‘Ghost recession’ agency survival guide: The top 10 actions to navigate a brutal 2024
According to agency growth advisor Chris Savage, founder at The Savage Company, Australia is in a 'ghost recession' with a third of agencies struggling to survive. Here, he offers ten tips to surviving.
These are the worst creative and communication agency trading conditions in 10 years (the first four months of Covid lockdowns excluded).
That’s what scores of agency leaders are telling me. Yet there’s little public commentary on how tough it really is for agencies, a third of whom are literally struggling to survive.
Marketer Andy Lark calls it a ‘ghost recession’. It’s in the room. Some see it, acknowledge it, face it. Others sense it. Many are oblivious, or choose to ignore.
My analysis from around 100 agency leader discussions, across all capability swim lanes (I speak to indies only: most holdcos are in serious decline in Australia, though they’ll duck and weave if you ask them) suggests this:
- One out of six agencies are doing really well – they’re in the right space, have clients spending big, happy days
- Three out of six are working harder than ever before: costs have risen 20% in the past two years, clients are demanding more for less, and they’re only just making some progress, or holding the line, generally with lower margin profitability
- Two out of six are struggling. They have minimal visibility on revenues six weeks out, a constant ‘just in time’ monthly struggle to convert revenue to cover payroll.
We’re seeing more ‘mergers’ and ‘acquisitions’ being announced. Many are simply dying agencies being absorbed by stronger firms. Little cash is changing hands.
Expect 2024 to remain super tough in our industry. If you’re an agency leader in the five out of six not thriving, here are the top 10 actions to survive. Remember, conditions are always perfect. The agencies I have led or owned grew faster during tough times than good. We worked harder than ever before, and focused energies on these 10 strategies.
1. Sharpen positioning
Agencies look and sound the same. Review your positioning. Does is clearly claim to solve a burning client problem? Clients are desperate for growth. Does your positioning promise a secret source to deliver it?
2. Love the one you’re with
Be super-focussed on keeping and retaining current clients. Look for problems to solve. Listen like thieves. Move with pace to adapt narrative and solutions to directly address their burning issues. You’ve got a one in two chance of selling something to an existing client. Get feedback- regularly. Be relevantly proactive, but only if clients have confidence you’re delivering on work already approved.
3. Best-ever marketing
Marketing works! Drive a best-ever marketing program. Be visible. Be a little controversial. Be seen. Most importantly, keep in touch regularly with your contacts. You need to be top-of-mind when they have a need.
4. Drive your new business pipeline, relentlessly
You’ve got a one in four chance of selling something to dormant and ex-clients. Focus here. Develop ‘bait’ – IP or insight – to offer in return for a 30 minute meeting. Get in the room. Show your vibe. Have ‘land and expand’ products to get them trying your agency. Be easy to buy.
5. Be brutal in what you decide to pitch
Clients are pitching more often, with longer ‘short lists’, onerous briefs, and with less money on offer. It’s a mug’s game unless you can unlevel the playing field, or have insider advantage. Unless you have an inside track, focus on existing clients, and the people who know you.
6. There’s no growth without pruning
As any gardener know, there’s no growth without pruning. Now is the time to prune your cost base. It’s hard to do. Running a commercial business is not for the feint hearted. If you’re running a club, where members are cosy and safe, and you are happy to accept minimal profit and even losses, fine! If you want to survive and thrive, get on with it. Do not delay.
7. Receivables- get the cash in
Meet weekly with your finance bods. Be absolutely relentless in getting bills paid, fast. Talk to clients. Ask for shorter terms. Pull in favours. Chase as soon as you need to.
8. Innovate products for the recovery
The market will turn, and money will flow again. But structural change afoot means it won’t come back the way it was before. There’s even more money going into the technology platforms, in-housing is real and growing, off-shoring is a happening thing, and AI is beginning to flirt with our revenue streams. Find time to evolve your offer over the next nine months. New products. New value. New relevance.
