Between pit and pendulum

Now, indeed, is the winter of our discontent. The human costs of a deepening economic downturn are becoming all too visible. Last week, as the leisure industry reeled from contracting demand, First Choice and Thomas Cook made cuts at the top of their management trees. This week, one of the UK’s biggest spenders, British Airways (BA), has admitted it is putting agencies on its &£30m below-the-line roster on notice and cutting its &£15m ad budget. The aim, say industry sources, is to minimise expenditure and take as much work in house as possible.

Agency redundancies will soon follow. Some, not necessarily connected to BA, are already in evidence: prominent advertising agencies such as HHCL, M&C Saatchi and Abbott Mead Vickers.BBDO have together laid off about 50 people. Of these, the most symbolic is AMV – the UK’s top billing ad agency; the same AMV whose proud boast it was during the last recession that it had not made a single person redundant. In those days it was not owned by Omnicom. The business model of UK advertising has changed a lot in ten years.

But not all threats to the UK marketing community are so overt and headline-grabbing as these. With smoke burning the eyes, it is easy to forget the traps that lie underfoot. One such example is a seemingly innocuous Green Paper which has just been adopted by the European commissioners. Its aim, laudable enough in itself, is to set a single definition for fair marketing practices in all 15 European Union countries. Its scope is everything, from advertising to sales promotion and sponsorship – even on the Internet.

The threat, however, lies not so much in the scope as the bureaucratic nature of the proposal. The EC wants a cumbersome form of co-regulation involving consumer organisations and industry and national regulators, backed by legal sanctions, to administer various agreed existing codes. A committee, probably comprising European commissioners and national regulators, would then strive to draw up a common code for all 15 countries.

There are several dangers lurking here. One is that the eventual code would be so broad and woolly as to allow a diversity of interpretations at the local or national level. In other words, it would cut across the trend towards a single market for advertising and marketing by allowing countries to retain their vetoes on certain products and areas – for example, France’s ban on advertising alcoholic drinks.

Another danger is even simpler to discern. It could take years to reach agreement on the proposed code, inviting sectional interests to block whatever single market initiative it disagreed with during the lengthy gestation period, in the name of alleged consumer interest.

Perhaps the most important aspect of the proposal, however, is the signal the EC is sending out to business. Yes, we are all committed to a single harmonised market. But will rules in that market tilt towards business or the consumer interest? The answer, on present evidence, might seem obvious.

And yet nothing is ever that simple. Ironically, the green paper cuts across the intention of an EU-wide law liberalising sales promotion practices, which the EC has promulgated in the self-same week. Confusion, unfortunately, is the raison d’etre of red tape.

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