Below is a list of answers we sent back to their questions.
There is some information that our clients and community should find helpful about digital marketing in a down market.
Has your agency experienced any increased client churn or budget cuts attributed to the current economic downturn?
Not yet. I think this has a lot to do with which vertical or industry you focus on. Currently, we have a few specific verticals that we help grow their businesses online – home services, financial services, schools and health practices.
We have dedicated websites for each industry. Home services and trades are somewhat recession resistant – if you need a plumber or electrician you will call them even in a down market, especially where we are based in Vancouver, Canada due to your home being so valuable.
Financial advisors, on the other hand, will be affected by how much cash people have to put into investments and insurance. It also comes down to the type of clients you work with – we primarily work with SMEs (small-to-medium sized enterprises) with revenues of $1 million dollars plus per year.
The rule of spending 5-10% of your revenues on marketing depending on which phase of growth you are in rings true. This means our clients with the lowest revenues should still be spending 50-100k on marketing every year so there is budget available.
In fact, during times of recession our advice is to keep spending on marketing as your money goes further. For Google Ads and online promotion you are bidding against competitors for impression and click share. If they stop or reduce spending, this means your money will go further and you will get more clicks for less dollars (providing your ads are run expertly).
As the Sage from Omaha, Warren Buffet, says be “fearful when others are greedy, and greedy when others are fearful.”
This market could be your company’s time to shine. If you do need to cut expenses, discretionary items like meals and entertainment and travel is where companies should look to reduce.
Your marketing should be showing positive ROI and if you work with us an agency our ROI conversion calculator will prove that.
What is your current view of the 2nd half of 2022? How positive or negative are you of the current market conditions for digital agencies (specifically in relation to client retention & new business)
Like all agencies we are in a particular phase of growth. It’s our third fiscal year and so far we are growing at approximately double the revenues each year. We are on track to meet this for 2022.
As mentioned in the previous answer, we have a few different verticals we focus on. What’s happening right now more and more is that we are going all in on the Canadian home services market.
Up here in Canada, digital agencies tend to be more generalist whereas in the US agencies are niche-focused so that they can scale and have authority to easily win more clients.
We so far have adopted a hybrid model that is becoming more and more niched as we progress. We also focus on bigger small businesses with at least one million in revenues.
This means we’re very hopeful about the 2nd half of 2022.
We have trade shows and other events lined up as well as some other very interesting projects on the go including a rebranding project that means we are going full steam ahead with confidence that our agency is in good shape to weather any stormy waters.
Are you making any structural changes to service lines, personnel, go-to-market or operations as a result of the current market conditions?
Not really. We have an amazing team ready to service our current and new clients.
Our sales, operations, fulfilment, content and technical departments are first class and we want to add more personnel and not lose anyone.
We have a certain amount of our own budget that goes towards innovation and new product development and so we are looking at marketing automation systems and white labelling right now and how that can benefit our new and current clients.
In addition, we’re looking at potentially acquiring businesses that fit our strategic direction and help us gain new streams of income and widen our sales funnel.
Are you making any changes to your client retention strategy or processes?
We have a robust system of account management and fulfillment for our clients that takes into account consulting, website design, search engine marketing, SEO, Google Ads, Google My Business as well as analytics and reporting.
We are going to add value-adds but the core system is there.
Retention ultimately comes down to results, fit and perceived value by the client.
These are all things you can control as an agency and if you fail at any one of these retention is at stake.
What is your longer-term view? What do you anticipate the market conditions to be like in 2023?
That’s a good question and if you watch various YouTube channels and videos right now, there’s enough material to get you running scared.
The costs of borrowing to get society through COVID by governments has been huge.
Quantitative easing and continually printing money by national and private banks plus the growing national debts of Western governments shows a house of cards has been stacked up.
When larger society and consumers are affected through growing inflation and rising interest rates, the psychology of the market can be affected and recession hits.
It could be really bad or we might just keep borrowing to get through it.
Either way, in any market there are things we spend money on as a necessity whether as individuals or businesses.
It’s our job as responsible agency owners to make sure we align ourselves with the necessary and not what can be cut from the budget.
If a recession does hit, we want to be the superhero that powers the small businesses we work with through to the other side in a better condition than when they entered it. For this to happen, they need to have faith in working with us and take brave steps forward.
If you have any questions or concerns about how much to spend on digital marketing in a recession or down market, speak to us and we’ll give you advice.
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Andrew Jackson lives on the North Shore and does SEO and digital marketing for a living. He is passionate about footy, DJing, craft beer, and of course, his family. He is married with 3 lovely daughters.