The size of adspend in the UK has long been a sensitive measure of
the country's economic well-being. Significant moves up or down have
invariably indicated the onset of illness or ongoing robust health.
So why aren't we basking in the glow of new figures from the Advertising
Association showing that adspend broke through the pounds 17 billion
barrier for the first time last year - a rise of 7 per cent in real
terms over 1999?
Probably because we can't reconcile this seemingly reassuring set of
statistics with what's going on around us. ITV's ad revenues are
slumping with Granada having suffered a decline of 10.6 per cent in the
nine months to the end of June. Magazines are going under at an alarming
rate, Capital Radio has issued a second profits warning and three
agencies - Saatchi & Saatchi, BMP DDB and WCRS - have shed well over 60
jobs between them over the past month.
At the same time, three of the world's leading communications groups,
Publicis, True North and Interpublic, are making pessimistic predictions
about their prospects for this year with True North warning of further
Yet, beyond the ad industry, things seem pretty good. True, it's had
some nasty knocks, but the US economy certainly isn't in meltdown. Tills
in the UK are alive with the sound of rampant consumerism.
So what's going wrong? A decade ago, the link between the industry and
an economy ravaged by high inflation was obvious. Today, the most
optimistic interpretation is that advertising is undergoing a
fundamental refocusing of itself, rather than reflecting the state of
the global marketplace. If not - and advertising remains the accurate
forecaster it's always been - then the world's economic prospects look
This time, though, the industry is having to deal with a unique set of
challenges with the collapse of dotcom and telecoms budgets symptoms of
a deeper malaise.
As media fragments, TV shows signs of losing its allure. Advertisers
that once assigned almost their entire promotional budgets to the
dominant mass medium now spend across a mix which also includes radio,
press, outdoor, sponsorship, the internet, PR and direct marketing to
reach markets economically and effectively.
Meanwhile, agency supergroups acquire specialist subsidiaries to adapt
to the changed media landscape.
Perish the thought, but the latest AA figures may prove the last rose of
an advertising summer.