The 4A’s Latest Mission: Drawing Up ‘Recession Proof’ Plan For Agencies


Whether the U.S. and other countries are in a recession or soon headed for one is being debated by experts, but there’s no argument that inflation has soared this year, economies around the world are slowing down and the financial markets are in bear territory.

The good news for the ad industry is that advertising growth overall is holding its own with predictions of double-digit growth this year and mid-single digit growth for next year. At least for now.

Still, with economies contracting there is wide-spread uncertainty about just how good, or bad, the next year will be.

With that uncertainty in mind the Four A’s (American Association of Advertising Agencies) is outlining steps that its members can take to be as “recession proof” as possible. A new publication outlining a range of potential actions will be out in the next few weeks.

4A’s President and CEO Marla Kaplowitz says that agency executives should focus on three key areas as they prepare for the next year, including talent, business development and financial stewardship and operations.

Developing and retaining the strongest talent is the top challenge, Kaplowitz asserts. While some might be tempted to cut back on training and other development programs, she strongly advises agencies against doing so. “They should be doing more, not less” in those areas, she adds. The pandemic hindered talent development and nurturing efforts, given the lack of face-to-face onboarding programs amid lockdowns.

With more people back in the office at least part of the week, now is the time reinforce programs to help staff be better leaders, managers and communicators, says Kaplowitz. And more broadly agencies should review benefit packages to be sure they are competitive with other agencies and other sectors, like technology, known for its generous benefit packages. Parental leave is one benefit that more staffers are attuned to, she said, including younger employees who aren’t parents yet but are thinking ahead.

As for business growth, maintaining a diversified client portfolio is key, said Kaplowitz. During the pandemic some agencies that were focused on travel, for example, were hit hard. Agencies must focus on strengths and diversifying those strengths will help agencies better navigate rough patches that hit the economy going forward.

Kaplowitz also urges agencies to be selective in choosing which pieces of business to pitch. “You’re not going to be right for everything,” she says.

Also, agencies should go beyond their contractual remits with clients in an effort to build true partnerships. One way to do that, she suggests, is to offer unsolicited ideas on a regular basis that will help grow clients’ business. Agencies that did that during the pandemic, she notes, “helped clients get through that.”

Finance and operations isn’t necessarily the “fun side” of the agency business, but it is critical to success, Kaplowitz says. One focus might be discretionary expenses, which can be detrimental to an agency’s health when hard times hit if strict controls aren’t in place.

“Avoid long-term financial commitments,” she said. Case in point: Extended payment terms for services. That can be a delicate discussion with clients, but agencies have bills to pay just like every other company. Agencies, she added, “need to push back” on unreasonable requests (or demands) in that area.

Resilient agencies stay focused on the must-dos with an eye on identifying new opportunities, which could help secure an agency’s future, Kaplowitz says.

This article first appeared

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Steve McClellan

Steve McClellan is the Editor of MediaPost's Agency Daily (MAD).

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