Stock market crash marketing opportunities, Effects of dropping interest rates, & Trump vs. Harris

As of this recording, August 5th, the stock market had its worst day in 2 years. There was a wipeout of roughly a little bit more than $1 trillion of value from the stock market, the US stock market, mainly from large mega tech stocks.

The Magnificent 7.

Magnificent 7 or 20 or whatever you want to end up calling it. It was just large tech stocks. It was more than just the 7 that was—

Mega cap.

Yeah, it was mega cap. And it's funny when you think about the stock market, most people are like, oh, that's financial, that has nothing to do with marketing. It actually creates a huge marketing opportunity. I don't know what you've seen, Eric, but typically when times get bad, and we saw this at our agency over the last few years because there's been a lot of bad periods, a lot of these publicly traded companies pull back. And what they are, whether you're working with these large publicly traded companies or not, They're some of the biggest spenders on Google, Facebook, TikTok, Instagram, LinkedIn, the list continues on and on. And when things just get really bad with their stock price and they're losing billions in market cap, the first thing they try to do is cut—

Marketing.

Marketing. And it's the easiest thing to cut. You want to cut people? Yeah, you got to turn—

It's harder to cut people. You know, there's emotions and everything.

Severance.

Yeah, severance costs a lot of money. You don't want a bunch of backlash to happen. It's just easier to cut marketing.

And then when things get really good, what's the first thing they add back?

Marketing.

Yeah, because it takes a while to hire people and ramp back up, but not necessarily with marketing. And what we find is in a bad economy, even though you're hurting more, ads tend to get cheaper. You can end up acquiring more customers and taking up more of the market share, you know, while it lasts. And then when the stock market starts going up, Big corporations start spending more, which makes it harder for SMBs to spend and keep up and get the lion's share of the traffic. Yeah.

So, I mean, look, I think right now we've seen crypto's dropped a lot. Bitcoin dropped under $50,000 to $49,000 or so, and ETH dropped like 20% in one day.

Wait, really quick question for you. Sorry to cut you off. You know, people told me Bitcoin dropped to like $49,000 and $50,000. I thought it was in the $50,000 range for a while now.

No, it went up to $72,000. Last week it was like $68,000 or so. Oh yeah, you're right, dude.

I'm looking at the chart. It went from like 60-something, high 60s, yeah, to all of a sudden like $49,000 in less than 7 days. A lot of the drop came in a few days.

Yeah, but I mean, this stock market crash is interesting because it, it triggered from Asia first, right? Like, it's, uh, you know, Japan was— I think they were, they're borrowing US dollars or whatever, and then they used that money to go buy stocks, like US stocks, and then they basically had to unwind the um, this trade. Um, and so, you know, the chickens are, I guess, they're coming to roost in Japan. And, um, you know how the, the yen was really weak against the dollar? Yeah. Now it's like strengthening now.

Right.

And so Neil and I, by the way, we're not economists, but we're just reading about this stuff. Um, so I think, you know, that, and by the way, related to this, Warren Buffett unloaded, he's, he's unloaded half of his Apple shares, I believe. Um, or was it all of it?

Uh, no, 50%. And he owns 3% of, uh, Does he own 3% of the treasury bonds out there? 4%.

Yeah, and then he has $277 billion or something like that in cash.

Or treasuries, I think it's actually called.

Yeah, treasuries. Yes, yes, yes. So he's ready to buy, right? And so like he knows something. Obviously he talks to a lot of people. He knows a lot of things that we don't know. And so, you know, I think the key thing to understand too for everyone here, yes, it's a marketing opportunity. It's a time, you know, if your marketing's going well, there's a time to double down because a lot of people pull back. We've talked about that quite a bit. But also for you personally, when the market crashes, instead of panicking, this is where you get a chance to be greedy when others are fearful. And so, we're not necessarily panicking right now. And I don't think this is the end of it. I think this is potentially the beginning. And I think the Fed is having an emergency meeting as well on this stuff. And maybe there might be emergency rate cut, like who knows. I don't think that's likely, but it might happen.

Is it? The Fed's having emergency meeting on this? I didn't see that.

I think they are, yeah.

I heard the Fed saying, you know, If things get bad, they're open to reacting, but it didn't seem like they gave any signal. Yeah, but I agree, they need to do something about the interest rates. You know, people always talk about business and how one president or another president is going to have a big impact on our economy. What's really going to have a big impact on our economy more than anything else is rate cuts.

Yeah, and the rate cuts are supposed to happen starting next month, which is September. It might happen a little sooner, but By the way, you know what happens when rate cuts happen?

People start spending more.

