Sir Martin Sorrell’s opinions regarding the advertising market are generally treated like gold dust, so it is always worth taking notice when he makes one of his pronouncements on the future.
The WPP chief executive believes 2008 will be good for advertising but that the pain will kick in during 2009. He cites the US presidential campaign and the Beijing Olympics as cause for comfort amongst the ad community in the face of those talking us into a recession this year.
Sorrell continually promotes China and India as the engines of global economic growth for the future, and of course there is a lot of truth in that theory. But then, as his agency network has a 15% market share in China, he would say that wouldn’t he. There is another school of thought that consumer consumption in China is only a tenth of that in the US, and that in the short term it won’t be enough to counter the downturn elsewhere.
ITV’s chairman Michael Grade and IPA president Moray McLennan are among those who have recently publicly stated that we are in danger of talking ourselves into a recession, especially in the media. But there is no point in burying our heads in the sand – the economic indicators are not good, and the media sector has to make plans accordingly.
We know that when recessions loom investment in advertising spend, and especially the media part of the matrix, is one of the first elements to be reviewed.
But in the last downturn, in 2001, media consultancy Billetts came up with some sage advice for clients pondering their strategy in a recession. An analysis of TV advertising in a previous recession in the early 1990s showed that the highest-performing brands increased their total spends by 7%, achieving an average rise in market share of 1.1%. The lowest-performing brands had reduced their total TV advertising spend by 8% and their average market share dropped by 1.6%.
It is the job of media agencies and media owners to remind their clients of this and persuade them that maintaining a significant advertising presence during a recession is actually smart business practice, and that it is possible to gain a much stronger foothold in the market as a result.
And, despite what Sir Martin says, it would probably be worth taking this message on board now rather than waiting for 2009.
