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
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
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.