Recession. It's when the reset— it's when the rate cuts actually happen, that's when the recession happens. And when the, you know, the yield curve, right, when that uninverts, that's when the— because it's inverted right now, um, and basically when that uninverts, the recession happens. So we can get ready for that potentially.

It's funny because when we deal with global 5,000 companies, or even more specifically, when we deal with US large corporations and their marketing spend, what we find is in most US corporations that we deal with, there's actually negative job growth. And there's positive job growth though in the government sector, which is what's propping up the market.

Yep.

And that's why we're still seeing a lot of companies struggle with their marketing. They're still seeing people pulling back on spend. So we're starting to see slow signals of the marketing industry pick back up minus this hiccup here. But this hiccup could turn things around if the government, you know, if it continues and the government doesn't do anything.

You mean turn things around in the wrong way? Exactly.

Because when we look at last year versus this year from a marketing standpoint, last year was bad.

Yeah.

This year—

It's gotten better.

It's bad, but yes, it's gotten better. And we're seeing, we're getting more inquiries from larger corporations.

Same for us.

And we're signing more contracts.

And they sign faster too. Yeah.

Right? It used to be where last year, the time for a contract—

5, 6 months.

Yeah, our contract length for the contract, our pitch to a close almost doubled in time length. And this year it hasn't gone back down to normal, but we saved another month compared to last year. So it's slowly getting better.

Yeah. For us, it sped up a lot. It was taking 5, 6 months and now it's probably taking us 2 to 3 months in a lot of cases. And people are just way more excited. But now with this, who knows what's going to happen? The Fed does need to react. I don't think— my guess still, because we've been talking about this for years, is I don't think a soft landing is going to happen. I think there's going to be some type of recession. Maybe that's a good thing, right? But someone, Alex Becker, you know Alex Becker, right? He wrote a tweet. Do you know who that is?

I've heard of Alex. He's a marketer.

Hiros.

Is he the marketer or no?

He's a marketer, yeah. So he wrote something. He's like the— and I tend to agree with this. It's an election year. The Fed's not going to let the economy go into recession. And so what's going to happen then? The money printer needs to turn on. The money printer needs to turn on. The rate cuts need to happen, right? And maybe to kick the can down the road. But I do believe— and Brian Halligan from HubSpot tweeted this today— that recessions are a good thing because it cleans out the gunk. And I think it's a natural thing that we've been putting off for a long time. I'd rather just get it over with. But I think we're going to be kicking the can down the road a little longer. I got to take a minute to tell you about the Agency Owners Association. This is a peer group for agency owners. Think YPO or EO, but for agency owners. And I just wanted to read you a couple of testimonials. So this first one comes from Carrie, and we asked her, what do you like most about the group? She said, having a group of people to discuss and bounce ideas. The leads are great too. Yes, we share leads in this group as well. This one from Ollie, and he says, the ability to really post whatever I want and need, and the group responds. Great experienced members. Getting a lot of insights from conversations with other members, getting a lot of value from sessions from Eric, getting advice from others as well. And so if you want to grow your agency faster and you want a peer group to do so, just go to marketingschool.io/agency. This is a group that both Neil and I created, and our hope here is to create a vibrant community of agency owners and do a lot more with it in the future. So again, marketingschool.io/agency, and we'll see you inside. Because we're talking about election year, I added this last minute, but maybe we should talk about the marketing differences between Donald Trump's marketing and Kamala Harris's marketing. Because Kamala Harris is the new Democratic nominee and obviously Trump is Trump. So have you seen some of their different styles? I can go in first.

I have not seen much of the different styles in marketing other than a lot of the— Harris is doing tons of reputation management, scrubbing the web and showcasing different results. I don't know if Trump's team is doing that either. I'm assuming both of them have stuff online that they don't want to see. That's the only thing I know. And funny enough, I won't mention who, but we got hit up by someone who works with one of the candidates that's saying, can you actually help with some of the results on Google?

Yeah. Well, I have a sense of who that is, but—

We ignored it.

Yeah.

Because I don't want to divide our company and work with one side or another.

Ah, yeah, yeah, yeah.

Yeah.

Then it becomes a whole thing for your company.

Yeah, dude.

It actually causes more damage inside of your company.

Yeah. And you're making sure maybe you get a multimillion-dollar contract that's for a few months, but it causes more damages in the long run. I don't want to deal with this.

10x multiple on that.

Yeah, and I don't want to play favoritism. I think people should do whatever they want on the political side.

Okay, so let's think about Kamala Harris for at least right now as of this recording. We're in August of 2024. I think her strategy, more so her team strategy, is to stay silent and just observe and see how things play out right now because she doesn't need to say much. She's a Democratic nominee. But you and I, like, we haven't seen her out there talking about what she stands for.

