In 2023, nearly half of all marketing agencies faced revenue declines, and many struggled to attract new clients because of economic uncertainty.

As economic uncertainty continues into Q4 of 2024 and likely into 2025, marketing agencies must adapt to survive and thrive in a challenging environment where all clients are pinching pennies and tracking ROI with every advertising dollar.

Here are three essential ways to help your marketing agency to reverse the declining-revenue trend by focusing on three specific action items.

1. Optimize COGS to under 35% by streamlining fulfillment

One of the most impactful ways to maximize profit and stay afloat in difficult times is by optimizing your agency's cost of goods sold (COGS) to below 35%.

If you can spend less to get your deliverables to your clients without compromising on the results you deliver to clients, then you'll be able to control your agency's destiny regardless of the economy.

To begin, you must meticulously examine your fulfillment processes to uncover inefficiencies that are quietly eroding your profit margins.

Let's break down the process:

1. Create a detailed process map. Begin by mapping out every step involved in your fulfillment process using a tool like Lucidchart. Such a visual representation helps you and your team understand the ideal workflow, identify potential bottlenecks, and ensure every task is accounted for. A process map is the foundation for making informed decisions about where you can reduce costs by improving efficiency.
2. Assign estimated times. Once the process map is complete, assign an estimated time for each step. Doing so helps set a benchmark for how long tasks should take, enabling you to identify where inefficiencies might be lurking. For instance, if a particular task is estimated to take one hour but consistently takes three, you've found a huge area for improvement that will end up saving you time and money.
3. Compare estimates with actual data. It's crucial to compare your estimates with real-world data. Use time-tracking tools to gather accurate information on how long each task actually takes. That data-driven approach allows you to identify discrepancies between expected and actual performance, providing insights into where your processes are breaking down.
4. Use AI tools for efficiency. To address inefficiencies, consider integrating AI tools into your workflow. For example, ChatGPT can assist with copywriting or code review, Midjourney or Canva AI can expedite design tasks, and Opus.pro or Descript can streamline video content creation. Though AI will not deliver a 100% finished product, it can significantly reduce the time required to complete deliverables. Even a 25% reduction in time spent on tasks can boost your team's productivity 25%, translating into substantial cost savings over time.
5. Continually improve. Process optimization isn't a one-time task. Regularly revisit your process map, time estimates, and tracking data to ensure your agency continues to operate at peak efficiency. Small, incremental improvements can accumulate over time, leading to significant gains in profitability and client satisfaction.

2. Prove ROI to retain budget-conscious clients

In today's economy, proving ROI is no longer optional, which is why so many branding agencies are struggling right now. As budgets tighten, clients are more focused than ever on ensuring their advertising spend directly contributes to their bottom line.

Even though proving attribution is a constant struggle, it is your agency's ability to demonstrate clear, measurable results that will determine whether you retain a client or you are replaced by a competitor.

• Implement robust tracking systems. The first step in proving ROI is to implement tracking systems that provide clear data on the effectiveness of your campaigns. That includes monitoring KPIs such as cost per lead, conversion rates, customer acquisition costs, and overall return on ad spend. It is your responsibility to know these metrics even better than your customers.
• Deliver transparent reporting. Regular, transparent reporting is vital to building and maintaining trust with your clients. Create reports that clearly outline the results of your marketing efforts, linking specific activities to tangible outcomes, such as increased leads and sales.
• Use data to drive decisions. Beyond reporting, use the data you collect to drive strategic decisions. If certain campaigns or channels are underperforming, make data-backed recommendations for adjustments. Clients want to see that you're not just executing campaigns but also continually optimizing them to achieve the best possible results.
• Educate clients on ROI metrics. Not all clients will be familiar with the nuances of marketing metrics. Take the time to educate them on the importance of various KPIs and the ways they relate to clients' overall business goals. You are as much an adviser and educator as you are a marketer.

3. Strengthen client relationships through personalized engagement