Agencies must hold their nerve and ride out economic storm

What a delight it would have been to retreat into the warm and gentle world of the historic Shell posters adorning the walls at the History of Advertising Trust's 25th birthday party this week, writes John Tylee.

Their proud proclamation that "You can be sure of Shell" and their vibrant evocation of an England now gone for good are a reminder of how art and commerce once perfectly blended in advertising as self-confident as it was visually stunning.

How many of those mingling atop the Shell Centre on London's South Bank must have wished today's battered and beleaguered ad industry could roll back the years to a time when advertising was so sure of itself and its future.

America's tragedy and traumas have turned the global ad market's hairline fractures into gaping cracks. If it goes ahead, the deal that is expected to result in WPP - whose chief executive, Sir Martin Sorrell, was the HAT's guest of honour - buying Tempus to boost the group's media buying firepower may be the last of its kind for some time.

Bob Willott, the editor of the industry newsletter Marketing Services Financial Intelligence, predicts that any further consolidation of the industry may be on hold for two years as predator groups become preoccupied with safeguarding their bottom lines.

At the HAT party, the bewilderment was palpable. How was it possible, asked the senior executive of a major poster contractor, that his company had been forced to follow its best-ever set of results with a profits warning.

Others were ruing the day they chased the dotcoms' fool's gold. One agency chief executive looking to move offices said the dotcom illusion was brought home to him when he was shown around a lavishly appointed former dotcom company HQ vacated so suddenly that half-filled coffee cups were still on the tables. The result is a lot more chastened agencies who may think twice about overlooking those boring but supportive clients that stop the roof falling in. "People may stop flying," a senior executive of an agency with a large FMCG client base told me. "But they won't stop washing their clothes or wiping their arses!"

What's clear is that the industry's problems were exacerbated but not caused by the events of 11 September. The fact that Abbott Mead Vickers BBDO has made staff redundant and M&C Saatchi is thinking of doing so is because of a steady erosion in corporate confidence which only now threatens to spread to consumers. The good news is that no agency is reporting a collapse of client confidence in advertising. The bad news is that, with airtime demand down, advertisers are prepared to wait in the expectation of paying less for it.

As postponements turn into cancellations, it will take all the agencies' persuasive power to convince clients to hold their nerve and keep their budgets intact. Suddenly, the age of innocence has never looked more alluring.