Are You Firing Your Internal Marketing Team in 2023? If So, What's Next?

Corporates and agencies alike are up in arms about the predictions and prognostications for 2023's inevitable marketing malaise. 

Marketing budget backpedaling is nearly inevitable in light of inflation spikes and the Fed's rising interest rates. 

But let's let the data do the talking. 

Here are a few stats courtesy of Axios:

• Per GroupM, U.S. ad revenue growth is expected to slow to 5.9%, down from the June 2022 estimate of 6.4%.
• Per Interpublic Group's Mediabrands Magna unit, U.S. ad revenue growth for 2023 was also adjusted to 4.8% growth from their June 2022 prediction of 6.3%.
• In China, where further COVID-19 lockdowns are causing major disruptions, the ad market is expected to shrink to a measly 0.6% this year and then rebound to 6.3% growth in 2023. Previous estimates in December 2021 had these estimates at 10% and 3.3%, respectively. In fact, the U.S. shifts above are primarily attributed to the larger shocks coming from the Chinese market.
• In the U.K., ad revenue growth is expected to hit 6.2% through 2024, barring any external shocks like more lingering impacts from the Ukraine war and the pandemic.
• 21/31 markets are expected to have increased ad budget forecasts while the remaining 10/31 are expecting "no change."
• Retail ad media revenue is actually expected to grow in 2023 from $101B to $110.7B.
• Connected TV ad revenue is expected to have double-digit growth over the next four years.

Big Layoff Meets Big Tech

Large-scale layoffs are occurring in some over-hired areas in the tech sector. 

Facebook, Amazon, Microsoft & Google, and a number of private unicorns have experienced large-scale layoffs in the last few weeks. Jeff Bezos' Twitter comment gives valuable insight into the overall sentiment well:

Furthermore, tech-heavy NASDAQ has seen heavy losses as growth companies tighten their belts. 

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Unfortunately, many such layoffs often occur in what are viewed as non-critical areas, including marketing.

Opportunities Abound for Marketing Agencies

Regardless of where you think things are headed, where there is pain, there is even greater opportunity. 

Because we try to adhere to a growth mindset, we actively seek opportunities rather than crawl into a hole. 

Let's innumerate just a few.

1. New Business Creation is High (Including Marketing Agencies)

Layoffs almost always coincide with a rise in startup formation. 
Marketing agency startups are one such sector that is likely to grow in the coming months. 

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As such, marketing agencies are also likely to experience a peak in demand for outsourced work, including white label digital marketing efforts from partner agency clients. 

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This presents a unique opportunity for both new and existing agencies that can partner on exciting digital marketing projects.

2. Hire One, Get Many

The effective internal marketing strategy and function do not evaporate with layoffs. 

While layoffs may cut immediate costs inside larger organizations, there are still functions and tasks (at least minimally) that need to occur in order for the business to function at least at a status quo level. 

Said tasks either require the existing marketing headcount to work harder and longer (a phenomenon we saw in the layoffs of 2008), or corporations may be prone to look for outside help from an agency. 

Here are some arguments as to why the agency model is of benefit in such a scenario:

• In-house marketing managers are often pulled in multiple directions and may not be given the budget for a full-stack marketing team with all the capabilities needed for scaled growth.
• When situations become complex and difficult, a team of in-house marketing managers may be limited in their ability to problem solve their way through challenges.
• For the cost of hiring a single in-house marketing rep, you may get part-time help from a marketing team that can view your internal marketing strategy from multiple lenses and frameworks.

An outside perspective is almost always helpful in seeing the opportunities in spite of the challenges, all within a budget that is likely smaller than hiring an internal team to assist.

3. Competition Favors Incumbents

In the competition for limited or smaller budgets, incumbents have a greater chance to make waves and land new business. 
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They have the experience and work portfolio that showcase their ability. 
An established marketing team leads with sturdy internal marketing efforts, systems, and processes, too.

4. Agency Costs Can Be Flexible

Tighter budgets typically equate to greater ebb and flow based on real-time internal revenue adjustments. 
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Agencies like recurring revenue too, but the reality is they're contractors whose services can be purchased a-la-carte and when needed. 
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Such a relationship means marketing budgets can be flexible without having to fire and hire internal staff, which can tank morale and cause legal employment issues. 
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Outside contractors solve this in-house issue with on-demand assistance. 
In such scenarios, hiring a marketing agency may trump the hiring of full-time, in-house marketers.

5. Tight Marketing Labor Market Favors Agencies

Finally, a tighter labor market favors the agency model, especially when hiring freezes are present:

• A greater supply of labor vs. tight demand helps put the power back in the hands of hiring companies and marketing agencies and not the employees (unlike what we saw with the pandemic)
• Salaries flatline or decrease, and talent quality is often elevated.
• Agencies who are able to execute on some of the other points will find themselves at a much greater advantage with a better labor force at a lower price.

It is also interesting to note that even with larger layoffs on the horizon, some 50% of workers are still looking to quit.

Some Other Silver Linings

Not all is gloom and doom. Some silver lining exists. According to GroupM, we are likely to expect:

• Limitations of large declines in particular market sectors (cryptocurrency, anyone?)
• Some large advertisers expect gains and growth despite market caution.
• New business creation remains high.
• Unemployment still remains at historically low levels.
• As an overall sector, digital media continues to expand, not contract (slowing growth is still growth, in spite of overall market declines)

CEOs and investors at various levels are split on how they feel the next 6 to 12 months will shake out. However, there are some inelastic industry sectors that are more likely to thrive and that marketing agencies tend to target during recessions. 

To name just a few:

• Healthcare, including the likes of general practice doctors, dentists and other medical professionals and specialists. Those that provide more elective procedures may not be so inelastic to revenue declines.
• Consumer goods and consumer staples sectors like food, groceries, toiletries, and other necessities.
• Discount retail (think Walmart)
• Utilities like electric, water, sewer, garbage and gas. Industries the service these sectors are also typically resistant (e.g. HVAC, plumbing, etc.)
• Freight and logistics companies
• Baby products and services
• Sanitation services and cleaning products
• Debt collection companies
• Accountants, CPAs, and some areas of financial advisory

There will be pockets elsewhere that are also likely to weather the storm over the months ahead.

Adaptation is Critical to Survival

Whether you're a corporation or one of the marketing teams that serve them, adaptation is paramount heading into this coming year. 
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The best marketer is a chameleon, able to adapt to its changing surroundings, all while providing incremental value to the company's brand, preferably above the cost. 
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We'll continue to work to nail that internal benchmark for each of our white label SEO clients as we head into 2023.
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