EDITORIAL: Agencies should avoid worst of last recession

Advertising’s reputation as recession’s early warning system usually means that agencies suffer more than most companies at the hands of jittery investors fearful that hard times are returning.

Advertising’s reputation as recession’s early warning system

usually means that agencies suffer more than most companies at the hands

of jittery investors fearful that hard times are returning.



Today, the familiar story looks like repeating itself with networks

committed to long-term investment in the problematic markets of Asia and

South America again at the mercy of moneymen seeking short-term

results.



Are investors right to cut and run? It depends. Certainly there is no

reason for them to desert in droves as they did in the late 80s, alarmed

at the ineptitude of agency bosses who had no experience of managing

their way through recession.



In the 90s, agencies have not only learned to take management seriously

but advertisers are less sheep-like in their behaviour. While the last

recession saw cuts in adspends across the board, the next is unlikely to

have a similar blanket effect with sectors reacting in different

ways.



Those changes will not in themselves make agencies recession-proof. A

diverse client portfolio will be an essential part of any survival kit

along with the ability to offer advertisers fully integrated

communications and to focus on client needs. Training, an easy target

for cuts in the past, will be more important than ever.



For the major global networks like Interpublic, Omnicom, True North and

WPP, all partially insulated by their diverse marketing interests, there

will be even greater opportunities to consolidate their grip on the

world adscene. Indeed, a recession is almost certain to speed the

natural selection process, giving fresh impetus to acquisitions which

will allow the strong to grow at the expense of the weak.



The sweaty palms will mostly be found among the young middle-ranking

shops which have neither the resources of a parent to sustain them nor

accumulated cash reserves on which to draw.



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