Britain's ad industry goes into 2010 more in hope than expectation. The best that can be said of the year ahead is that it may be the precursor of better times. But nobody is holding their breath.
The most recent IPA Bellwether Report had to content itself with reporting that the extent by which companies are cutting their marketing budgets has fallen to the smallest level since mid-2008.
Twenty-eight per cent of advertisers trimmed their spends compared with 13 per cent who boosted their budgets. The graph line is still heading south as confidence remains fragile.
In its most recent forecasts, Group M remarked that 2010 "is looking slightly better than we imagined six months ago" but points out that any improving confidence is "based on anecdotes rather than substance".
The AAR's experience seems to reflect that. Kerry Glazer, its chief executive, says the past few weeks have seen a lot more calls from clients wanting to discuss their future ad arrangements. "I feel intuitively that there's a new buoyancy in the market," she declares.
Nevertheless, there's no escaping that the AAR's research suggests that last year's overall new-business market was down 21 per cent.
According to Nielsen Media Research, total ad investment in display media between January and September last year was £5.8 billion - £865 million (13 per cent) less than the same period in 2008.
Adam Smith, Group M's futures director, points out: "The consumer is going to be beset by worries in 2010 and I fear that will limit our expectations. In real terms, we're still nowhere near where we were in 2007."
On the face of it, none of this seems to square with what appear to be signs of an upturn. At the end of last year, ITV signalled December ad revenues were up more than 4 per cent year on year and January looks promising.
At the same time, onlookers agree that the upside of the recession has been to fuel the necessary restructuring of agencies to reflect a changing and fragmenting media landscape. Having slimmed and adapted, and with little in the way of more price-cutting to offer clients, agencies can watch and hope.
As the Group M forecast points out: "The cost of recession has so far fallen mainly on the unemployed, the underemployed, new jobseekers and savers.
"In 2010, the whole of UK society will start to bear the huge remaining cost of stabilisation in the form of higher taxes and smaller government. Higher interest rates await mortgagers coming out of deals, and possibly for everyone should the Bank of England start worrying about inflation. Demand will be curtailed and may even fall."
Against that background, there seems little prospect of significant adspend boosts in the three most problematic sectors - cars, finance and food. These three categories accounted for 22 per cent of the market but provided 36 per cent, or £315 million, of the £865 million loss between January and September.
"Any serious recovery will have to involve all three," Group M says.
- Phil Georgiadis, chairman and chief executive, Walker Media
"I am not convinced it's the end of recession, but my best guess is flat revenues with some categories (motors, financial and retail) investing more to offset those that will decline (government, price comparison sites).
"For media owners, the challenge is how to survive a consolidating world. A recovery in ad revenues will not necessarily save certain media owners. Equally, the stronger ones can thrive in spite of flat revenues ... look at Sky.
"For agencies, the issue is structural. The battleground is no longer online against offline. It's about clarity of purpose and output. Advertisers are bored with theory."
- William Eccleshare, president and chief executive, ClearChannel International
"I'm cautiously confident that 2010 will bring improvement over last year.
"But it's a patchy picture. What strikes me most forcefully as I travel are the great differences in both timing and severity of this 'global' recession. Across ClearChannel International's 27 markets, we're forecasting everything from continued slight decline to double-digit growth. Overall, the year-on-year comparatives will generally look good so the mood will be better and confidence is key to recovery."
- David Jones, chief executive, Euro RSCG Worldwide
"Overall, I think people in general - both advertisers and consumers - are cautiously optimistic about 2010. The first quarter will determine how the year plays out.
"At a specific level, the new world economies of Brazil, China and India are out of the recession and planning on strong growth. The US is planning for a better year - in a recent survey of some of the largest global marketers, around 70 per cent stated that they would spend more in 2010, that they believed their businesses would do better than in 2009 and that their strategy was growth.
"I think Europe is where things will be tougher in 2010 and especially in the UK. The UK economy is in really bad shape compared with the rest of the G20 and that is clearly going to impact our industry."
- Amanda Merron, partner, Kingston Smith W1
"This year will be as equally tough as 2009. Clients continue having to work within strict limitations and we're still seeing campaigns being pulled at the last minute on the orders of the company board.
