a business owner, that was my first indication. At the time, I was on holiday in Thailand. So at the time I immediately called to my team in Hong Kong and said, “We need to buy masks and we need to make this preparation in case this becomes something.” That’s because I worked and lived through SARS. So I was on the frontline of communications during SARS 17 years ago. So obviously personally I felt very scared.

Drew:

Of course. Yep.

Keri:

But how it then unrolled is, in Hong Kong, we had our first case about the 22nd of January. So by the 25th of January, that three days after our first confirmed case, Hong Kong declared a state of emergency and we closed our parks. By the end of January, we closed all of our libraries, our museums, or letter facilities and so forth within that jurisdiction. China was busy doing the same thing at the same time.

Now, with the experience of how quickly something like this can travel in our community, and especially as I said a densely populated community like ours, our governments resorted to the very strictest protocols. But at the time that these protocols were coming into place, we were actually on Chinese New Year holiday, so we had a five day period where we were on leave in Hong Kong, and that’s a one week period to 10 days in mainland China.

So a lot of this happened when we were on holiday. So to say it meant most of us were on holiday in our home countries, but some people had traveled overseas. So when we were meant to return to work after the Chinese New Year holiday, the day before that I think it was, the civil service announced that they would work from home. Now, what happens in that situation is usually business follow suit. So as an agency, we immediately followed suit. So the minute that the civil service said that they were working at home, in Hong Kong and in Singapore, we worked at home.

Now China is a different situation because the mainland China government very quickly extended the Chinese New Year holiday for another … I think it was 10 days. So during that time, there was no work. Everything was shut down. At that time, schools had closed for the Chinese New Year holiday and then just hadn’t opened again. So for those of you with kids at home on day five or day 10, think of those parents here in the Asia Pacific region that are on month two.

Drew:

Wow.

Keri:

With the kids at home while working at home. Yeah.

Drew:

Now, have your schools gone back, or no not yet?

Keri:

No. No, the schools are closed. They had announced that schools would likely open after the Easter break, but that’s now being said to be unlikely. So it’s a fluid situation here still. But yeah, so very early on in that decision making, first of all because I’ve had prior experience, I was very quick to say this could become something. Then Hong Kong, Singapore, as market the government very quickly made decision, which was very helpful because of course the moment Hong Kong declared a state of emergency, that means that, within insurance contracts for major events, force major comes into effect, which means that we can then start to cancel a major event with the insurance company kicking in that.

Drew:

Right.

Keri:

So then we can make quicker decisions under that legal jurisdiction that the government gives us. I understand from colleagues all around the world that there have been a lot of problems regarding some governments don’t want to call an emergency too soon and they have their sound reasoning for that. But when it comes to business, especially when it comes to managing the inherent nature of what are we liable for, it becomes a lot easier to manage that if the state or jurisdiction has called for emergency. That’s been our experience here anyway.

Yeah, so it’s very interesting times we’ve been living through, and I’m just really glad to be able to share our experience in this way because I think there’s a lot of misstep that we’ve taken as an agency or learnings that we have from across working with many types of business organizations to get us through to the point we’re at now. Remembering that government regulation changes on a daily basis or guidelines. We don’t necessarily have that much regulation, but government guidelines changes on a daily basis.

So a lot of it is sentiment monitoring and seeing, well what’s happening in the industry and what are consumers saying? What do people want us to do as a brand? What do our employees want us to do, and making decisions based on that.

Drew:

So, as January is wrapping up and as people are starting to work from home, especially given the kind of clients you had, did you see an immediate decline in clients? Were clients canceling contracts, canceling events, asking to pause retainers, things like that? Or did that come slower over time for your?

Keri:

Yeah, that’s a great question. The first thing that we did in January as an agency is we reviewed all of our client contracts for two things. Firstly, what was our remit with the client in our contract in our crisis management, whether that be on social or PR or whatnot, and what was our termination or pause contract clause within our contract. So when we knew that this was coming, we then proactively reached out to each of our clients individually to say, this is our current terms regarding a crisis within our contract, so this is what we’re currently contractually obliged and of course willing to work with your team on.

Should you wish us to do these other things that we can also offer you, please let us know. If crisis is already included in a retainer contract, which for many of our retainers it is, let’s immediately start talking about crisis planning and crisis approval chain so that we’re all in the know before something happens. When it comes to contractual termination and pause, we reviewed all of our client contracts to see what risk we were at as an agency and what we should be proactively doing.

Of course, we spoke to our insurance company and to our legal teams to find out what their take on this was. So that was the first step there was really protecting our clients and protecting our client relationship. We then immediately saw either the workload of the client increasing 10 fold because everything was in crisis, or clients immediately effected, so clients within let’s say airport service operators or such, immediately needing to find ways to reduce their overheads in every way possible. So therefor reaching out to, in almost 90% of causes, pause our contract, not terminate.

Now the only ones that wished to terminate were those that had, for example, a mega event that was no longer happening.

Drew:

Right.

