As each week passes, we hear more gloomy outpourings about trading prospects from the major groups in the industry. Huntsworth and Dentsu joined the gloomy chorus last week, countering Maurice Lévy’s attempt to cheer us up with news of better trading in October. Even those companies that are currently on target for the year feel the need to counsel caution about their future prospects – witness Chime Communications and Levy’s warning about December.
It would be daft not to take notice of these miserable predictions and for businesses to prepare themselves accordingly. But there is a point at which the predictions can become self fulfilling.
Market demand starts with the consumer and, if consumers aren’t spending, most manufacturers become more cautious and selective in their marketing initiatives. That affects the amount clients will commit to their agencies – irrespective of the efforts agencies will make to emphasise the merits of clients exploiting a depressed economy by seeking to win market share from weaker competitors.
So agencies start muttering out loud about the weak economy, others join in and, before we can say “economic recovery”, consumers and clients get even more nervous and cut back further. In such a situation, perhaps agencies need to sound more positive, however cautious they may feel and however firmly they may be managing their back office costs.
But if nothing can be done to improve matters, maybe there are other opportunities to be seized. For example, any agency that is suffering will be worth less than in boom times. That provides an opportunity to introduce share incentive schemes for some more key people, with self-evident prospects of value growth when the economy recovers (particularly if the agency’s key people are better motivated). The quiet economy may also allow time to be devoted to developing improved features in the way clients are serviced. When the economy was booming, no-one ever had time for anything but getting the job out of the door.
It’s an ill wind that blows nobody any good.
Bob Willott is editor of “Marketing Services Financial Intelligence