Dive Brief:
- A number of major ad agency players including WPP, Dentsu Aegis and Havas are carefully watching their bottom line for expenses around the upcoming Cannes Lions advertising festival in June, The Wall Street Journal reported.
- An internal memo circulated at WPP, the world's largest ad holding group, asked for a 25% decrease in expenses at the festival, as well as a reduction in the list of people attending the week-long event, per the Journal. Attending Cannes Lions can cost agencies anywhere from $8,000 to $20,000 per person and submitting campaigns for award consideration can cost up to $3 million, a source told the Journal.
- A separate memo sent later from the same executive let the company's agencies know that WPP wants to be a leader at Cannes Lions, but with fewer people physically in attendance. The Journal said Dentsu Aegis similarly expects the number of people in attendance will be "significantly reduced" from last year; Havas also issued a memo telling executives to "be very conscious of the cost implications of Cannes," the publication reported.
Dive Insight:
Traditional agencies, facing stiff competition and criticism on a number of fronts, are accordingly tightening belts for an event often noted for being lavish. Brand clients are not only demanding more transparency and restructured partnerships following a number of controversies, including undisclosed rebates between agency partners, but are also taking operations in-house with greater frequency or giving their business to global management consultancies like Deloitte and Accenture.
The leaked memos come less than a month after WPP announced a 3% drop in Q1 North American revenue and after a separate report suggested that CEO Martin Sorrell will take a dramatic pay cut this year. The Journal additionally pointed out that Dentsu Aegis Americas saw a 3.4% drop in organic revenue in April, along with Magna Global's forecast that ad spending would increase only 3.6% this year, down from last year’s 5.7% increase.
Given these market conditions, it's no surprise that agencies are taking a closer look at expenses around Cannes Lions from both an image and budgetary standpoint.
