EDITORIAL: A recession is not looming, it is here

It's official. It's a recession. With so many commentators -

including the IPA with its glossy Bellwether Report - still dancing

round their handbags about what constitutes a recession and whether what

we're experiencing really is one, it's quite refreshing to hear Sir

Martin Sorrell being unequivocal in this week's feature on page 22.



Sorrell's view is that the classic definition of a recession as two

quarters of negative GDP growth is irrelevant and archaic. Today, he

says, recession is better defined as a sharp deceleration in the rates

of growth.



On this basis, then, few would argue that recession is a more fitting

and appropriate term than, say, slowdown or downturn - the words

favoured by the rather more nervous observers. Ask any media owner about

a sharp deceleration in the rates of growth and, for once, the answer

will be a straight one. No matter that comparisons with last year's

once-in-a-lifetime, dotcom-inflated boom give a distinctly distorted

picture, the industry is not simply settling back into the 1999 growth

curve.



And, while there may have been a danger of talking ourselves into a

recession a few months back, now there's an inevitability about it and

it's time to publicly acknowledge the reality. All too often recently

the advertising industry has been forced into taking tough measures -

such as making redundancies - behind closed doors and then trying

desperately to play it all down publicly or, worse, resort to denials.

Instead of facing the enemy square-on, many in the ad industry have been

more likely to hide in the bunker over the past couple of months.



But with Sorrell's clear conviction and last week's news from

Interpublic Group's chief executive, John Dooner, that his company would

be slashing 10 per cent of its workforce following a 6 per cent fall in

second-quarter revenues, there is no longer anywhere to hide.



The real question is how agencies can work with recession-hit clients to

ensure that the current climate inflicts as little damage to brands and

brand communications as possible. However, both parties are better

insulated than in the last recession because of the shift to fees rather

than commission. Not only does it provide agencies with a certain

comfort blanket - more welcome than ever - but it ensures clients are

more likely to be offered innovative, cost-effective advertising

solutions. Hence, perhaps, the fact that the real sufferers so far seem

to be the big, old fat-cat media owners.



Topics