The next 6 months?…

17 August 2009

AdAge reported last week that the advertising industry won’t recover in the second half of the year.  It’s not shocking news given the recent article in The New York Times reporting that while consumers spent more in June, they did so because prices of food and energy were rising, and not because they were ready to spend freely again.  Personal incomes continued to sag as employers continued to cut wages and reduce working hours.  And the personal saving rate, which had been rising, dropped sharply from a month earlier as one-time transfer payments from the government stopped arriving in people’s bank accounts.

I personally don’t think the business will be considerably better – or worse for that matter – in the second half of the year.  It’s likely to be fairly flat, and all indications are that retail will remain in the doldrums through the back-to-school season and the holidays.

What does that mean for the agency business?  There probably won’t be a significant up-tick in agency spend in Q3-4 since consumer spending won’t be fuelling investment.  That said, hope still exists for 2010, and some CMOs will understand that they need to start planning (and spending) now in order to leverage change when it happens.  And they will continue to look for new avenues and means with which to connect with their core consumers most cost-effectively.  This puts digital, earned media opportunities, and niche-targeted initiatives at the forefront of some marketers’ thinking. While we’ve heard a lot of talk about “switch spending”, we haven’t see much action yet, but I believe that will change in the coming months because even if the economy does begin to turn around, continued pressure on budgets will encourage marketers to explore alternative routes.  Additionally, some consumer values and buying habits may have changed irrevocably, so it will become increasingly important to foster brand relationships – ideally loyalty and advocacy – and this is more difficult to achieve through traditional TV push marketing.

In Jon Fine’s Media Centric column in last week’s Business Week, he commented on the marketing discipline’s shift away from media (he’s talking paid media) and an increased attraction to “below-the-line” channels.  Why not?!  “Below-the-line” channels – some of which are still media-based by the way (it’s just not paid media) can provide a far greater opportunity to really connect and “participate” with the consumer in a way that no mainstream advertising route can.

Fine also points out that “experimenting decouples the success of the marketer from the success of the media they once relied on more exclusively.”  I don’t see a problem with that – we can’t be held to a traditional model when our environment has completely changed.  Besides, it’s healthy to change and to be challenged.  After all, insanity is doing the same thing over and over again and expecting a different result!

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