While I may not be as old as Tony Mikes, I do have over 30 years in this business and I have survived the same downturns in the economy that the article below addresses. Simply put, many of you reading today’s blog entry need to understand–and think about–the fact that what Tony is saying is just as applicable to your business. Whether it be banking, automotive, furniture, insurance, healthcare, or almost anything else you can think of, you must be proactive now to survive for another day.
Thank you to Tony Mikes for granting me permission to share his wisdom. Tony is founder and managing director of the Second Wind Network. He is an entrepreneur and former advertising agency and graphic design studio owner.
Five Ways to Weather a Weak Economy
I am 65 years old and have been in the advertising business since 1965. During this period I have lived through three or four recessions (or “economic slowdowns,” as we say in polite society). Let’s see, there was the 1974 energy crisis; then 1981, 1991 and 2001; and now the reasonable possibility of another slowdown in 2008.
With a fair amount of experience in these matters, I have discovered similarities. Most economic slowdowns are fed by the media looking for a story, especially prior to a presidential election. All of these were shallow, with the exception of the stagflation period during the ‘70s. Most lasted about one year, and offered great opportunities for contrarians.
With this in mind, I am dispensing some advice that may help your agency weather this latest “whatever it is that seems to have gotten into the economy” situation.
- Sell Like Hell.
Wherever there is trouble, there is opportunity. Now is the perfect time to up-tick your new business process, especially in selling your ability to help companies increase their sales, fill their pipelines, or (the magic words that clients want to hear in downturns), “use limited marketing dollars more effectively.”Following are some key new business intros you can use:
- Are your marketing efforts directly tied to your sales efforts?
- We can show you how to use the web to market more effectively to drive more traffic to your business.
- We can help your company close more sales once the leads are in your hands.
See what I mean? In down times you have to help clients with programs that drive sales, above and beyond simply branding their businesses. We can talk ’til the cows come home about the absolute validity of brand as a promise of uniqueness, but if sales aren’t humming, clients won’t listen. Job number one in a soft economy is to help your clients and prospects to survive.
Get your new business engines revving. Now is the time to be proactive!
- Marketing Counts This Time Around.
In past economic downturns, advertisers tended to cut their budgets, tighten their belts and ride it out. This time it’s different. This time most companies realize that the customer is very bright and very informed. Customers are not looking to be sold, they are looking to buy, to have a relationship with their chosen brands. In this customer-empowered economy, most companies realize that they need to continue marketing to stay close to their very valuable customers. However, it may not be the type of promotional marketing used during previous downturns, i.e., “buy for less now!” As we’ve discussed recently, the new creative and the new media speak much more to authenticity, relationships, loyalty and transparency. If your agency can help clients achieve these new marketing goals, then you, in turn, will continue to be busy… even during downturns.
- Cut Expenses Now. Don’t Wait.
It is well known among agency consultants that most agencies don’t cut their expenses soon enough when economic downturns begin. The most important cuts revolve around payroll, associated costs related to payroll and rent. But there are other places to look as well; cars, travel, interest to banks, etc.Please do me a favor. Sit down tonight with a cup of whatever you drink and review your agency’s metrics. Total agency payroll compared to agency AGI (billings minus direct vendor costs) should be in the 50% range. If yours is much higher, you must consider how to make it lower. Rent should be no more than 5% of AGI. If you look at Second Wind’s Annual Agency Survey Report, (available to all Second Wind members on our website www.secondwindonline.com) you can make a spread sheet and compare your agency’s expense metrics to other similar agencies.
Now is the time to get your agency’s expenses in order and in line!
- Use the Web – Know the Web.
The idea that agencies need to become experts in helping their clients navigate web marketing is something that will save your “soul” during this downturn. The web is a spectacular marketing tool. Companies are intrigued by it, but really don’t yet know how to use it properly for marketing. If you cannot offer them web marketing solutions, then they will find another way. If you can, your agency will do a brisk business even during a downturn.
- More Billings from Current Clients.
There’s no better place to get more new business than with your current clients. You are already in the door and have the relationships. Simply by activating your efforts; roaming the halls, turning projects into programs, putting forth extra brand development and brand activation tactics, you will keep your billings strong. Keep in mind that increased billings from current accounts are worth four times more in profits than the first year billings of a new account.
