As companies and consumers learn to live with the COVID-19 pandemic, Google and Facebook are doing their part to offer financial aid and the extension of payment terms to agency partners that are struggling. In April this year, agencies Marketing spoke to said they were caught in the middle of clients' request for payment extension while having to meet payment deadlines for Facebook and Google. Most of them were independent agencies which said while the duopoly rolled out ad grants, the actual issue of the extension of payment terms for agencies had not been addressed.
Although Google announced that it is giving out US$340 million ad credits in March this year, they were only made available to small and medium-sized enterprises. That said, in a updated statement to Marketing, Google's spokesperson said it listened to its agency partners during this period, and looked at ways it could help in the context of a rapidly evolving situation.
"We took several steps in the last six months to provide more flexibility to agencies to enable business continuity. We also stepped up investment in our free digital marketing training programs such as Skillshop, as well as bespoke programs for agencies. Asia Pacific has seen the highest engagement in the world through these programs, benefiting practitioners across the region. Our efforts are ongoing," the spokesperson said.
The spokesperson added that in Singapore, it has also just launched an on the job upskilling program in partnership with the Economic Development Board for 3,000 Singaporeans. This includes job placements for Singaporeans into a number of agencies.
Meanwhile, Facebook Singapore recently announced that it is offering SG$4.75 million grants to support over 800 local small businesses with between two and 50 employees. Each grant amounts to SG$5,500 which includes SG$3,500 in cash and SG$2,000 in optional ad credits. Marketing understands that agencies too can apply for the grant as long as they meet the requirements such as employee size, being in business for over a year, experienced challenges due to the pandemic and being in or near a location where Facebook operates. Marketing has reached out to Facebook Malaysia for comment on when it will roll out a similar initiative.
Mixed results among independent agencies
During a recent check in with Marketing, one agency head with operations in Singapore and Malaysia told the publication on the condition of anonymity that it has yet to receive any financial aid or extension of payment terms from both Google and Facebook. Another said there is no blanket financial aid for agencies and that Google and Facebook will assess longer credit terms on a case-by-case basis.
Meanwhile, Shanker Joyrama, founder and CEO of Kuala Lumpur-based Orion Social Media said while it managed to work out a monthly invoicing system with Facebook, the agency is still paying out of its own pocket for Google. Joyrama declined to reveal the ballpark amount it is paying to Facebook on a monthly basis.
Joe Nguyen, board member of Sri Lanka-based digital marketing agency eMarketingEye which focuses on hospitality marketing, said the first quarter of the year is usually a "high spend quarter" for the hospitality industry when it comes to search engine marketing (SEM). When COVID-19 hit, the agency knew it "would be in trouble", Nguyen said and it eventually accumulated more than US$1 million for the first quarter as clients were unable to pay up. According to Nguyen, Google initially allowed the agency to push back payment by 30 days. EMarketingEye continued its payment as usual until July, when there was another sum of money due.
"I had a chat with Google and said we needed a longer payment term, we couldn't pay that by mid-July. We'd already cut salaries of all employees across the board and there was no revenue coming in. If we had to pay more, we'd be in the situation where we might have to lay off employees, but we are resisting layoffs," Nguyen explained.
Following talks with Google, eMarketingEye managed to come to terms on a payment plan for the remaining amount for the first quarter which would stretch out for the rest of the year. According to Nguyen, the remaining amount is about 30% of the full amount it owed earlier this year. Nguyen added that its current SEM spend is being paid as per normal with hotels gradually resuming operations, save for the huge chunk it had accumulated at the beginning.
About 40% of the agency's revenue comes from SEM and it works with clients including Anantara Hotels, Resorts and Spas, Avani Hotels and Resorts, Berjaya Hotels and Resorts, Dorsett Hotels and Resorts and Destination Singapore Beach Road. The agency focuses mainly on Google and does not carry out a lot of ad buys on Facebook Exchange. Other services eMarketingEye offers includes SEO, PPC, web development and analytics.
"For SMEs or smaller agencies, it's really about the cashflow. If [the duopoly] is unable to help with the cashflow, they won't help any company survive. Larger agencies may have deeper pockets or are able to get loans, but to me, it's the SMEs that are going to be hurt the most," Nguyen added.
Despite initially hitting a bump in the road with payment, eMarketingEye has quickly evolved and adapted to recent times by working on new projects. For example, it turned a booking engine it used for hotels into a food booking service for local food companies. It is also currently helping smaller hotels through its post-COVID recovery plan by absorbing the cost they have incurred during the first quarter and then practice revenue sharing as they gradually recover. To date, Nguyen said 15 clients have signed on for the post-COVID recovery plan.
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