How A Recession Will Impact The Digital Marketing Industry
Economic experts predict a recession in 2023. Learn how recessions impact marketing agencies and the steps to take to survive the potential changes.
As prices continue rising and the world heads into a new year, fears of the recession continue to rise. Some experts say the recession is here, and others say there is a 61% chance of a recession in the next year, and it could happen soon. Regardless of what opinion one subscribes to, knowing how one might impact the digital marketing industry helps companies and individuals prepare for the worst-case scenario.
The World Economic Forum recently conducted a poll of economists. Around two-thirds of respondents agreed there will likely be a recession in 2023. Even if there is just a slowing of small business, it’s good to know how it might affect a job for those in digital marketing.
People tend to reduce their spending in a tight economy. They’ll buy less retail and visit e-commerce sites less frequently. How do fewer sales impact digital marketing agencies and freelancers? Some of the impacts on the digital marketing industry will include lost clients, budget cuts, and higher costs.
Yet, there are several ways digital marketers can adjust and become more resilient.
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6 Ways To Recession-Proof Your Digital Marketing Company
- Shift focus to existing clients
- Boost skills
- Hire smart
- Cut costs
- Seek retention-proof clients
- Educate clients
1. Shift Focus to Existing Clients
Start by shifting focus toward increasing spending with the customers currently on the roster. Now is the time for clients to increase their advertising. Other companies often cut marketing budgets first because it is an easy place to reduce costs. However, those companies who keep spending will increase their market share and gain new customers while those cutting costs fall behind.
The last time the world went through a big recession was 2008, so that is the best example of brands that ramped up advertising and came out on the other side with more of a market share.
Target is a great case study of expanding market share during a recession. They gave their Archer Farms grocery line a tagline of "Expect More, Pay Less" and rolled out advertising to highlight quality for lower prices. They saw a 30% growth in that line when a lot of brands lost market share.
One way marketing professionals can survive the recession is by keeping the customers they have. Make sure to ramp up customer service. Show current patrons how much the brand appreciates them. Ask what the business can do to make their experience better.
Pay attention to competitors and the perks they offer. Don’t let them steal away top clients with a better deal.
2. Boost Skills
A downturn is an excellent time to boost skills and offer new services or reach new customers. For example, send social media marketers to a conference to learn how the face of social platforms changes over time and improve advertising efforts on the social giants.
Look for new knowledge that allows the company to expand on services offered and ones that pay more, such as user experience (UX). One could also add services such as database management.
You may have less work during a recession, but you can increase skills that attract new clients or provide additional options for current ones.
3. Hire Smart
Other companies often make the mistake of cutting staff for a temporary situation that resolves itself after several months. A recession is a great time to hire those top job candidates smaller brands might otherwise miss out on.
Look for people to add skills not already on staff. Expand knowledge and services with smart hiring. If the brand pays them fairly and gives regular raises, they’re more likely to stay where they are as the economy improves.
Retain current employees. It costs six to nine months’ salary to replace a worker once they leave. It’s best to keep top staff members rather than recruit new ones.
4. Cut Costs
If a few clients leave or reduce their spending, cut costs where it makes the most sense. Start with an audit of spending. Does the company really need water bottle delivery every week? Install automatic switches, so lights go off when people aren’t using rooms, such as the restrooms.
Look at all subscriptions to see what can go. Reduce interest rates by combining high-interest loans with lower ones. Call current vendors and ask if they can cut costs without losing quality. Get creative, stop extra spending, and batten down the hatches until the economic storm passes.
5. Seek Recession-Proof Clients
Some types of businesses aren’t hit as hard during a recession. Look for clients where recessions don’t really impact them, such as grocery stores, education, and utility companies.
Agencies with many clients in the tech sector should seek additional clients in other categories. Experts predict technology sales will drop from $512 billion in 2021 to $485 billion in 2023.
Surprisingly, businesses in the entertainment industry sometimes increase during recessions. People need something to take their minds off their worries. Alcohol, cigarettes, candy, and entertainment spending increases.
Some might be surprised to learn of three more categories not impacted by recessions at all. Healthcare is an obvious one. However, people also still pay for tax preparation services and tattoos.
Keep the clients on the rolls but don’t seek out those tied to luxury categories such as new cars, homes, electronics, and travel.
6. Educate Clients
One of the most powerful things marketing agencies can do during a recession is keep their customers calm. Educate them on why it’s crucial to keep promoting through the lean times, so their brands don’t lose traction.
Send statistics on companies that ramp up marketing efforts during recessions and how they corner more of the market. Come up with a strategy to help each customer through the unique challenges they’re facing and show them the agency understands the struggles they face.
How Will Your Digital Marketing Agency Survive the Recession?
The best way to handle a recession is to come up with a strategy that moves an agency and its clients safely to the other side. Following the steps outlined above and being proactive increases the odds a business will not only survive but thrive.
A strong marketing strategy should carry you through any economic uptick or downturn with little adjustment in the spending but some changes in the messaging. The temptation when times are lean is to cut back on promotional spending. However, small businesses should still hire digital marketing resources. Consider it an investment to come out on the other side of the recession with growth rather than shrinkage.