Article - The Current Crisis and How it Affects Your Agency

READ: 1 min
AUTHOR: Robert Craven

We are about to become what The Economist refers to as a ‘Shortage Economy’.

Post-Covid, spending has gone bonkers. The surge in demand is so strong that the supply chain appears broken.

More importantly, the decarbonisation agenda has meant a greater vulnerability to gas prices (up 60%).

And now we have protectionism: global trade policy is more about politics than trade efficiency.

The good news is that energy prices should calm down after the winter. However, the underlying issues (decarbonisation and protectionism) show no sign of abating.

Boris claims the UK is moving to a “high-wage, high-skill, high-productivity economy”. As an aside, he originally refused to link the current economic situation to Brexit but now he claims it is the natural consequence of Brexit.

I struggle to see this high productivity economy right now. Yes, wages are rising, but so are prices. And the squeeze on household incomes continues (energy bills, empty petrol stations, supermarket shortages, end of universal credit top-up). Quite how the government has reframed the shortage of HGV drivers as an omen of great things to come for all of us is beyond my sense of logic. Putting up barriers to migration and to trade will more likely pull us in the direction of economic failure.

So how will this impact digital agencies?

Your team will be under increasing pressure. Their home bills will visibly rise and they will see their colleagues’ wages leaping up around them. Expect some to leave and many to ask for a pay rise.

Your clients will be under the cosh. Manufacturers will have the additional burden of massive energy rises. Others will be wary as they watch the twin evils of inflation and labour shortages. Not a great combination with a whiff of the old stagflation, when factories ended up on a three-day week and we had power cuts most days of the week. 

The ad platforms will be desperate to maintain their meteoric ad spending growth to maintain their share price increases. At the same time the post-Covid malaise has reached and permeated the more nervous agency customers.

As usual, what you will see will depend on who you are and where you are in the market. The high-flyers may well continue to fly high, while those having a rough time may find life even rougher.

Most agencies will feel the pincer movement of rising costs and increasingly demanding (and often penny-pinching) customers.

We have seen more agency owners looking to bail out than ever before. Many have just had enough and feel beaten and ill-prepared for the next battle. The industry will see another clear-out of the vulnerable, which should be a good thing for the survivors.

More than ever, your clients want to buy with confidence from someone with a proven track record. Someone who can help them navigate the mad world out there. As usual, you need a great back-to-basics approach: an awesome business development machine, an awesome business delivery machine: an obsession with systems and processes underwritten by a great culture.

To quote the Billy Ocean tune, “When the going gets tough, the tough get going.” Enjoy.