When bulls are rampant, there’s no money in being a bear. If you
don’t believe this seconds-old wisdom you could ask Phillips & Drew, the
fund manager that has famously underperformed all its rivals by cleaving
bearishly to the belief that the market would go pear-shaped. Or Julian
Robertson, who last week closed down part of his vast Tiger hedge funds
because the markets have become illogical; or Warren Buffett, who nearly
lost his decades-old reputation before a Damascene conversion to
new-tech stocks last year.
Even the press has become bullish about the ad business. Not in the UK
of course - it’s only a bull market, not Disneyland - but in countries
as culturally dissonant as France and the US. The recent expensive
forays into the US by monsieurs Levy and de Pouzilhac have found favour
with the Paris Bourse and media. This, despite the huge sums being paid
for some sellers that manifestly needed to sell.
In the US, the major quoted stocks - Omnicom, Interpublic, Young &
Rubicam and True North - have all produced sterling figures for 1999
(IPG’s are coloured by a one-off charge for the Lowe-Lintas merger). The
UK’s WPP performed equally well. Advertising, as the Wall Street Journal
acknowledged in an exceptionally positive feature this week, is on a
The WSJ quotes Competitive Media Reporting data suggesting that dotcom
spending accounts for only 2 per cent of the major advertising groups’
total revenues. World adspend is tipped to rise by more than 7 per cent
this year. Why does all this good news leave me uneasy?
The problem lies with the idea that advertising has won the
effectiveness battle around the world. I don’t mean in the US. There,
major big-spending clients believe in advertising. Many US agency chiefs
will say that it’s a daily battle to get interesting creative work out,
but they start with a huge advantage; most US clients don’t question the
benefits of advertising. They just call it selling.
In much of Europe and most of Asia, belief in advertising is more
fragile, despite increasing spend figures - much of which can be put
down to rampant media inflation. European and Asian economies are firing
Clients are advertising because they believe consumers will buy again -
not because they believe in branding through recessions or that
advertising can kick-start consumer-spending. The industry shows
worrying signs of repeating the excesses of the 80s (crazy prices for
acquisitions, massive salaries, a rush for short-term client bonanzas -
in this case dotcom).
It only takes a few thousand nervous online investors to desert
Microsoft and it could all come tumbling down. But in a world where B
COM3 passes for a brand name for a branding specialist, what do I know?