As we leave behind the halfway mark for 2023, in the current economy, all economic research is doom and gloom, it is more important than ever for digital marketing agencies to focus on growth. Companies are cutting back on non-essential spending, which can often (and counterintuitively) include digital marketing budgets. An environment where online marketing budgets are being cut makes it more difficult for digital marketing agencies to keep, let alone grow their businesses. However, there are still things that you can do to keep your business moving forward. In this blog post, we will discuss some tips for surviving and thriving in a recession as a digital marketing agency.

What is a recession?

A recession is an economic cycle where the economy is contracting, typically defined as two consecutive quarters of negative GDP growth. This can be caused by many factors, such as a decrease in consumer spending, a decrease in business investment, or a rise in unemployment. When the economy is in a recession and economic growth is negative, it can be difficult for businesses to grow. Eventually, things will calm down, and the global economy will experience economic recovery again, but nobody (including the Federal Reserve Bank and the International Monetary Fund) knows exactly when that will happen. This is a business cycle where the money supply and monetary policy be tight, and every business needs to be aware of that.

What happens during a recession?

Economic research shows that in an economic recession, economic outputs, employment and consumer expenditures fall. The government's fiscal deficit expands because tax revenue dwindles, while expenditure on unemployment insurance increases as new individuals qualify. Consequently, the government's debt-to-GDP ratio increases.

None of the above is good news.

In the digital marketing agency business, it means that you have to get scrappy and creative as your clients will look for ways to reduce digital marketing spending. Here's what they might do:

Review their current digital marketing spending and every marketing channel and identify areas where they can cut back without sacrificing results. So focus on revenue-related services!
Make use of free or low-cost digital marketing tools rather than the usual global brands. Make sure you've got good deals with the tools you use.
Try to negotiate better rates with suppliers and partners. This includes you! Get ready to discuss your pricing
Rapidly cut back on non-revenue generating items like PR and new development. Be prepared to diversify your offering.

Are we in a global recession?

in short: Yes (or almost)

The world is now entering a recession as a result of the covid pandemic. This recession is expected to be worse than the last recession in 2008. Whilst is no definitive answer, most economists say that the recession began sometime in late 2019 or early 2020.

Here are the signs to be aware of :

A general slump in economic activity and industrial production
A decrease in consumer demand
A significant decline in business investment
High unemployment rate
Sharp stock market declines
An increase in borrowing costs
A rise in inflation and interest rates
Stagnant or dropping gross domestic product (negative economic growth)

What should you do in a recession?

The main thing to do in a recession as a business is to focus on growth. Every business should take have an action plan to prepare for an economic downturn. Here are three main things you can do:

1. Be proactive

In a recession, it is more important than ever to be proactive. This means that you need to be on the lookout for opportunities and be prepared to capitalize on them when they arise. You also need to be prepared for things to change quickly, so you can adapt as needed. The worst thing you can do is stand still.

2. Focus on efficiency

In a recession, businesses often have to do more with less. This means that you need to focus on efficiency and make sure that you are getting the most out of your resources. You should also look for ways to streamline your processes and reduce wastage.

3. Stay positive

A recession can be a difficult time for businesses, but it is important to stay positive and focused on your goals. Remember that things will eventually improve, the global recession will end and economic recovery will come. So, until the economic expansion comes back, keep working hard to grow your business!

Upcoming Event on Agency Growth Events:

10 tips for Leading Digital Agencies

As per above, the digital marketing agency business is going to be tough in the next few years while we enter a recession. Here are some specific tips on how digital agencies can survive and even grow during a recession:

1- Focus on ROI:

In a recession, businesses need to be more mindful of their spending. This means that you need to focus on digital marketing strategies that have a high ROI. This could include things like SEO, PPC, and email marketing. Make sure you tie your services to your client's bottom line. if you're providing website design services, focus on SEO efforts and conversion optimization, or if you're working on social media presence, make sure you track social media networks for every interaction until purchase. Don't just focus on website traffic alone, but demonstrate how it translates into more customers and revenue.

2- Diversify your services:

Offer new services that can help your clients weather the storm. For example, if you typically focus on acquisition marketing, consider adding services like retention marketing or customer success. You should also consider productizing your marketing agency services, which should help with sales, retention, and profitability.

Listen to Lee Goff on how to do this here.