Yeah.

Versus like Trump, we know what his policies are. We know what he stands for, right? Right now, I think she's kind of just playing it out and seeing what will happen. I think they were supposed to debate, but then she pulled out of the debate or whatever. So that's, that's a strategy, right, to wait and see. But you can't, you can't do that for too long. Otherwise, you're gonna become irrelevant. Whereas Trump is like constantly walking into the lion's den. Like the first interview that he had with someone else, someone was like, Um, you know, basically saying like, I'm not gonna put words into his mouth, but it was a very hostile environment and he took it really well and he's down to debate and he's like doing all these rallies and things like that, right? Um, so I think Trump is very much in your face. And the thing with Trump is, um, and Scott Adams, the creator of Dilbert, wrote about this. He's very good at, at, at labeling people. So he calls Kamala Harris crazy Kamala Harris, right? Or he calls, uh, Joe Biden sleepy Joe, right? Or like, you know, Neil, like, you know, negative Neil or something like that, right? Yeah. He's got a lot of names for people that are very catchy in remembrance, right? And then there's like, he's got the MAGA hats, right? Like love him or hate him, he's got something that he stands for. And then you also have when he was doing a talk and Neil and I, by the way, we're not saying we support either side, but we observe these things. It's like you hear the crowd chanting, save our kids, save our kids. So there's like, there's so many slogans that he has. I think Kamala Harris, she's gonna need to stand for a couple— she's gonna need to figure out what she stands for. And then she's gonna need to have some, Catchy slogans that people remember, because when people repeat these things, each one's like an impression. It's like an ad, right, that's happening over and over. So, um, who knows what's gonna happen. I, I think Trump is probably in the lead when it comes to marketing right now just because he's out there. So we'll continue to report on this because it's an election year and we only get to do this every 4 years or so. But, um, I think it's, it's fascinating and we'll see what happens. I think it's gonna be, it's gonna be a close race. I want to take a second to tell you about my podcast co-host agency, so NP Digital. So Neil Patel Digital. What they do is they do a whole host of marketing services and they are global. They're worldwide. They have SMB services as well. They have mid-market to enterprise services as well. They cover the entire gamut. So you could just go to mpdigital.com to learn more about it. And now back to the episode.

If you guys are spending your marketing dollars on social media right now, you just need to be really careful on who you're targeting and how your ad dollars are being spent. because these politicians are raising so much money, they're burning a lot of it on ads.

Yeah.

And it's just going to jack up the cost for you to acquire a customer. You could be like, well, I'm only targeting so-and-so type of customer. Well, they're targeting anyone who's 18 years and older and who can vote pretty much, right?

Yep.

Maybe they're very specific in states that they're trying to win or, you know, showcase or focusing their dollars in specific areas to get the votes. But either way, you know, this is going to increase your ad costs and you just need to be really careful because as we get closer and closer to the election, you're going to start seeing more and more money spent. Sometimes what we recommend to small and medium businesses who aren't maximizing their spend and they have a lot of room to spend more, save some of your dry powder and delay the spend to after the election and it'll help reduce your cost to acquire a customer. But don't do it too much further because what's going to end up happening is you're going to run into Black Friday and Cyber Monday. But right after that period, you can usually see another dip in CPAs.

Did you see the graph, the bar charts that show how much each candidate raises, has raised over the last, I know, the last 5 or 6 elections?

I have not.

It's always the Democrats are probably raising like 2 to 3x the Republicans. So it's like $800 million or $1.2 million or whatever. And then, you know, the Republicans are raising like $400 to $500 billion, or sorry, million or so. So it's a lot of money that they're dumping into these, these platforms. And it's hard to compete with that. So to Neil's point, you know, just be vigilant.

Yeah. And you may think, well, Google does over $200 billion in ad spend a year. $1 billion is a drop in the bucket. What you have to realize is they're bidding for impressions and they're spending it during a such short, concise period of time. It's not that they're taking up all the inventory. They're jacking up the cost per impression or the cost per click, which is causing you to have to spend more money. That's actually the real issue.

Makes sense. All right guys, so that's it for today's episode. Marketingschool.io/agency if you want to grow your agency faster. That's our little community. In fact, Neil, do you want to come to the next session next week? Are you in town next week?

Depending what time I'm driving home, but yeah.

All right, we'll figure it out. So this is when Neil and I will jump in every now and then, every month or so, and we'll have guest speakers and all that. And you have an entire community of people All trying to grow. We're talking, we're talking 7, 8-figure agency owners, 6 figures as well. And yeah, that is it for today. Please don't forget to rate, view, subscribe, and we will catch you tomorrow.