State of the market: Marketing communications in FY21

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As many marketing communications government contractors can attest, this year’s first two quarters have been remarkably busy. While typically having a less active period for Requests For Proposals in the federal procurement timeline, Q1 and Q2 have brought a sizable number of RFPs to the market this year. Many of the anticipated contracts were released on-time with several coming ahead of schedule, such as the Food and Drug Administration’s Public Health Education Campaign, and several others being many months behind. We’ve also seen a number of federal agencies experience a rebirth, relative to their dormant status over the past four years. For example, Q2 delivered several communications-oriented RFIs and RFPs out of Environmental Protection Agency and Department of Housing and Urban Development.

By and large, the largest communications contracts, such as contracts pertaining to military recruitment, are mid-cycle and aren’t expected to have any future contract opportunities. On the other hand, with Census 2020 finished, several of the agencies that led and supported Census work over the past couple of years have been aggressively looking to fill revenues. Many of those companies have done a great job filling that lost revenue.

And, of course, there’s COVID. Vaccination numbers are ahead of schedule, and many agencies are doing impactful work at both the state and federal levels focusing on vaccinations. Fors Marsh Group continues to deliver on their $250M contract. Additionally, “another $1 billion will go to the [Centers for Disease Control and Prevention] for vaccine awareness and engagement activities,” according to US News.

Acquisition preferences and consolidations

With respect to acquisition strategies, we’re seeing an increase in usage for contract vehicles and governmentwide acquisition contracts, both “best-in-class” (e.g. OASIS). We’re also witnessing an increase in department and/or agency-specific vehicles, particularly in the civilian and public health markets. We expect to see continued coverage of the anticipated BIC MAC as OASIS is set to sunset in 2024. Additionally, we’ve seen a handful of contract consolidations, largely in the Department of Homeland Security and Defense Department. Having regular communications with contracting officials in each of those departments, we anticipate this will certainly continue in Q3, Q4, and beyond.

Contract spend on the rise

We anticipate that FY21 will see an increase in federal spending on marketing communications funding. Historically, we’ve seen slightly north of $2B in annual expenditures; we anticipate this will rise considerably in FY21. COVID aside, many of the contract ceilings on the recompeted contracts are rising. For example,

  • In late Q4, Plowshare retained their National Tobacco Education Campaign contract at CDC with a contract ceiling rising 71% ($548M from the previous $319M).
  • Last month, Crosby Marketing retained their Marketing and Public Relation Services contract at the Social Security Administration and are expecting a 72% rise ($82M from the previous $47.5M).
  • Lastly, the FDAs Public Health Education Campaigns Program (held by True North Communications) is in source selection with an estimated 44% rise ($900M from the previous $625M)

New entrants into the market

Due to the pandemic, the private sector has certainly seen tremendous volatility. As consultants for the marcom sector, we have seen a significant increase in private-sector focused marketing communications firms considering and/or entering the federal market. The biggest reason cited is the stability of longer term contracts and the steadiness of funding for work.

Expect to see new companies in future competitions offering the government many of their private sector experiences, reaching particular audience segments and/or deep category expertise.

What’s coming in Q3 and Q4

While virtual events certainly saw a spotlight in Q1 and Q2, we anticipate a few continued and emerging topics in Q3 and Q4; specifically:

  • Cyber security communications – After the SolarWinds hack, expect to see an increased focus on cybersecurity throughout the federal government. This will also mean more communications to the federal workforce and contractors around cybersecurity.
  • Workforce development and recruitment – With the aging workforce and a number of vacancies across the market, we anticipate an increase in federal employee recruitment. We typically see more insourcing and federal hires under Democratic administrations, so we expect recruitment of federal hires to ramp up.
  • Agency rebranding (and employer branding) – With new leadership in place, a desire to reintroduce themselves to the market, and to compete for talent, expect several agencies to undergo a brand refresh.
  • Vaccination communications – The American Rescue Plan signed by President Biden this month includes $1 billion for the CDC for vaccine awareness and engagement activities, so expect an enormous influx of ad dollars to flow on this.

And, at a macro level, expect to see additional contract consolidations, increased contract ceilings, and continued preference to contract vehicles.

Mike Kapetanovic works with marketing communications firms on growth in the federal marketplace. He can be contacted via www.growthlab.us

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