How to find (and keep) new business in the face of a recession
A coming recession is likely to make keeping a hold of clients much more difficult for agencies. GrowthLab’s Mike Kapetanovic suggests an aggressive remedy.
Tech holding companies, such as Alphabet, Meta and Snap, have been warning that a pullback in ad spending is coming and, now that their second-quarter results are in, those warnings appear well-founded. The latter two reported significant declines in advertising demand across core products, with Meta even reporting its first revenue drop ever.
Meanwhile, the Google parent saw revenue growth sputter across major ad offerings including YouTube and Search, though overall ad revenue did manage to beat expectations.
GrowthLabs founder Mike Kapetanovic suggests agencies go on the offensive in a recession / Unsplash
Inevitably, the slowdown in spending is hurting streamers too. Roku’s shares plummeted after its recent Q2 earnings report, with chief executive Anthony Wood painting a grim picture of the months ahead. Even so, rival Netflix is touting the upcoming launch of its ad-supported content tier (due by year’s end) after reporting what co-CEO Reed Hastings called “less bad results” than expected.
And maybe that’s the silver lining. For the countless agency leaders wondering what’s next as major clients pull back on marketing spend, it might seem as if the wolves are circling and the bottom is in danger of falling out.
According to the latest IPA Bellwether report on advertising in the UK, that’s how most marketers are feeling in the UK with nearly 40% indicating they are pessimistic about the months ahead – and the mood doesn’t seem much better stateside. But the truth is that advertising isn’t going anywhere. Even if a recession is looming, there are plenty of companies that want to and need to spend money on marketing to drive growth.
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It’s up to you to go find them.
Almost unanimously, brands and advertising platforms point to economic uncertainty as the culprit behind deflated marketing budgets. Indeed, after two consecutive quarters of negative growth, it’s reasonable to assume that a recession is just around the corner if it hasn’t already begun.
For most clients, the prospect of a downturn will be enough to warrant a second glance at spending on advertising. Some might go as far as to postpone major marketing initiatives. Others might walk away completely.
The question is, what do you do? You can remind clients of all the great work you’ve done in the past. You can point to all the goals you’ve set together that you’re still chasing even now. You can beg them to stay and explain how important they are to your business.
Or, you can put your business, your people and your strategy first. No matter what sector this client might be competing in, if you’ve been an effective partner for any significant amount of time, chances are you’ve learned a few things that other prospective clients in that sector could benefit from.
That’s right. If your prized client decides that macro-economic uncertainty is an excuse to cut ties with your agency, don’t mope about it. Instead, make them regret it. The market knowledge, domain expertise and industry relationships you’ve developed working for a client that no longer values you will make you all the more valuable to one of its competitors. It’s time to go on the hunt.
Many years ago, I was leading an agency in flux. We had just been notified that one of our largest clients was entering a period of consolidation and would no longer be needing our services. We were on the outside looking in and, for a moment, we all felt helpless.
But a few minutes after getting the news, I went to my desk and (admittedly, without much prior thought) began typing the following email:
Subject: We drove $2bn in sales for your market leader, let’s chat.
Message: Hi there, we’ve never met – I’ll keep it short. For the past decade, we’ve driven $2bn in sales for [Client Name] at a 20:1 ROI. We’re no longer working with them and are confident you can capture market share. Let’s chat.
Sure, I may have acted emotionally and perhaps could’ve crafted a more eloquent pitch to this prospective client. I could’ve waited a month or two for the sting of what felt like a massive loss to subside.
However, it worked. Within minutes, I had three CMOs call me looking to chat. Within a month, we landed our former client’s biggest competitor.
I had no regrets then. You shouldn’t now. If a client decides to let the market (or fear of the market) dictate its business strategy, there’s little you can do to stop it. What you can do is stay confident, stay the course and trust your team.
And go get someone else.
Mike Kapetanovic is the founder of GrowthLab