Opinion holder entrepreneur Contributors are their own.
As former Netscape CEO Jim Barksdale famously said, “There are only two ways to make money in business. One is bundling and the other is unbundling.”
Marketing agencies have been in an arms race since the concept of search engine optimization (SEO) was introduced over 20 years ago. They have developed new tactics, tools, and approaches to help businesses reach the top of search engine results pages (SERPs).
We have also worked on bundling our services to give our clients everything they need to be successful online at a single price. For businesses, this is an attractive proposition. After all, in the years-long bull market cycle leading up to the pandemic, thriving companies valued cost certainty and simplicity over bargains. And they value extraction over efficiency. This makes it easy to sell your SEO agency one-stop-shop service.
But the SEO industry, like many others, is about to face something it hasn’t seen in a while: a massive recession. Efficiency and frugality will win out in the cycle we’re heading into.
Aside from the early 12-18 months of 2008 and the whole of 2008, the recession wasn’t something SEO agencies had to deal with. This means that the SEO industry tends to be skewed toward the younger generation, and most of today’s professionals and agency owners have never experienced a recession. And the looming recession threatens to signal a seismic shift in the SEO market. That would create the conditions for what I call “great unbundling.” Here’s what this means and what SEO agencies should be prepared for:
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Why the recession is forcing companies to cut costs
When a recession hits, companies look for ways to strengthen their financial base. That means they are looking for every opportunity to cut spending. But research shows that companies that cut their marketing spend during a recession do worse than their competitors. It also takes time to regain momentum after a recession is over. As such, marketing budgets are often wasted in shrewd companies.
But that doesn’t mean business won’t change how They’re spending their marketing budgets when the recession hits. In fact, according to an extensive study by the Harvard Business Review, the key to coming out of the recession on good terms was a combination of defensive elements. When Aggressive changes to strategy and spending.
When it comes to marketing, you better believe that companies will start digging into the top-line numbers on marketing agency bills. This is already happening at my company. We’ve seen a notable increase in business comparing and buying various individual His SEO services, and we’re starting to do the math to determine if the bundles our current agency offers are still the best way to go. indicates that
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For marketing agencies, all of this means that continuing to offer only bundled services is becoming a burden. Bundles work by combining a set of related services (and all the details of how they interact with each other) into one convenient package for a single price.
As clients begin to assess their spending levels, they naturally begin trying to separate individual costs within their marketing strategy. However, the bundles are presented in such a way that they are difficult to disassemble, making it very difficult to compare the individual elements. This leads to two things.
The first is an increase in awkward conversations between business decision makers and agency marketers. These conversations include questions about line item costs and why they don’t match his SEO rates on the open market. The answer, of course, is convenience. For example, the fact that a business does not have to manage a string of individual SEO experts and freelancers to execute its marketing strategy.
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But when the recession starts to deepen, that’s not enough reason for companies to stick with bundled services. The agency has to compete with her SEO freelancers who are inherently agile and adaptable to changing demands. They are often experts too, so agencies need to be world-class in their field to offer a more engaging service than individual experts.
What happens next is that a significant percentage of businesses complete their cost-benefit analysis and decide they can optimize their marketing spend by looking elsewhere. They take the opportunity to drop the useful extras that come with the bundle in favor of solutions focused on link building, content creation, SEO tools like Ahrefs, SEMRush, and AI content tools like Clearscope and MarketMuse. headline. That would put agency revenues under pressure and put them in danger of becoming victims of the recession themselves — unless they take decisive action of their own.
In a recession, bundling works when the whole is less than the sum of its parts. This makes sense when looking for a contribution margin, for example in hard-cost sectors like e-commerce and retail where inventory is wiped out. But it doesn’t help much in knowledge work where inventory is time.
How to navigate the great unbundling
For agencies that rely on bundled services for the majority of their revenue, now is the time to act. There are several measures that can mean the difference between sticking with your valuable customers or losing them completely. The first one is the most obvious:
Start decoupling services and preparing à la carte offerings as soon as possible — even if you don’t advertise to your clients that you’re doing it right away.
That way, you’ll be prepared for the uncomfortable conversations that will soon start happening. But that’s just the first step. The next thing to do is look for opportunities to automate within your existing internal workflows. This makes operations for clients more efficient and reduces costs. And because automation is one of the few deflationary levers available in the economy, automation will quickly become a big part of the conversation, so you can stay ahead of the game.
Automation requires an up-front investment, so the savings that can be made may take time to materialize, but many institutions see opportunities in the simple gains they have so far ignored. Savings will be an important financial reservoir that will help you achieve a few other necessary steps. to absorb costs in line with Second, we want to ensure that we continue to pay our staff well for doing the most valuable work for our clients. That way, you’ll retain top talent and be ready to take advantage of new opportunities as your competitors decline.
Finally, consider creating SEO courses and education to motivate your clients to continue. These are value-added items that make up an important part of the bundle, but have a one-time set-up cost that pays off big over time. By turning your agency into a valuable resource beyond the services you provide, your clients will see you as a partner in their fight to survive the downturn. When that happens, they are more likely to reward you with loyalty. Some people think that surviving a recession is a victory. Market share grows only by living longer than your competitors.
Related: Marketing services are wise to buck the trend of “unbundling”
Way forward
The SEO industry is in uncharted waters. Relatively few people in the industry have experience dealing with the Great Recession. But there’s ample evidence of how companies will react when it hits, in which case the agency has only two options. Give your clients what they want or stick to a business model built for better days. Which one do you think is better?
