In May 2005, analysts warned that oil could “super-spike” to $105 a barrel and economists were prophesying that the American economy as a whole might be sailing into choppy waters. Well, they are no longer prophecies. They are realities.
The fact is we’ve hit the perfect storm. The housing market is in total flux with mortgage debt ballooning from $4.9 trillion in 2001 to almost $10 trillion in 2007. The upheaval in the oil industry doesn’t seem to be coming toward any kind of order. Instead, crude oil prices have hit record highs of around $147 a barrel earlier this summer. And the greater threat to American families than the rising prices of oil is the surging costs of groceries. Food costs are increasing at the fastest rate since 1990 with jumps anywhere from 20-60 percent.
As with energy, higher food costs cut into discretionary income that buys everything from cars to computers to movie tickets and drives the consumer-based U.S. economy. So where does that leave the advertising and marketing industry? FedEx Kinko’s released the results of its national “Signs of the Times” small business survey last month.
Close to 100 percent of the small business owners polled were moderately to very concerned about the current economy’s impact on their business. However, decreasing their marketing and advertising budgets is not a likely course of action. Instead, staying connected to customers — especially during taxing times — is imperative. It is vital for businesses to remain visible.
The burning question we hear from lots of agencies during these turbulent times is, “How do we increase new business?” Let’s start with the old adage of treating your clients like prospects and your prospects like clients. We are fighting a perfect storm and each agency needs to develop its own unique perfect plan to weather the storm.
Since each agency is distinctive, then each agency should have the perfect plan that best suits them and their offerings. It sounds so basic and we often see agencies nodding their heads and mumbling under their breath, “Well, of course. Communicate what is unique about us and how we can make a difference. I got it!” Although we’re all in agreement, we often see the same things being done over and over again with the expectation of a different outcome. Yes, it’s the definition of insanity. Having a crystal clear definition of who you are as an agency allows you to clearly communicate the unique value you can offer to a help solve a client’s (current or prospective) problems. Gone are the days of “telling and selling,” especially during the times when the signs of an imminent recession are all around us.
During one of AAR’s New Biz IQ sessions, we helped an agency to crystallize not so much how they differ from their cluttered competitive landscape, but rather the value that they bring to solving marketing problems because in a tumultuous economy, there is a shift in attitude toward value orientation. And there is a lesson to be learned here. Emphasize core values during the economic downturn, starting with the value you bring through your relationships with your current clients. The mentality during these times is just like it is in the summer — the thought is everyone is on vacation, so don’t make as many calls.
Similarly, the thought is everyone is not buying during a recession (even though we’re not officially in a recession, we’re close enough), so don’t make the calls. Bottom line: The business goes to those who make the calls, starting with your own clients. Commit to learning. Those who think they know everything have nothing to learn. It’s a great time to look at things from a fresh perspective. How can you do things better or different? Serve clients smarter?
We’ve heard it a number of times and it is well documented: Brands that don’t constrict into a ball during bad economic times and increase their communications, while competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Furthermore, doubtful consumers need the reassurance of familiar brands. In addition, more consumers are watching a screen at home, which can deliver higher than expected audiences at a lower cost.
Support your client by having an even deeper understanding of consumers and how they are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods, are more willing to postpone purchases, trade down, or simply buy less. The more you know about the consumer and how to build and strengthen brand relationships instead of making a transaction, the more valuable you’re going to be to your client in the long term. In return, clients that are convinced of the significant impact your agency has made on their business will pay back twofold: It’s a great way to grow organically and it will have a positive impact on word of mouth, which may bring in new clients for your agency.
Similar to the way your agency must emphasize core values by building stronger relationships with its current clients and, in turn, their consumers, the agency must also realize that it is the perfect time to start forging new relationships with marketers. And it may be in the agency’s best interest to cast a wider net. The fact is the best time to introduce your agency to a prospect is when they are not looking for an agency. It takes the edge off of the entire introduction and no one is “selling” anything. However, you’re doing something much more valuable; you’re building trust, interest and the foundation of a potentially long-term relationship.
And when the economy is in the rebound stage, your efforts of exemplifying value, strengthening old relationships and building new ones will help your agency to thrive, rather than just survive a perfect storm.
Leslie Winthrop and Lisa Colantuono are executives at AAR Partners in New York.