Keri:

So there’s nothing to go forward for. So after we then had to renegotiate what the remainder of our remit would be in those cases so that we could help them to communicate around the postponement or cancellation of an event and making sure that we’re communicating throughout their entire stakeholder mapping to be able to get the right communications to the right people and have everyone assured that the right things were being done, but also that they were well informed and educated of what was going on.

Drew:

As you were doing this assessment, talking to the clients and sort of seeing where work was growing, work was shrinking, work was going to go away, I’m assuming you, like all agencies, the largest expense you have are the human beings that do the work, your team. So here in the states anyway, a lot of the agencies that are beginning to feel the effects as we are now entering what you were entering into in January, there’s a lot of discussion about laying people off versus pay cuts, versus all of those sort of things.

So what was happening maybe at your agency, but also I’m sure you were talking to other agency owners in your area? How did agencies in your part of the world handle this typically and what was the rationale behind the decision, whatever that was?

Keri:

Yeah. Just one point of clarity there I think is that what we were going through in January is somewhat the same kind of experience that agencies in Europe and America are going to be feeling now, except we had a lot less knowledge. So we didn’t know what this disease was. We didn’t know how fast it was spreading. We didn’t know. There were so many more unknowns. So I would say to agencies that are operating in Europe and the US that you’re very lucky to have an additional two months of knowledge in hand now to help make these decisions and are going to be able to make them faster now that we know really how dangerous this is.

So what have we been doing to manage our agency finances are right across the remit. At Sinclair, our core value is team first. That was the model of the agency that I set up at the very beginning, and I believe very strongly that as a service and a professional service that is based on the expertise and intelligence of the people within our agency, that is the core value and asset that we have.

Drew:

Absolutely.

Keri:

When we put our team first, everything else will be okay. What we did from the very beginning was start talking to our leadership team and saying this is … We’re a very transparent agency and I think that that’s an important thing to say as well. But from the very beginning saying this is where our current cashflow is at. This is exactly what’s happening with each of our clients, and you can see an overall of what our cashflow situation looks like and we need to make decisions.

So our first one was to talk to the leadership team and say what decisions should we be making here as a team. Within that, we formulated some ideas and scenarios, and then we took that to the entire team at the agency and said, here are the scenarios. What do we all want to do in this situation? So rather than making decisions at the top, we kind of used the leadership team to think through what could possibly happen and what we could do, and then brought it to the team as a whole.

Now my commitment to the team has been at Sinclair that we will not let anyone go during this period and that we will keep the full team intact no matter what. No matter what that takes, we’re going to stick to that commitment. That commitment means that people will get some form of pay on a monthly basis and that they will remain insured with health insurance. If that means that we need to take voluntary non paid leave, then that’s what we’ll do as a team. If it means that we need to reduce salaries across the team, that’s what we’ll do. But we will ensure that everyone who wishes to remain with us has the opportunity to keep their job.

I know that there are other agencies, Indy agencies, that are making the same types of commitments to their team to ensure that … My mindset is, and most people in Asia is, that this is a journey. We are going to go through stages of this journey which are community, outbreak, containment, and then we’re going to be moving onto recovery.

Drew:

Right.

Keri:

That’s going to be a three to six month period. We don’t know what it is. In greater China, we’re on two, two and a half months at the moment. With that understanding, we also know and have experience, through past emergencies like this, that business bounces back really quickly and you’re not going to be able to hire fast enough when it comes back. So with that in mind, we just need to get through this period, whether that be three months or six months. That’s our commitment.

The other things that we’ve done as an agency is we’ve reached out to any sort of emergency government loans or financing that we can get our hands on or apply for in all of our market. Now what’s happening in Asia is very different to what’s happening in the UK or the US for example, or France for example, where the government has been stepping up to volunteer to pay wages to some extent. So in France, for example, I think it’s 80% of wages are getting paid across the board.

So in our markets, we need to find ways to pay our workers ourselves because we don’t necessarily have those emergency government grants or commitment. So we’re doing that through government confirmed SME loans or other financing options that the government is backing for us. So that’s the way that we’re supporting in that way. Other things we’ve done is we’ve phoned every other financial partner that we have to ask for any type of cashflow management that they can offer us. So one thing to mitigate is that we understand that our clients are suffering too and that they’re not going to pay us in the timely manner that they usually do.

Drew:

Right.

Keri:

So fighting back with them isn’t going to help. If there’s no money, there’s no money. But rather looking for other ways to finance those gaps in payments. So we’ve been working on that. We have phoned all of our landlords and asked for rent reductions. In mainland China, our wonderful landlords there have given us two month free rent period.

Drew:

Wow.

Keri:

Bless them.

Drew:

Yeah.

Keri:

Our landlord in Singapore has been kind and given us a percentage. Our landlord in Hong Kong, not so much. Nothing there. That is usual Hong Kong way of life though. You’ll read about that everywhere. I think we feel about our landlords the way you feel about your governments, but anyway.

Drew:

That’s probably true.

Keri:

Then the other thing we did was we looked at every supplier and the contrac