OPINION: Few reasons to be optimistic in 2003

Talk about the UK ad industry's prospects for 2003 and it is hard not to lapse into Cassandra-like doom and gloom. The recession that marked the beginning of the new millennium is proving a cruel hoaxer, sometimes pretending to be fading away to return in an even nastier form. Just ask those agencies who were heartened by the rise in the value and volume of their business as 2002 drew to a close only to find that it was still well below normal and clients' pessimism remained as deep as ever.

This isn't surprising. With predictions of a drop in house prices, the prospect of a Middle East war, a continuing flat stock market and the return of some 70s-style industrial unrest, it is small wonder advertisers remain reluctant to commit budgets.

Sure, there have been encouraging noises from major US media owners about the first signs of an advertising recovery, raising hopes that US multinationals may extend their marketing internationally, thereby boosting the fortunes of UK agencies.

But if the threat of higher unemployment, a collapse in equity valuations and high debt levels impact on US consumers as severely as some pundits predict then the prospects of recovery in advertising markets across the world during this year - and maybe next year too - could prove illusory. If all this suggests anything, it is that agency networks, advertisers and consumers will have to live in an insecure world for the forseeable future.

For the major groups such as WPP, Interpublic, Omnicom and Publicis, the challenge will be to boost margins while justifying their value to clients who have never truly believed their boast about delivering integrated marketing communications efficiently and cost effectively and who see mega-mergers merely as a means of self-enrichment by their marketing suppliers. This will be a difficult balancing act. And it will be made even more so by the perpetual need to produce shareholder value while lacking the resouces to make acquisitions.

And what of consumers? How will heightened insecurity impact on their reaction to advertising in 2003? New research suggests the blessings are mixed. Financial companies may find it harder to break through as people decide ignorance is bliss. Better news for providers of luxurious indulgences, as consumers seek emotional fulfillment, not complexity. And expect DIY brands to do well as the home increasingly becomes a sanctuary.

Take what crumbs of comfort you can from all this. There aren't many.

Count on Droga to succeed at Publicis

Parachuting Dave Droga in to be the Publicis worldwide creative director after Lee Garfinkel's short term of office may prove inspirational. The Australian learned his craft in a market where innovative ideas often have to make up for modest budgets and honed it in London, leading a creative upturn at Saatchi & Saatchi in the process. It's a big job, but Droga is up to it.