Economic downturn is a reality many businesses are facing and marketing agencies are no exception. With businesses trimming budgets and prioritizing must-have tools and services, many agencies have seen a significant slowdown in sales. Only adding fuel to the fire, the talent gap continues to widen, while customer expectations still rise.
These challenges have had a direct impact on revenue numbers. While marketing agencies still predict 43% average revenue growth in 2023, this is 37% lower than last year. As we embark upon a new year, economic uncertainty will continue to be top of mind for agencies – not only in how it will impact business, but also in what strategies need to be put in place to cut through the noise and communicate with clients.
So what can marketing agencies do to boost sales and ultimately navigate the economic landscape heading into 2023?
Here are three tactics to implement right now:
1. Diversify client offerings
Digital transformation has been a focal point for many businesses, which means agencies need to audit their services to ensure they’re meeting those needs. In 2022, marketing agencies largely rose to the challenge by introducing a wider array of services, with site design and development (23%), paid social (16%), and full-service digital (16%) topping the list of most popular services added.
By offering these types of services, agencies were able to empower their clients to uplevel their digital communications. As the first point of contact for many potential clients, keeping website design and development on the forefront and placing time and energy into it will help businesses weather the storm. Heading into a new year, agencies should be cognizant of these types of needs and make sure they are including services their clients are desiring.
The other tech offerings topping the list that were found to up-level value are full-service digital and Search Engine Marketing (SEM) or paid search. Investing in tech is better for consumers in the long run and can even make the difference in allowing agencies and their respective clients to continue operation or not. Thinking about automating as much as possible this year and in coming years, for both agencies in how they are reaching clients and in the services that they offer to them, can yield great results. Other popular services agencies have added in 2022 and seen success with include creative services, sales training and branding services. Keeping offerings fresh in 2023 is an ideal way to help beat out the competition.
In addition to offering a range of services, agencies can further increase their value to clients by keeping them in the know. In fact, 8 in 10 agencies say that reporting is an essential part of their service. Increased communication and transparency with existing clients has resulted in client retention through the 2022 economic downturn. In fact, 39% of agencies saw positive results in client retention by using this measure.
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2. Prioritize tracking ROI
In times of economic uncertainty, demonstrating ROI becomes mission critical to marketing agencies. In fact, those agencies that upgraded their tech stacks to track campaign metrics and demonstrate ROI saw positive results, while those that didn’t conversely saw negative results. 82% of agencies that adopted new tools and technology to track campaign metrics and demonstrate ROI saw big results, resulting in an average 17% higher revenue growth than those that did not add new tools or tech. Many agencies pointed to low bandwidth, budget restraints and not knowing which tools would be the most useful as to why they didn’t add new tech to track metrics in 2022.
Among the agencies that predict growth in 2023, 85% say that proving ROI to clients will be key to that growth. Understandably, recession concerns make clients more hesitant to invest in new campaigns without proven ROI. Offering a comprehensive tech stack and competitive marketing tools can prove to be the selling point for customers new and old. To battle the current climate, adding transparency into the approach and proving ROI to clients is key.
3. Invest in technology to increase sales
There is an increasing necessity for technology solutions across a variety of areas, to support decision making and spending, in order to ease the pain points that have resulted from the tension of the last year. If agencies intend to ramp up sales efforts in 2023, they must adopt new tools and technologies to streamline their work. In fact, investing in new tools and technologies and business development ranked among the top three priorities for agencies in 2023.
Unfortunately, times of economic turbulence bring layoffs and smaller than normal teams, operating on tighter bandwidth. Agencies felt the brunt of this in how they performed against revenue goals in 2022. The average growth percentage agencies saw this year declined 39% from what they saw in 2021. Yet at the same time client demand continues to rise. 3 in 4 agencies predict that in the next five years, their clients will want to see more comprehensive services and metrics than they do now when choosing an agency. Agencies were 29% more likely to predict the need for more comprehensive services than they were in 2021.
Therefore, making processes more lean and efficient by investing in a comprehensive tech stack and competitive analytics tools can ease some of the burden and ultimately help hit a variety of goals. Further integrating that technology and being able to access real data will enhance agency efficiency and appeal to clients. While it may seem like a daunting task, scheduling time to research new tools and prioritizing their addition can help turn the tide and address the goals that were missed last year. Investing in the right technologies can mean the difference between success and failure for agencies and their clients.
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It’s time to set goals for 2023
While 2023 will present its own set of challenges, agencies should be proactive in their planning efforts, so they are able to withstand any hardship and come out ahead. Investing in data-based decisions, upgrading technology and incorporating new tools and technologies as well as proving ROI to clients are attainable ways to address challenges and navigate uncertainty in the current climate.
In 2023, setting goals and having a plan of action is paramount. Agencies must ask themselves how they would like to grow their business in the coming year and prioritize the tools and technology that will help them get there.
