That is what we are headed for if you believe business leaders, most economists and the press. Unless of course, the president and Congress come through with an agreement and can evade the fiscal cliff before Dec. 31, 2012.
Is your organization ready and have you thought through all the potential marketing and branding issues should this become a reality? As one of our clients said, "I am not sitting on my hands waiting and hoping. We have a plan and I will pull the trigger, if need be." If you haven't done the same you should. Clients -- together with their agencies, production shops -- need to sit down and draw up precautionary measures so they are prepared and ready.
Here are seven suggestions we are making to our clients. Everyone won't agree with what we are proposing, and it might seem drastic to some, but for marketers protecting your brand equity it is critical and so is transparency and being upfront with your agency and other outside partners.
Fiscal summit: Client and agency leaders and their respective financial teams need to draft an action plan and timeline. Everything should be on the table with potential cost savings clearly identified. This is a time for partnership and solutions (some of them will be hard) and not a time for individual agendas.
Scope of work prioritization: Categorize and prioritize all 2013 scope-of -work assignments. Sort them into three categories -- must have, nice to have and cut. Depending on the severity and length of the crisis, this will help the team make critical decisions at critical times.
Revisit agency staffing and compensation: Don't blindside the agency. If the fiscal cliff happens, cutting agency fees and staff will be a necessity. Just look what happened in 2008. It's also a good time to revisit and benchmark blended rates, overhead rates, etc.
Put agency on notice: This sounds severe and we are certainly not recommending the agency be fired. But, most agency contracts have a 90-day notice period and clients need to be honest with their agencies while protecting their marketing budgets. You don't want to be two months into the crisis to start talking. Remember, you can always go back and take it off the table if the crisis does not happen or is short lived.
Put new initiatives on the bubble: This may be hard, but no one is going to be in the mood for new marketing efforts if the crisis is as bad as predicted. Get everything ready, but wait until you have a more clear vision of the future before launching anything new.
Postpone production: If your business can, use what you've got and not initiate any expensive new productions. By delaying them until February 2013 (or later), you will protect these dollars.
Flexibility of media and marketing plans: Look at all your current media commitments through the 1st quarter of 2013 (maybe beyond). Understand what you are committed to, what you can get out of and what lead times are necessary to shift spending.
No one wants another recession, but most economists predict it is not a question of "might happen," but "will happen" unless a solution is found. Late last week progress seemed to be being made in talks between Congressional leaders and Mr. Obama, but unfortunately history does not give us any great confidence that a solution will be hammered out. By preparing a plan and being ready to act, agencies and clients can get ahead of the curve. At the end of the day, the best news would be to throw that plan in the trashcan and get back to business as normal.
Unlike most crises that sneak up on us, this is one that can be predicted. And, there is no reason not to prepare.
Are you ready?