Indie Agency Leaders, Assemble! How Economic Uncertainty Can Foster an Environment for Growth and Innovation

On the global stage, China is an economic behemoth. As the second largest economy in the world, China’s ever-evolving economy is an important source of global demand. This year, however, there has been a distinct lack of clarity on the country’s economic status, with the country’s GDP deflator reported a 1.4% fall in the second quarter of this year – the biggest decline since 2009.

Despite this, Humphrey Ho, managing partner of Chinese agency, Hylink Group, maintains an optimistic outlook that he hopes to pass on to his clients. “Economic uncertainty fosters an environment for innovation and reevaluating what was once considered unbroken,” he says. “Deflationary risk in China can be positive for brands and consumers. On the flip side, there is a low-interest environment where the Chinese Central Bank continuously lowers interest rates to spur spending. These circumstances particularly impact the 400 million-strong middle-class consumer group, which remains steadfast in pursuing an improved lifestyle encompassing travel and global experiences.”

Shifting priorities to encompass newly set goals, structures and austerity measures is all part of adapting to ever-evolving economic parameters, and Humphrey urges clients to lean on agencies like Hylink Group for the broader business advice they can offer. “These difficult times have brought about the integration of agency relationships that were once fragmented or multifaceted. Agencies capable of providing a comprehensive range of services, including in-house, digital, creative, traditional, PR, and web development, have reemerged as more favourable options than industry pure-play companies.”

Kara Mitchell, principal of client services at US-based Mintz + Hoke, shares this belief that uncertainty - economic or otherwise - has the potential to bring about opportunities, if looked at through the right lens. According to Kara, one prevalent byproduct of 2023’s economic uncertainty is the emerging trend of a ‘cost centre vs profit centre’ mentality. “This has been exacerbated in certain industries where additional industry-specific dynamics—beyond just the challenge of a looming recession—are at play.”

“Take the financial services industry where they have also had to contend with the regional banking crisis. While many financial services clients are not directly involved in the banking crisis, they have been taking a more conservative approach to communications. However, sometimes clients are so focused on growth they forget about retention. They forget about the importance of internal communications and customer communications.”

In order to circumvent this thinking pattern, the Connecticut-based agency has been applying a “here and now” approach and to see market cycles as exactly that, cycles. “The natural instinct in uncertain times is to pull back when we all know that’s the time we should be leaning in,” explains Kara. “We work with clients to help them see the importance of looking beyond the immediate period. Market cycles will pass, and we need to be prepared for what lies on the other side.”

“We see this is an opportunity for marketing to take a leadership position internally in its organisations and demonstrate value by bridging connections across internal disciplines in service of better customer experiences. And it’s an even bigger opportunity to build transparent relationships with existing customers, to build loyalty” she explains. 

Matt Babazadeh, head of strategy at US agency Zambezi, shares a similar sentiment when it comes to demonstrating value to customers and ensuring brand strategy can be the key driver of value. “Consumers are willing to pay more for brands that they believe are additive to their lives,” he says. “That addition can take many different shapes and sizes — a product that makes their lives easier, a brand that signals their values, a community that they take pride in joining, and many others. The role of strategy is to evaluate those value drivers and assess how they’ve changed in a new recessionary environment.”

“Instinctually, price is a factor. But we can’t lose sight that this is also a more emotional time for consumers. And demonstrating empathy in different ways than money can drive brand value as well,” he concludes. 

Brazilian agency, Propeg, has been practising empathy as they help brands in less secure markets persevere with strategies to combat the recent economic uncertainty market. As a market, Brazil has remained economically optimistic - due, in part, to a new super cycle of commodities and low inflation period - but Propeg CEO, Vitor Barros, has made it a priority for his agency to focus on understanding clients’ key pain points, in order to help them position themselves during economic downturns. “Unfortunately it is common to see that marketing costs are one of the first to be cut during a cost-reduction moment. When this happens we partner up with clients to understand: how much do you need to reduce? Then we give them their reduction in the form of a strategy so that the brand suffers less,” says Vitor. 

“We feel that being a client’s agency is more of being a partner rather than just a marketing supplier. We try to understand profoundly how the business works and how it’s structured,” says Vitor. “As in a marriage, a relationship between clients and agencies should withstand good times and bad times – in fact, it’s even more crucial to have a good agency alongside a business during the bad times.”

Despite the different economic temperatures in Brazil, China and the US, all three leaders agree that the value of an agency partnership is imperative to a brand’s success during uncertain times. The most crucial aspect of this relationship is  the business strategy that underlines everything, as Kara sums up perfectly; “Having a solid brand strategy that is defined, understood and catalysed throughout your organisation, is critical. At its most basic level, defining the brand’s positioning to unify the entire organisation around a common belief is the most important step in ensuring a consistent brand experience externally.”