The beauty of forecasting in this business is that most of the time people don't bother to look back. The credit crunch was alive and well a year ago and the finest forecasters were, in these very pages, staying broadly optimistic. Twelve months later, it is hard to imagine anyone will predict an end to the gloom.
With no growth in the market, the weaker players will experience a double whammy revenue loss but most will see out the year saved by the commoditisation of media trading. The default planning approach will be: "A little less but across the same media and a share to everyone in return for a discount."
In the newspaper market, it's more of the same, declining circulations and a shift in focus online. Agencies are now dealing with Associated Newspapers across both Mail titles and News International across its stable of nationals, and we will wait and see what impact, if any, this has beyond basic space transactions. Radio will swap the promise of Fru Hazlitt for the energy of Stephen Miron, one of the finest commercial brains of the media industry, and he will certainly give it all he has as he attempts to leverage Global Radio's consolidated position in a medium that has lost its way.
Television has started to jettison some of the new stuff with "red button" interactivity not paying back. Back to basics makes sense to me but the trading mechanics still stifle best use of the medium, so I hope that by the time you are reading this, CRR will have been dropped. TV will continue to suffer in spite of the marked deflation until advertisers take more control of their plans and redefine the investment criteria. There will be a realignment of sales points by the end of the year and ITV's share price will be buoyed by feverish bid speculation. Maybe Google will have worked out that it's actually a sound long-term acquisition.
And so to online: a sector unlike other defined media sectors. There is search (and this largely means Google) ... for big brands a sales and distribution technique. Brands and agencies will increasingly question the ROI and work out that the real winners in the search arena are the aggregators. So why pay twice?
Social media will be interrogated by more advertisers. Facebook will need to attract some famous advocates and I don't doubt Blake Chandlee's ability to achieve this ... but he'll have to show a commercial return.
I would like to predict that there will be some cataclysmic change in 2009. If you pick up the industry press there are plenty of articles about the changing "model" ... the Marketing Model ... from interruption to engagement ... the Agency Model ... ideas-led, not media-led ... content is king and so on ... The Media Model ... platform neutral, on demand, integrated etc ... and how we all need to adapt or die. So is it time for shake out? Will we see some old dogs die? Will some new offerings thrive?
I suspect the prevailing wisdom in the face of sales downturns is that there is no short-term guaranteed correlation between advertising and sales. And the long term just seems too far away for most advertisers. Thus I can confidently predict a downturn in all major established media markets. But for most advertisers this will mean a little less in all their chosen media rather than a radical realignment of the "portfolio".
The sad truth, though, is that for all the econometric models, the ROI systems and the studies of what has happened in the past, the industry behaves in a completely risk-averse way. Largely, as I have said, because the effect of the marketing mix is very difficult to isolate with absolute certainty.
So we revert to forecasting media inflation or, more specifically, deflation, and then, informed that they can buy the same for less, advertisers decide to spend less. But if we were approaching 2009 media plans as if they were a financial investment, we might all feel more pressure to make bolder decisions.
Well, there will certainly be job losses of a dramatic nature in the existing marketplace but I suspect on all sides it will be the innovative, untested areas that will feel the force of recession first. Safety first will be the mantra.
I read an article in The New York Times by Warren Buffett in which he was encouraging people to buy equities, and his argument, supported by his track record, made for persuasive reading. "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
He goes on to say that "people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value." It got me thinking about what we do in media.
Marketing is an investment that has delivered long-term returns for businesses through the creation of brands. Few would deny this. If Buffett was a media planner, I suspect that he would be exhorting his clients to invest heavily. Some media markets offer extraordinary value. TV pricing is cheaper in absolute terms than it was 15 years ago and if all other media were forced to sell their inventory, imagine how much more deflation we would be able to take advantage of. And media brands that can genuinely innovate with commercial partnerships that leverage their unique relationship with the consumer will definitely benefit.
But most media negotiations are based on discounts, not absolute price let alone ROI. And so media owners choose to restrict supply to hold up their yields and agencies tend to allocate average shares across and within media. The effect is that there are few real winners and losers. The stronger media brands will get stronger but at the expense of weaker ones rather than by encouraging greater levels of proactive marketing investment. The weakest will go to the wall but the existing order will remain. The only certain winner seems to be Google but with the best practice funding disappearing, perhaps more agencies will challenge the ROI with more vigour.
All marketing is risky and, unlike the weather or the rate of inflation, has a less certain impact on success or failure. The stakes are higher, but fortune favours the brave.
- Phil Georgiadis is the chief executive of Walker Media.