At present, the signs are less than exhilarating. Rising interest rates are being fuelled by big increases in personal debt in both Britain and the US. To make matters worse, a booming housing market has stalled and may finally bring what has been a robust period of consumer spending to a halt. This is bound to put further pressures on agency and client relationships already heavily strained by the growing influence of procurement departments.
The good news is that although 2004 has not been the economic turning point everybody hoped it would be, the last few months have brought back a degree of stability and profitability to the business not seen for some time. The challenge for next year must be to build on those positives, such as they are. An improved climate of confidence should translate into improved client budgets which, in turn, will prompt agencies to invest more in their creative product.
Just as important is that this so-called "virtuous circle of confidence" should act as a catalyst for putting agency and client relationships on a proper footing. The best agencies are an Aladdin's Cave of ideas no client company can match. The trouble is these ideas are not the product of a very efficient process. Agencies have been in retreat ever since they hived off their media operations, destroying much of their revenue base and status in the process.
Provided the reasonably benign mood can be sustained, next year should be an opportunity for agencies to clarify and expand client relationships and to resolve the issues of client service and what constitutes fair remuneration.
For all its shortcomings, 2004 may yet go down as the year that set the scene for some significant progress to be made.
