The influence industry’s 2020 started off strong financially, but the rest of the year presents challenges as the global pandemic and economic downturn continue and a presidential election looms.
With so many unknowns, advocacy and communications firms are making adjustments to keep clients, including logging longer hours, temporarily reducing retainers and providing shorter-term contracts rather than the more common yearlong agreements.
“Nobody knows where we’re going, and so it has reminded me a lot of dating in high school, the business development. ‘I love you, you’re our firm. Can we wait three months?’” said Richard Levick, CEO of Levick Strategic Communications.
Levick, a crisis communications firm, is among the Washington firms that received a loan from the Paycheck Protection Program created by Congress to prevent businesses from laying off workers.
But associations that advocate for industries are ineligible for PPP loans, which has compounded the pain of lost revenue due to canceled events or a cut in programs. Nearly 25% of trade associations expect to lose $500,000 or more this year as a result of having to cancel in-person events and meetings, according to a June survey from the American Society of Association Executives.
Some influence industry executives remain cautiously optimistic that they can avoid the normal lobbying slowdown during election years because of action by Congress through the late summer on spending bills and additional virus relief measures.
“I’ve been in Washington 25 years, and the last six months before an election is a pretty slow legislative period. This is not the case” in 2020, said Sam Geduldig, the co-CEO of CGCN Group, which does lobbying and communications work.
The firm provided temporary cuts in retainers for some of its longtime clients hardest hit by the Covid-19 crisis during the first half of the year. But a flurry of congressional activity brought new clients in the door that mitigated any losses, he said.
Uncertainty remains about what the rest of 2020 and next year may bring, as the virus begins to surge again in some areas, threatening more shutdowns.
“The first half, obviously, was solid. The real question to me is now the economy moving forward and what financial challenges will people have in the future,” said David Castagnetti, of lobbying firm Mehlman Castagnetti Rosen & Thomas, referring to clients.
“We can only control what we can control,” he added. “It’s a reputational business right now. We have to work extra hard, and the team is working extra hard — there is certainly no more 9 a.m. to 6 p.m. work schedule.”
Some recipients of federal business loans said they sought assistance as a preemptive move.
“I did it just as a precautionary method,” said Buck McKeon (R-Calif.), a former chairman of the House Armed Services Committee who now has his own firm, the McKeon Group. “It’s incumbent upon me to keep the company going to make sure that we don’t have to lose people, so I applied for it and got it.” He plans to use a majority of the $270,000 he received to pay employees and even hopes to expand his team.
Meredith McGehee, the executive director of Issue One, a nonprofit that received a PPP loan, said the group’s accountants essentially said, “You’d be stupid not to apply.” Even though the group’s situation didn’t become dire, the anxiety continues, she said.
Trade associations, which don’t qualify for the federal help, worry that if events have to be canceled next year, it could create problems for groups able to weather the current storm.
For organizations like the U.S. Travel Association, trade shows can represent a significant portion of their revenue. Its annual event, which was set to take place in Las Vegas this year, was canceled. In 2018, its annual trade show brought in more than $14 million, according to tax records. It is among the groups, which also includes the International Franchise Association, that have been forced to cut staff and do more with less.
Sean Kennedy, the top lobbyist at the National Restaurant Association, said the organization hasn’t had to lay anyone off and is generally on sound financial footing, despite having to cancel its trade show in Chicago and a decline in revenue that comes from a training program it offers to restaurants. However, he said the group and its state partners have seen an uptick in new membership.
On the Sidelines
“There are a lot of folks who have been on the sidelines that are aware of the advocacy work that we’re doing and aware of the policy work that said, ‘We don’t want to be on the sidelines, we want to be part of the conversation,’” Kennedy said.
The National Retail Federation, whose members have also been hurt by the economic slowdown, is in a comfortable place financially, said Stephanie Martz, the group’s chief administrative officer and general counsel. It’s been focused on helping its companies navigate the pandemic and subsequent reopening, having lengthy calls multiple times per week that draw hundreds of members.
“We kind of feel like if there was ever a time to spend money in support of our members, it’s now,” said Martz. “I honestly think that’s one of the big reasons that we have not seen a big drop off. Even though our members are pretty strapped, I think they feel like they’re getting a lot of value.”
To contact the reporter on this story: Megan R. Wilson in Washington at email@example.com