OPINION: Stuart Elliott in America
By STUART ELLIOTT, the advertising columnist at The New York Times, campaignlive.co.uk, Friday, 13 July 2001 12:00PM
"Welcome to my nightmare", the shock rocker Alice Cooper sang back
in 1975. Who could have imagined more than a quarter-century later that
his anthem - yes, dear readers of a tender age, Alice was and is a he -
would be an appropriate theme song for Madison Avenue to be screaming
out to the rest of the advertising world?
For months, the hope was that the slowdown in ad spending that began
late last year in the United States could be avoidable, and avoided,
If the dotcoms outside America never grew as big and as fast as the ones
that collapsed so quickly and destructively from Silicon Valley to
Silicon Alley, the theory went, the remaining ad markets - or at least
the large, important ones such as Asia Pacific and Western Europe -
would sidestep the carnage.
But American misery is sure finding foreign company, as one giant
overseas agency after another is suddenly reporting shortfalls in
revenues and profits.
The most recent bombshells came from the Aegis Group and Havas
Advertising, which both disclosed on 5 July that as clients spent less,
their growth in revenues had slowed substantially. In America, 4 July is
Independence Day, which made 5 July Dependence Day, in that national
economies are now so dependent on each other.
Both Aegis and Havas reported slower growth (but still growth, mind
you), certainly not a reversal in results at either into negative
But, these days, any disappointing announcement, even when the signs are
still pluses instead of minuses, prompts a massive sell-off in shares,
and it was no different for Aegis and Havas: down in just one day by 20
per cent and 9.3 per cent, respectively.
That double whammy echoed the one-two punch that Wall Street inflicted
on 15 June to Interpublic and True North Communications (a week before
the Interpublic takeover of True North took effect).
When both agency companies warned analysts that cutbacks in client
spending would result in second-quarter earnings falling short of
previous estimates, Interpublic shares plunged 14.6 per cent, while True
North shares fell a bit farther, down 14.9 per cent.
The bad news has now spread to the Cordiant Communications Group, which
reduced its underlying growth projections for 2001 and saw its shares
pummelled by 10 per cent in a day; as well as to the WPP Group, which
tallied organic revenue growth in the first five months of the year of
just under 4 per cent, compared with 6 per cent in the first
The WPP words of woe were particularly, well, woeful, because they
indicated that marketing services outside the realm of traditional
advertising - supposedly immune, or at least more resistant, to client
budget cutbacks - are weakening too.
"It now appears that there are virtually no disciplines nor geographic
regions that are not impacted by the slowdown in marketing spend," David
McMurry, the advertising industry analyst for Credit Suisse First Boston
in New York, wrote in a report released the same day as the Aegis-Havas
double-dip of disappointment.
Or as Martha Reeves and the Vandellas warned ten years before Alice
Cooper's not-so-welcoming ditty: "Nowhere to run, baby, nowhere to
This article was first published on campaignlive.co.uk
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