The credit crunch is sinking its teeth into agencies. On the streets of Soho we've witnessed a depressing number of agencies close or merge while from others we hear sorrowful tales of job losses. Others claim to be doing well and perhaps they are.

Both agencies I helped found were born in difficult times. But launching in a recession imbues you with sound business practices. Anyone who has ever wondered whether the agency can afford a kettle will always keep a pretty tight eye on costs. And the Managing Director who knows what it's like to make a cup of coffee for his or her client will always service clients better than those who sit in a glass office issuing instructions.

At a recent reunion of the BHWG founders, someone suggested the moment an agency starts its downhill slide is the moment it invests in a traffic department. From that point on campaigns are managed for the benefit of its own systems rather than the client's needs. Responsibility for delivery is passed from people with the client at heart to those who are balancing account handling, production and creative departments in equal measure. End result? Overpriced work produced at a pace that suits the agency.

Whatever the case, I can't help feeling that maybe some DM agencies have not woken up to the new realities. And I don't just mean by investing in a credible digital offering. Some senior people I meet are still wafting around as if it were the mid nineties, working in agencies with top heavy management, slow processes, inflexible responses, unrealistic creative proposals and a lack of disciplined analysis. For instance, testing is an alien concept to them.

Some of the bigger ones, who found ‘direct response too limiting' and mutated into ‘below the line generalists', have thrown the baby out with the bathwater. They have abandoned the disciplines of targeting, proposition-driven creativity and ROI driven strategies that make our industry so attractive to brands as we enter recession.

Nor have digital agencies necessarily mastered the marketing disciplines required to turn their technical skills into effective customer comms. For instance, to too many of them, deadlines seem an alien concept.

So how should an agency prepare for recession? Some see redundancies as a quick fix to keep figures sweet for ‘Group'. Certainly, every Senior Manager should have client responsibility and any non revenue-generating position - internal, IT, facilities, administrative, HR, finance, traffic - needs to be questioned before taking the axe to client-facing and creative staff. AMV BBDO did not become the UK's biggest and best agency by regularly shedding staff.

As important as keeping overheads under control is the need to focus your proposition. In a recession, clients look for ROI and quick gains. It's a time to re-learn your ROI skills. Rediscover testing matrices. Use test results to work out why some creative ideas work better than others and get creative teams to apply those learnings. Be smarter with your data analysis. Use web analytics to sharpen targeting and messaging. Suggest ways to migrate more customers online and test it. Revert to writing creative briefs with propositions and benefits. Breathe new life into dormant clients and revisit past ones. Show clients how you can improve their results for less than they spend now. It really isn't rocket science.