More Sad Men than 'Mad Men' in 2009

MEDIA & MARKETING:It has been a year of carnage for advertisers with few predicting any better for 2010, writes SIOBHÁN O'CONNELL

THIS WILL be a year the advertising industry will not forget in a hurry. Forget Mad Men– through 2009 it was more a case of Sad Men. And an authoritative sector forecast predicts that 2010 won't see any improvement.

In the heady days of the boom, clients cancelled advertising planning meetings because they had too much business. This year they cancelled meetings because they were going out of business. Graham Taylor, owner-manager of niche agency GT Media, recalls how he was about to go to a meeting to present advertising plans to his client Budget Travel only to learn that the firm had called in the liquidator.

According to Taylor: “In my 30 years in the business, I have never experienced a year like this. It has been quite incredible to witness the carnage as our industry has imploded under the twin forces of the global economic turmoil and our own disastrous circumstances.

“Media revenues are down between 30 per cent and 50 per cent, depending on the sector . . . declines of this magnitude are unsustainable . . . It is going to be very challenging to maintain a viable business through what looks like being very choppy economic waters next year.”

Taylor’s story is not unique by any means. There isn’t an ad agency or media owner in the State whose turnover has not been severely affected by the recession. It has become so bad that credit insurers are reluctant to provide cover to insure against bad debts from clients in volatile sectors such as the motor trade.

Credit insurance is therefore likely to be a major problem in 2010, not only for ad agencies but for media owners who have booked a lot of business directly with clients. That caution will be reinforced by the annual outlook for advertising spend published by management consultancy Billetts. Despite the fillip of the World Cup, Billetts expects total spend will shrink by 7 per cent in 2010. The firm made the same forecast a year ago and seriously underestimated the depth of the downturn. On this occasion, agencies will be hoping the prediction turns out to be closer to reality. Billetts’s forecast is based on the views of its big-brand clients, which hire Billetts to audit the media buying decisions of their ad agencies. On a positive note, Billetts’s managing director Nigel Brophy foresees a rebound in ad spend in certain sectors, such as retail, telecoms and home entertainment.

Brophy predicts that television expenditure will decline by a further 5 per cent in 2010 with newspapers set for a 7 per cent decline in their advertising revenues. He expects radio advertising revenues to be static after a 24 per cent decline in 2009 and online revenue to grow by 9 per cent.

Stuart Fogarty, managing director of McConnell’s, the leading indigenous agency, is more optimistic. “We are making TV ads again for the first time in six months,” he said. “We are seeing tracking data for clients which show their brand awareness is falling as their ad spend falls, particularly in the FMCG [fast moving consumer goods] branded goods sector. We have one FMCG brand, which has seen its market share fall from 80 per cent to 40 per cent in just one year. Now they are going to start advertising again.

Big brands are losing market share to secondary brands and will have to re-invest in advertising in the year ahead.”

Fogarty’s view that big brands are under siege is borne out by a recent survey of 1,000 consumers conducted by advertising agency Rothco. This found that half the respondents will buy more “own brand” products next year than in 2009, with a similar proportion prepared to switch supermarkets and 40 per cent mulling a switch in utility providers.

Advertisers prepared to spend can get a lot more bang for their buck than a year ago, particularly in press. Says Graham Taylor: “Prices are at rock bottom in the print media at the moment and publishers need to consider how they can start to stabilise the market. They will have to reduce their rate card prices because the prices are down anyway and then put clearly defined discounts in place based on volume spend.”

That will be easier said than done. Most advertising agencies now have their media buying decisions audited by companies like Billetts. If media buyers are not securing the same massive discount off rate card they got a year ago, it’s a black mark against them. In Taylor’s view: “The audit assessment shouldn’t be centred on the size of the discount off rate card. It should be about the value of the advertising spend.”