Seo advertising

Recession fears mean SEO agencies must prepare for the big unbundling

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As old Jim Barksdale, CEO of Netscape famous: “There are only two ways to make money in business: one is to bundle, the other is to unbundle”.

Ever since the concept of search engine optimization (SEO) became a thing just over 20 years ago, marketing agencies have been locked in an arms race. They have developed new tactics, tools and approaches to help businesses rise to the top of search engine results pages (SERPs).

They’ve also worked to bundle their services together to provide customers with everything they need to thrive online at one price. For businesses, this has been an attractive proposition. After all, in the type of bull market cycle we found ourselves in for many years leading up to the pandemic, successful businesses value certainty and simplicity more than bargains. And they prioritize extraction over efficiency. This made it easier to sell one-stop-shop offerings from SEO agencies.

But the SEO industry is about to face something it, along with many other industries, hasn’t seen in some time: a major recession. In the cycle in which we now move, it will be efficiency and frugality that will prevail.

Except for 12 to 18 months in the the first years and all of 2008, recessions just haven’t been something that SEO agencies have had to deal with. Simply put, the SEO industry tends to be younger, which means most current experts and agency owners have never experienced a recession before. And the impending recession threatens to mark a tectonic shift in the SEO market. This will create the conditions for what I have taken to calling “the great unbundling”. Here’s what that means and what SEO agencies need to do to prepare.

Related: 5 Ways to Support Business Growth During a Recession

Why recessions force businesses to seek cost savings

When recessions hit, companies look for ways to shore up their capital base. This means that they are looking for almost every opportunity to reduce their expenses. But research shows that companies that cut marketing spend during a recession fare worse than their competitors. They also take longer to regain momentum once the recession is over. So in shrewd companies, marketing budgets often escape the axe.

But that doesn’t mean companies don’t change. How? ‘Or’ What they spend their marketing budgets when recessions hit. In fact, a large-scale Harvard Business Review study found that the key to coming out of a recession in good shape was to do a mix of defensive and offensive changes strategies and expenses.

When it comes to marketing, you better believe companies are going to start digging into the most important numbers on their marketing agency bills. At my company, we are already seeing this starting to happen firsthand. There has been a pronounced increase in company comparisons for various individual SEO services, indicating that they are beginning to do the math to see if the package offered by their current agency is still the best way to go.

Related: How to make your business stand out from the noise

What agencies can expect as the recession sets in

For marketing agencies, all of this means that continuing to offer only bundled services is about to become a liability. The plans work by combining a suite of related services – and all the fine details of how they interact with each other – into one convenient package at a single price.

As customers begin to assess their spending levels, they will naturally start trying to isolate individual costs in their marketing strategies. But because the bundles are presented in a way that is difficult to deconstruct, it is very difficult to compare the individual elements. This will lead to two things.

The first is an increase in uncomfortable conversations between corporate decision makers and their agency’s marketing reps. These conversations are going to include questions about item spend and why it doesn’t seem to match open market listing rates. The answer, of course, lies in convenience – such as the company not having to manage an array of individual SEO experts and freelancers to implement its marketing strategy.

Related: Elon Musk doubles down on recession fears, says it’s ‘inevitable’

But as the recession begins to bite, that won’t be reason enough for a company to stick with bundled services. Agencies will have to compete with SEO freelancers who are, by nature, more agile and able to adapt to changes in demand. They are also often specialists, so agencies will need to be world-class in their field to make their offer more appealing than an individual expert.

The second thing that will happen is that a significant proportion of companies will complete their cost/benefit analyzes and decide that they can optimize their marketing spend by looking elsewhere. They will see an opportunity to ditch the nice extras that come with a bundle in favor of more targeted solutions in link building, content creation, and SEO tools like Ahrefs, SEMRush, and AI content tools like Clearscope or MarketMuse. This will put pressure on agency results and put them at risk of becoming recession victims themselves. That is, unless they themselves take decisive action.

In a recession, consolidation can work when the whole is less than the sum of its parts. This can make sense when going for contribution margins, like in hard cost areas like e-commerce and retail, for example, where they have inventory to clear. But it’s less useful in knowledge work where the inventory is time.

How to Navigate the Great Unbundling

For agencies that depend on bundled services for a significant portion of their revenue, now is the time to act. There are a handful of metrics that could mean the difference between retaining valuable customers and losing them for good. The first is the most obvious:

Start unbundling your services and preparing à la carte offers as soon as possible, even if you don’t immediately announce to customers that you are doing so.

This will at least prepare you for some of those uncomfortable conversations that will soon start happening. But this is only the first step. The next thing to do is to look for automation opportunities in your existing internal workflows. This will help make your customer-facing operations more efficient and less costly. It will also give you a leg up on the game as automation will soon become a bigger part of the conversation as it is one of the few deflationary levers available in the economy.

Because automation requires an up-front investment, the savings generated may take time to realize, but many agencies will find opportunities in low-hanging fruit that they have overlooked so far. The savings will become an essential financial reservoir to help accomplish some other necessary steps. The first is to absorb costs as you adjust your unbundled prices to be more in line with what your customers can find on the open market. And the second is to allow you to continue to pay your staff well – those who do the most valuable work for your customers. This is how you’ll retain your best talent, so you’ll be ready to capitalize on new opportunities when your competition falters.

Finally, consider creating SEO courses and training to entice your customers to stick around. These are value-added items that can be a key part of bundles, but since they have a one-time setup cost, they pay off more over time. By turning your agency into a valuable resource beyond just the services you provide, your clients will see you as a partner in their fight to ride out the recession. When this happens, they are more likely to reward you for their loyalty. This will help position your agency where it has the necessary reserve liquidity to gain additional market share in the aftermath of the recession. Surviving a recession is seen as winning by some, and your market share will increase simply by outliving your competitors.

Related: Marketing departments are smart to thwart the “unbundling” trend

The path to follow

The SEO industry is in uncharted waters. Relatively few people in the industry have experience dealing with a major recession. But there is plenty of evidence of how companies react when one hits, which means SEO agencies will soon see their clients wondering if the convenience of bundled services is worth paying for. . When they do, agencies will have only two choices: they can give their clients what they want, or they can cling to a business model designed for better days. What do you think you’d better choose?