3- Double down on growth:

Don’t let the recession stop you from growing your business. Use this time to focus on growth and expansion. Some of your competitors might stop growing or even lose business, be sure to always look for new deals and grab that market share. Remember, in a recession, there'll be some losers and some winners.

4- Get creative with your own marketing:

Now is the time to get creative with your marketing and find new ways to reach your target market. Get creative with your content and diversify from the other agencies hunting for the same business in the same pool as you are. This is one of the most important aspects of finding new customers for your digital marketing agency at this time.

Here you can listen to Roland Gurney on how to do just that!

5- Get creative with your pricing; cut into those digital marketing budgets:

Offer package deals or discounts to help your clients save money. You can also offer pay-per-performance pricing models, which can help you align your interests with your clients. This'll help retain your existing clients and enable you to convince some of the new ones.

Remember, real income for most businesses is at stake, so you need to demonstrate outstanding results to justify your prices.

Here's a 15min masterclass on how to better price your services

6- Be flexible:

Digital agencies must be willing to adjust their services and payment terms to meet the needs of their clients. This could include things like working with clients on a retainer-only basis temporarily or offering discounts for prepaying for services.

As long as you're not going against your core values, some flexibility will go a long way now.

7- Focus on your existing clients:

Make sure you are providing them with the best possible service and results. They are more likely to stick with you during tough times! You already understand their business goals, you've aligned with their digital marketing goals, and you've built industry experience with them. Make sure you make the most out of this time investment for both your customer and your digital marketing agency.

8- Look for new collaboration opportunities:

A recession can be a great time to start working with new clients or entering new markets for digital agencies. You can learn all about internationalizing your digital marketing agency here.

You can look for opportunities to partner with other agencies or freelancers to help you expand your reach. You can also use this time to look for new talent as the job market might skew towards the employer. Read more about acquiring top talent here.

One of the most important things would be to make sure you look through the digital marketing tools you're using and make sure you're part of their digital marketing agency partnership programs. Most email marketing, social media management, or general online marketing tools have partnership programs for digital agencies. Don't miss out.

9- Make sure you have a good financial plan

This is one of the most important things you can do to prepare for a recession. Make sure you have a good handle on your finances and that you are prepared for a temporary decrease in revenue.

When it comes to recession-proofing your digital marketing agency, having a good financial plan is essential. This means having a good understanding of your expenses, your income, and your cash flow.

One of the best ways to protect your business during a recession is to have a healthy cash reserve. This will help you cover unexpected expenses and keep your business running smoothly. You should also make sure you're paying attention to your debt levels and credit score.

In addition, it's important to be mindful of how you spend money during a recession. Try to avoid unnecessary expenses and focus on investments that will help you grow your business. For digital marketing agencies, this could include things like investing in new technology or expanding your service offerings before finding clients who are willing to pay for them.

10- Keep your team motivated:

A recession can be a difficult time for employees, so it is important to keep them motivated. Make sure they are aware of the goals of the company and offer incentives for meeting or exceeding them.

As everyone else talks about stuff like two consecutive quarters of reduced economic activity, monetary policy, the federal reserve, the international monetary fund, and consumer spending, stop listening to economic research and change the narrative and focus on providing exceptional value to your clients and power through the recession.

How to come out of the recession on top? Listen to Robert Craven: 📌 How To Come Out of The Recession On Top - Robert Craven

Does SEO still work in a recession?

The answer is a resounding YES! SEO is one of the most important digital marketing channels, especially during a recession.

First of all, people are still searching for things online. In fact, there is typically an increase in searches during a recession as people look for deals and ways to save money. This means that there is still opportunity for businesses to reach their target audiences through SEO.

Secondly, organic search results are free. This means that you can continue to drive traffic to your website without having to pay for ads. This helps at a time when marketing budgets are being cut.

And finally, SEO can help you build trust with your audience. During a recession, people are looking for brands they can trust and companies that have been around for a while. If you can show up strongly in search results, you can build trust with your audience and position yourself as an authority in your industry.

Summing up!

If you're looking for ways to recession-proof your digital marketing agency, these tips should help. From diversifying your client base to focusing on organic traffic, there are a number of things you can do to protect your business during challenging economic times.

Now that you know what to do to survive the recession, here are a few tips on how to survive the summer!