It's spring and confidence within agency new-business departments
is melting like April snow. 'It's dire,' is the common response of top
20 shops, when new-business directors are asked to discuss their sparse
list of client prospects.
Elsewhere, the foreboding is equally strong. 'In the 20 years I've been
involved in new business I've never seen it so quiet,' Ann Harris, the
former Publicis and HHCL & Partners new-business director turned
Meanwhile, John Ward, the former Bates UK vice-chairman who now runs his
own planning consultancy, contrasts a previous feast with the current
'I was doing almost one new- business assignment a week for most of last
year,' he says. 'Two weeks ago I did a new-business prep for a small
agency. It was the first work of its kind I've been offered since
David Wethey, the managing director of Agency Assessments International,
is picking up on worries about the dearth of new business from 'almost
every agency in town'. What's more, the shortage has been as sudden as
it has been dramatic. 'I would say it's happened as recently as the last
five or six weeks.'
And Martin Jones, the owner of the AAR, jokes that he's thinking of
setting up a helpline for beleaguered new-business directors bearing the
simple message: 'You're not alone.'
Connect all these experiences together and they add up to a pervasive
nervousness and reluctance to commit budgets among advertisers of all
Perhaps it's merely a pre-election blip, jitters over the foot and mouth
epidemic, or the sign of an ad market returning to normality after being
distorted by dotcoms.
The Advertising Association certainly thinks so, forecasting an adspend
growth of 1.5 per cent in real terms this year. Not great -but only when
compared with recent very high-growth periods. Will there be a
'We certainly aren't predicting one,' Andrew Brown, the AA's
What's clear, though, is that if the events of recent weeks are the
harbinger of another early 90s-style slump, the ramifications are
far-reaching. Working practices may have to change, new promotional
avenues offered to clients and industry consolidation extended even
further as the strongest brands cluster within the biggest networks. One
senior industry figure warns that 'we could be looking at lay-offs if
The driver of the world's advertising business, the US economy, has
levelled out to a plateau. This is the main source of the problem
because it is breeding caution among clients. They fear that America's
sneezing bout today will cause Britain and other major markets, such as
France and Germany, to catch a cold tomorrow.
'The UK economy is fundamentally good,' Michael Baulk, the head of
BBDO's European network, says. 'But no economy stands alone and we can
expect to feel a backdraft from Europe.'
The trouble is that recession becomes a self-fulfilling prophecy. Wethey
believes some clients may be getting unnecessarily spook-ed about the
effects of a US slowdown where, unlike in the UK, share ownership is
widespread among consumers and consumer confidence is more volatile.
Some involved in the UK industry at senior level fear the implications
have not been grasped. 'Agencies are wrong if they think everything is
going to be OK because we're heading for a recession of some sort,' Ward
Much of that complacency has undoubtedly been fuelled by high-spending,
but transitory, dotcom clients. But it will make the new reality harder
to bear - especially as the spate of agency acquisitions in recent times
has left a number of senior executives reaching the end of their
earn-out periods, with little or no new business to bump up their
'When the dotcom business arrived we regarded the income as 'bonus'
money because we didn't know what would happen to that business. But
we've all become reliant on it,' Helen Weisinger, new-business director
of Delaney Lund Knox Warren & Partners, says.
Some believe that a downturn in the UK will force agencies to mirror
their US counterparts, who freelance more of their creative work.
The same may go for other non-revenue producing disciplines such as
At the same time, agency-hunting clients will expect to receive a more
multi-faceted service. Wethey says: 'Direct marketing is becoming
increasingly more attractive and we've had more requests from clients to
find PR agencies in the last six months than we've ever had before.'
Some agencies see the current predicament as an opportunity to catch
their breath and take stock. 'A lot of new business was shouting at us
last year but we had no time to listen,' one new-business director
'Now we have to go about forging relationships we failed to establish
Not everybody is blaming recession fears alone for the new-business
slump. Judy Mitcham, M&C Saatchi's new-business director, believes a lot
of big and prestigious accounts are not moving at present because so
many have done so in the recent past.
Neil Kennedy, the former Bates senior executive who is now a consultant,
says the trend is for fewer pitches, especially in the retail sector,
because many clients would rather appoint on the strength of the
chemistry and previous working relationships.
Despite that, Baulk has alerted his managing directors and general
managers to be prepared for a slowdown. 'We're not on a red light but an
amber one, meaning we should proceed with caution,' he warns.