Invisible clouds hide silver linings
So, will it be recession or recovery for marketing services next year? That is the only question worth asking as 2001 drearily peters out.
Observers will not have been nudged towards optimism by the latest figures to emerge from one of the world’s largest marketing services networks, Cordiant.
A third profit warning, 400 more struck from the workforce – bringing the running total to 1,100, or ten per cent, this year – and rumblings about the company’s debt covenants do not augur well. Then again, it could be argued that some of these problems are specific to Cordiant rather than the economy in general. The company deliberately indebted itself while the tide was still running in. The official line was that it needed to make a series of acquisitions to tilt the balance of its business away from the lacklustre advertising sector towards more profitable below-the-line work. Sceptics suspected the company was simply being fattened up for sale – which in the event did not happen. Moreover, Cordiant is particularly exposed to hard-hit South Korea and Australia.
Be this as it may, chief executive Michael Bungey’s observation on the situation has a chilling universal resonance: ‘We see no signs of recovery and the outlook is as invisible as it has been for the last six months.’
Can things really be that bleak? Marketers are only too prepared to believe so, according to the latest CIM Marketing Trends Survey. Morale has hit rock bottom, and so have sales expectations for next year – although it should be borne in mind that the survey was conducted not long after September 11.
A more nuanced, and optimistic, picture is provided by the findings of Zenith Optimedia’s annual expenditure forecast, just out. Yes, we have experienced the worst advertising downturn in ten years, but the good news is it won’t last. Next year the decline will bottom out and we should return to (weak) growth in 2003. Zenith points to some reasonable grounds for guarded optimism – the continuing and somewhat surprising resilience of the UK economy for one – including a number of signpost events which ought to perk things up. These include the World Cup and the advent of 3G mobile phone technology. Neither of these, it has to be said, will be surefire successes. The self-confidence of the mobile telecoms industry has been all but destroyed by the string of disasters besetting it. As for England’s chances in the World Cup, they could easily be over in the early stages of the event – bringing television advertising and merchandising opportunities to a speedy close.
Until more of that fabled ‘visibility’ becomes evident, the most that companies can hope for is a few flecks of silver in the cloud. For strong brands, the message is obvious: don’t penny-pinch on the strategy and service just because times are hard. There are few better opportunities than a recession for creating a sustainable increase in market share.
For what it is worth, stock markets seem to be signalling a recovery. The fear is that Bin Laden may have one more shot in his locker – and what better time to use it than Christmas?