"Whoever wins this year's General Election is certain to make cuts all over the place and it may not be until the Olympics of 2012 that the industry gets a fillip.
"But it's also true that agencies are much better managed than they were in the 70s and early 80s and that a sustained recession is fuelling much of the necessary change within the industry."
- Derek Morris, chairman and chief strategy officer, ZenithOptimedia
"I'm no economist but my gut feeling is that this year will see more of the same, certainly for the first six months. Any recovery will occur during the second half of 2010 and, even then, growth will be very small. The UK will be the last to climb out of recession because, along with countries like Spain and Ireland, we've fallen the furthest.
"Our boom was fuelled by personal debt held up by the effect of rising property prices. As a result, there's a lot of bitter medicine still to be swallowed in the form of big tax rises and increased National Insurance contributions. That will dampen down our markets for some time to come."
- Stephen Woodford, chairman and chief executive, DDB UK
"In 2010, we will see an upturn in client confidence, so higher spends and more work for agencies. However, I don't see a return to the relatively benign (with hindsight) pre-recession conditions, as pressures on agency margins intensify.
"Three trends are causing this - the increasing complexity and cost of providing integrated communications, the latent cost pressures caused by wage freezes and the large amount of capacity in the market, so the supply of agencies exceeds demand. Given all that, the successful agencies will be those that thrive on integrated ideas, who deliver them efficiently and who have digital at the heart of their business."
- Hamish Pringle, director-general, IPA
"It's not all bad news. ITV has had a good couple of months and we've seen evidence in the past six weeks of clients spending money they'd been holding back. It's been a case of either using it or losing it.
"I suspect things are better than the agency holding companies are willing to admit. They have to manage City expectations and they don't want to send any signals to the procurement people that there's anything left to cut.
"I think 2010 will be tough but it will be better than 2009. Of course, if there's a Middle East crisis and oil prices soar, all bets are off."
- Guy Hayward, UK group chief executive, JWT
"Weighed down by monstrous debt, the economy will be willing but not able to put on a significant growth spurt. There will be pockets of brightness but in general the wheels of growth will spin furiously but gain little traction.
"For agencies, this will be a year of intense competition and innovation as they seek to bounce back from 2009 by taking a larger share of a pie that will scarcely grow. Ideas for growth will have greater currency with clients than cost-cutting measures."
- Marc Nohr, managing partner, Kitcatt Nohr Alexander Shaw
"Will it be tough? Hell yes. It's not the easiest way to make money at the best of times but clearly the events of the last year have made it all the more challenging.
"Consumer confidence is a fragile commodity and macro-economic indicators suggest there may be more pain in the economy still to come. But the advertising business is a heterogeneous beast - with some areas harder hit than others and some agencies being better placed than others to make the best of the times we live in. There are always opportunities for those who make their own luck."
- Tim Bell, chairman, Chime Communications
"My group budgets predict a flat year. We will grow but that's because we're a well-balanced business in which 50 per cent of our activity is overseas. Our VCCP subsidiary had a good 2009, but only because its business has expanded internationally.
"In the UK, we're having to face what will be a six-month election campaign with the result that spending of all kinds will be put off until the outcome is known. Meanwhile, VAT has gone up and there'll be higher energy costs and tax rises to come."
- Mark Cranmer, chief executive, Isobar
"We're alive. Feels like the worst of the seismic shifts are behind us. But 2009 finally saw the old assumptive architectural models of the advertising industry crumble. Our structures now need to be designed for the shifting audience plates of the new era.
"Whatever you may do in the advertising industry, you can now go bolder, deeper and faster into an audiences' consciousness than ever before. Heady stuff indeed. Our biggest challenge is to figure out the value of this, rather than be driven by the cost of it. Aftershocks anticipated."
- James Murphy, partner, Adam & Eve
"The 'R' word we'll hear most this year will be recovery, not recession. Not that 2010 will be a rush back to pre-recession spends, but it will be more about sensible planning and slowly increasing investment in brands to be well placed for a real upturn.
"The election will boost the media marketplace but will soften consumer confidence as 'wait and see' is replaced with harsh realities.
"New business will be busy as clients see 2010 as the stepping stone year between recession and growth and want to have the best partners when the good times truly return. We're still in the tunnel but there's a light in the distance."