Industry readies itself for impact of Iraq war

The French-owned advertising networks Publicis Groupe and Havas have played down suggestions that France's opposition to the US and UK stance on Iraq could damage their dealings in the US.

Maurice Levy, the chairman of Publicis Groupe, said: "I'm getting daily reports from our US operations about what's happening. At present, all the bitterness seems to be confined to the US Congress and a few individuals.

As far as business is concerned, we've seen no change of attitude by clients.

I don't believe they will act unfavourably, but a lot will depend on the course of the war. But it's in nobody's interests to make things more difficult than they are."

Alain de Pouzilhac, the chairman of Havas, said: "We don't think it's an issue because people know how to separate business from politics. We work with customers, not nations. It's absurd to think Intel would stop working with Euro RSCG in New York because Bush and Chirac don't get on.

And could you imagine General Motors refusing to work with a French agency when it sells so many cars in France? It's easy to get all this out of proportion."

Lorna Tilbian, a media analyst at Numis Securities, added: "I don't think there'll be a backlash by US clients against French-owned groups. Publicis and Havas not only service companies such as L'Oreal and Peugeot, but many local clients as well. The French may mix business and politics at home but they don't do it abroad. And the Americans aren't likely to cut off their noses to spite their faces."

Meanwhile, media owners are bracing themselves for a downturn in advertising revenue as events in Iraq unfold, but are not expecting mass cancellations of campaigns by advertisers.

Television broadcasters are facing deferrals of campaigns from advertisers in sectors such as travel and oil, but expect this advertising to run at a later date rather than being cancelled altogether.

ITV and other broadcasters will lose advertising minutage as they increase volumes of news coverage that will not carry centre breaks. However, ITV will hold discussions with the Independent Television Commission to work this volume back into schedules after the conflict is over.

Steve Platt, the managing director of Carlton Sales, said: "It's a bit early to say at the moment, although we have had a few deferments but no cancellations. The categories that have deferred are the ones you would expect, such as the oil companies and tourist boards."

Platt added that the greater amount of news coverage would mean losing minutes, with advertisers in news programmes having to be rescheduled.

He said: "Where this goes depends on the length of the war and also on our discussions with the ITC - if we lose peak airtime we will want to get it back. There will be disruption to the schedule and to advertisers but people have to be, and usually are, understanding of the circumstances."

Platt's comments follow a statement from Granada's chairman, Charles Allen, which predicted April revenues would rise by between 3 and 5 per cent despite the war. However, Allen also highlighted that advertisers were deferring activity.

National newspapers are being hit by cuts in spend by the travel sector, but the major impact on them so far has been advertisers waiting until the last minute before deciding whether to advertise. However, newspapers said advertisers would start pulling activity in the event of conflict beginning.

Ian Clark, the director of advertising at News Group Newspapers, the publisher of The Sun and News of the World, said: "We suspect that next week advertisers will be looking very closely and making decisions over whether it is appropriate to advertise. It would be brave to suggest that all advertising will continue at the same level. The length of the potential conflict will be a factor, and exactly what happens in terms of the effects on our troops and how this is reflected in editorial coverage, will also have an influence."

Advertisers keen to bypass the issues associated with running ads next to editorial featuring images of war may divert their spend into outdoor activity, prompting an increase in use of the medium.

Clark added the number of editorial pages in News Group's titles would increase but that it had no advanced plans to decrease advertising pagination.

Chris White-Smith, the display ad director at Telegraph Group, said this was the position at its titles: "There is a lot of caution out there. In terms of pagination, we'll take it a day at a time."

Some advertisers including BA and Lunn Poly are considering pulling or delaying campaigns if an attack against Iraq goes ahead. Oil companies are also in discussions with their media agencies over fears of oil price rises.

Radio groups are likely to be less affected than TV. Mike Hope-Milne, the head of sponsorships and promotions at Capital Radio Group, said: "We have a contingency plan in place, but it would take a lot for ad breaks to be taken off. If, however, a client wants their ads removed then we have ways of doing that without them incurring penalties. Sponsorship will continue as usual, but the type of promotions we run will be determined by the national mood at the time."