Three Areas to Think About as Economy Wavers

Before I went to Italy and got COVID, I went to the gym three times a week. One of the things I learned while at the gym is that the only way to see results—be that weight loss or strength building—was if something was hard. If you don’t stress your muscles, you will not develop stronger muscles.

There’s no denying that the economy is in a far different position today than it was six months ago. As a result, advertisers are a bit skittish and trying to decide whether they should invest now or hoard cash.

It’s the same position we found ourselves in mid-March 2020. The big difference between the beginning of COVID and today is that if we are heading for a recession, we have no idea what type of recovery we will have. Could we bounce back? Maybe. According to the National Bureau of Economic Research, the average post-World War II recession takes ten months. Could it take that long this time? Who knows?

After assessing the financial situation and ensuring that you are going to have the necessary cash in the bank to survive, there are three steps that I would think about. While Winston Churchill’s “never let a good crisis go to waste” is often used to describe layoffs, I think not doing these three things would also be a colossal waste.

Systems

I want you to rewind for 12 months and think about what the ad markets were like. Then, I want you to ask yourself the following questions:

• How much time does my sales team spend not selling?
• How much time does my creative team take to create a sales deck?
• How much time does it take to respond to an RFP? And what was the win rate of said RFPs?

This is just on the revenue side. Questions you could be asking about your content include:

• How many sources do we have per story?
• How long does it take to copy-edit a piece on average?
• How much time is my editorial team spending on non-editorial functions?

Every department at your company has systems. It’s how things get done. But once enough time is spent with a system, it gets calcified. Maybe that’s not such a problem when things are flush. But when things get more challenging, inefficient systems require more resources to complete the same work. And that’s a problem.

Let’s use that first sales question as a starting point. “How much time does my sales team spend not selling?” I don’t mean whether they are hard-working or not. Instead, I think you should determine how much time they spend doing other work that has nothing to do with bringing in dollars. It’s very easy to lose sight of what the actual focus of a strong sales team should be, and, before you know it, a solid chunk of time is wasted on administrative or other internal tasks.

There are plenty of other systems at your company that should be audited. You’ll either find efficiencies in time—which means you can get more done or need fewer people to do the work—or you’ll find efficiencies in cost, such as tools that might be redundant or useless. In both cases, understanding what’s what is a great thing to accomplish as things get a little rougher.

Product & prioritization

On Tuesday, I wrote:

As we continue to move into rougher times from an ad perspective, publishers need to know which of their ad products perform the best. Lean into those. Try and optimize your lesser-performing units. If ad spending drops by 5 or 10% in a recession—and who knows what the number will be—you want to be known as a partner that works. And ultimately, there are two levers for performance: cost and ad interaction. The more people you can get interacting with the ads, the less you need to play with the price.

We must create more when things are going great because demand is abundant. They may not be the best-performing ad products, but they work when marketers have a lot of money to spend.

Think about all of those NFT activations. Are they the right way for brands to spend their money? No, of course not. But, they were exciting experiments, and brands could afford to spend.

As the market starts to contract, however, we need to be aware of the products we are offering partners and zero in on what works best. This way, we can focus partners on what will give them the greatest bang for their buck. Again, I’m not saying we need to offer intense discounts, but performance will reign supreme as the economy tightens.

In that same vein, it’s time to focus ruthlessly on prioritization. Are there things you were working on that are not a core part of the business? They might not be worth exploring anymore, especially if you’ve spent a lot of time trying and haven’t seen any success. But, again, this could be anything: an ad product, a paid product, a section of the content, or anything else.

The focus of the business should be mission-critical work.

Experimentation

This sort of mission-critical focus can cause problems, though. If a recession lasts only for ten months, then being too short-sighted could hurt you. On the other hand, by the end of 2023, we could be out of the recession, and you could be looking to make investments again.

That’s why, while it’s essential to be focused on mission-critical work, it’s still important to do some experimentation. During the early pandemic, media companies were experimenting with many different things. Here are just a few that I wrote about:

• Politico launched a brand new newsletter within 24 hours
• The New York Times launched a live blog
• Axios sped up the launch of its App
• Adweek experimented with a daily livestream

None of these were high-resource experiments, but they were opportunities to see how new ideas might resonate with your audience.

But there needs to be a balance here. Just throwing ideas at the wall and seeing how they stick is a “flush economy” mindset. Instead, it would help if you thought about low-fidelity ideas that you can pressure test without committing many resources. As I wrote in early 2020:

When business is stable, many companies get comfortable and don’t innovate. As I said a few weeks ago, during this crisis, we have to adapt. New business models may evolve. And ultimately, we need to experiment with new ideas. You never know what might become a future line of business.

Dig into the business…

Ultimately, this is where the rubber meets the road. We must understand how our businesses operate. We should ask ourselves whether we are doing things because they’re right for the business or because we’ve always done them. We should be focusing on making our products stronger for our ad partners, so they have no choice but to continue advertising with us.

A couple of weeks into the pandemic, I wrote this:

A bad look for the brand… You know what’s a bad look for a brand? Going out of business. No one will remember the good takes or the bad takes; they’ll just remember that the brand went out of business, or worse, forget that the brand existed entirely.

During times of crisis, the most important thing you can do is survive.

You ensure you don’t if you are ultra diligent with the business. And these are three areas worth spending time on while the economy continues to evolve.

Thanks for reading today’s newsletter. If you have thoughts, hit reply or join the AMO Slack. I hope you have a great weekend!