9. Get the team back in the office FFS
Get your team back in the office, now. Three days per week, non-negotiable. Ideally four. Productivity is dropping dramatically in our industry. It underpins profit declines. Better work happens when our people are together. We need to lift energy, standards, momentum, creativity, service. YES we need flexibility and practical fairness. Start though by getting your teams back into the office. Now.
10. Be brutal in hiring the right mindset, and cost
Sometimes we have to spend money to make money. As the market turns, we will need to add resource. Focus on hiring at 20% less remuneration than you did a year ago. There will be plenty of talent available come August this year. Hire the right mindset: talent that wants to come to work, to be part of a team and is prepared to lean into a concerted effort to be better for clients, and for each other.
Conditions are always perfect. 2024 is going to be extremely tight for many agencies. Keep the faith. Take action across the 10 strategies outlined, and you have a great shot of coming through this with momentum, strength and sustainability.
Chris Savage is founder at The Savage Company.
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Far out. Some of these comments are just so nasty and naive. For those with the snide comments, you clearly have absolutely no idea how to run a business. It’s just so easy to bring people down, than to actually grow something yourself. For someone who has been running a business for over 10 years, Chris’ wisdom and insights are invaluable. Things are tough out there – redundancies are coming. Maybe when more happen, there will be less snide remarks and more motivation to work out how to make things work in a tough environment.
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“Productivity is dropping dramatically in our industry”
is it though? Pretty sweeping statement and the assertion is a lack of in person is the cause.
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Most holdcos are in serious trouble (but I don’t speak to them) – riiiiight.
If you did, or tried harder to do so, you may have got to some better, more rounded analysis.
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This advice is incredibly antiquated and reminds me of the old consultancy hustling days. So glad to be out of this crowded marketplace.
Pay people less, don’t let them have any flexibility despite saying that you do, claim that WFH equals low productivity, hassle your clients relentlessly etc. Why would anyone want to work in this environment?
Clients worth having are changing and won’t tolerate mindsets from the 90s.
AI isn’t flirting, it is already sleeping with your clients so get onboard.
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A few anonymous ‘experts’ having a crack here, Chris. Thank god they are not ‘helping’ lead my agency. We’d be broke in no time, with our culture also up the proverbial creek.
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Fair point. I get my in sight on this from the publicly released financial results and also, well, I DO speak to some of them…and that’s what they (mostly) tell me!…. Chris
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Thanks. What are your thoughts on what agencies should do to rebound? Keen to hear and share. Chris
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While there’s some merit with the hiring sentiment, I think this is an oversimplification of myriad challenges in today’s climate. The world’s moved on – you have to move with it. The ‘analyse’ doesn’t seem very scientific either. Pure lead generation.
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Thanks! It IS a crowded marketplace… that’s part of the issue.,..and agencies need to build a bridge to re-emerge with a new, updated, relevant and sustainable model. The bridge starts with staying in business and trading through a rough year. Urgent action is needed by many to be able to do so. What are your thoughts and ideas on what agencies that are finding it tough can do NOW to keep their businesses trading through and to buy the time to reinvent? Keen to share thinking . Chris
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This strikes me as hustling (hassling) for a quick buck over building longer-term genuine sustainable growth. Sure agency leaders (who are insecure of their value prop) can crack the whip and run around like angry lunatics, but everyone’s going to want to leave them for doing so. Both clients and staff. Seems to me that the consultancy game needs to sell the notion that “agencies are getting taken for a ride”. A bit of a tired and disproven (for the most part) trope.
I’m also reading elsewhere that we’re back at the lifecycle stage of the disappearance of the CMO. Why might that be? Perhaps agencies should spend more time dedicated to solving the business challenges of their clients and not “calling in favours”. Value exchange needs to be a two-way street.
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“Develop ‘bait’ – IP or insight – to offer in return for a 30 minute meeting.”
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Sage advice I’d say. Thanks Chris.
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