Obviously, it's not easy.
I mean people say is this it's a bit like
the first night of Pacer where you know,
you have the four questions in a why is
this night different from all other nights
always this recession or
is this recession the same as others or
is it different to others and the answer
is I think this is like no other I mean,
I don't think it compares to
the banking crisis of for
the subprime crisis at or 8 or 2 9.
11 or the.com bust and 2001 to or
1991 to or the Christ shark the 70s.
I mean, this is very very different to
anything else we've seen in the closest
approximation I think is to wartime and
we are locked down in most countries.
We just had a call which
with eight eight of our
locations around the world and
had a an hour and a half.
Discussing how things were going and going
into Q2 which is the critical quarter
because all the projections for
Q2 pretty awful.
I mean Goldman's latest projection.
I think the US economy's GDP
down 34% with a recovery.
I think I'm 12 in Q3 and
then a further inquiry in Q4.
So it is pretty Grim
conditions at the moment.
I think this will be a sort
of v-shaped recession.
I'll stick my head out.
I think maybe you and
I will have a call in Q4 of this year and
he where we'll discuss.
Why was it that we were
in such a panic mode and
mean don't get me wrong what's
happened is terrible one
death is more than is acceptable
as a result of this but
I think one has to get it in proportion
to what has happened historically.
And we weren't ready for the pandemic
government's weren't ready companies won't
be ready Health Services weren't ready.
Whatever not apportioning blame for that.
We just weren't ready for it.
Maybe Bill Gates was ready at 10:00
in 2015 or whenever it was but
we haven't been ready and prepared for
this will be prepared for the next one.
But I think this is really where
in the eye of the hurricane
the storm my own view is that
it's not going to be short-lived.
It's going to be Very painful thank
you to our clients are going through
extreme pressure and pain and
I think they break down
into two categories one is
what I would call tear and
the disruptors if you like and
then the disrupted or
the the analog companies that
are rapidly becoming digital and
there's a very different reaction
from them as far as we can see it so
far remembering that S4
is a company with a bow.
400 million of dollars of net revenues and
ebitda pre covid
of about a hundred million before Central
costs of about 13 14 million dollars.
So about 85 90 million dollars
over here bit darker and
a market cap of approaching
a billion dollars.
So it's small but purely digital and
what we see is the tech companies
maintaining their patterns of spend.
I mean the true
the the budgets they have for
Life sports events have been
eviscerated and pushed into next year.
The Tokyo Olympics Tokyo 2020 will be
in 2021 Euro 2020 will be in 2021.
So we have that to look forward to and
that's been pushed back and that leaves
a lot of scope for their budgets, but
they are deploying their budget still.
So I think the disruptors the tech
companies continue to maintain their spend
the FM's TGs the Pharma companies.
Less so the retailers and because travel
and Hospitality have been hit badly.
Those companies are certainly cutting
their budgets delaying and deferring and
cutting but they are switching money to
digital and not just saying that I mean,
I'm trying to talk my own book obviously
not just saying it for that reason, but
what we are seeing is a view
developing that there
should be an duration of this switch to
digital and if that's at three levels
amongst consumers, you know who are now
logged at home using online communication
like we are now in a much more
effective way with improved technology.
So online Communication in terms
of media online e-commerce,
obviously growing and growing and that
will accelerate the second thing is Media
owners trapped in in traditional or
analog He's again through
this crisis will see the the improved
functionality of digital communication.
We're seeing for
example some newspapers and
magazines cutting their
paper version in the crisis.
And I think that will be a permanent
change and then the Third change
will be at the Enterprise level competent
people running Enterprises who were
worried about digital transformation the
impact that would have when things were in
a steady state, I mean things before
covid before the or A price shock and
the supply spat between Russia and
Saudi Arabia things were okay and
we already had a slow down because of
the G2 tensions between the US and
China but better things were basically
okay, they were manageable and
client didn't want to disturb the status
quo by layering on top of all this and
other stages did book digital disruption.
They are now doing I think they will be
willing to do that because Q 2 and and
Beyond maybe maybe Tough and
they'll be willing to take the right off.
So I think you see that
that sort of a two-part or
two segments situation at least and
now that may change as we go into Q3 and
I think things will improve
in Q3 there are signs of improvement in
some of the statistics in Western Europe.
Not all but we're starting to see I think
some improvement obviously the u.s.
Is going to in to go
through a very tough time.
We have President Trump last
night preparing the nation for
a tough couple of weeks and
the figures will get worse.
I'm pretty sure but
then after that as we go into Q3,
I think things will get better.
And as I say I think you for
there will be a sharp snap vac and
it will be will be the shame.
So that's how we see it.
One other thing we see at
the moment is our content business
is much less affected.
I And digital media planning and
buying and programmatic business.
The analysts are calling for
the ad industry holding companies
to be down about 10% on the top line
of which digital would be down five and
tradition around 15
that's order is what we
sort of think the industry will be I think
the one qualification I would put so
far is the content as far as we see
it will not be You down we're seeing
a lot of repurposing of content from live
events, for example to digital events.
I don't think Live Events will be
the same again after we come out of
this covid recession.
We're seeing much more use of Robotics.
So instead of using people in
terms of producing content,
we're using robotic cameras and
Studios and we see a lot more
use of Animation as well.
So there are some alternate
revenue streams and
one interesting thing on
the programmatic side.
Is that the inner housing Trend continues
but it is in this lockdown situation.
It's difficult for
clients to implement in housing.
And so we are performing
a liaison function with them
as they migrated to an in
the housing format.
You know, we have working with
several clients and in housing.
The program's continued but
is very difficult.
To recruit to implement.
So those are some of
the things that we see
the general mood of our
people I think is is good.
Obviously we're concerned
about people's welfare.
That's the most important thing.
We're concerned couple of things
came up on our recent call around
mental health and well-being and
then also things like childcare the
practicalities of being in a apartment or
house with With young children
with two parents working.
I mean these sort of things are causing
tremendous disruption so that those
are some of the things that we see we're
very focused on liquidity and finance.
We're very focused on people and their and
their health and their well-being and
we're very focused on what clients how
clients are changing and responding and
one final initial observation.
This old sore about spending.
Through the recession.
I think that is not the case.
I think you the clients have to be
obviously with the financial pressures and
with the huge potential Falls in GDP and
increases in unemployment
that there will be a premium
on liquidity and finance and therefore
it's unrealistic for the industry to prove
to sit there saying spend your way
out of this there has to be measured.
Adding and I think what we're seeing
as I say particularly on
the disrupted non-tech side so
far is this cutting of budgets which
is understandable in these conditions,
but a switch at the same time to digital
which I think will be permanent.
I think their habits that we
developed in this recession will be
habits that work with us or
live with us for a long time to come.
