Claire Beale on Advertising: Should we spend more, or less, in a crisis?

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The Independent Online

Recession presents advertising with a moral conundrum. If advertising encourages unnecessary consumption, does it therefore encourage financial irresponsibility? Are some forms of advertising unethical in a downturn?

Or does advertising have the power to fuel economic recovery, encouraging consumers to spend their way out of recession? Does advertising offer economic salvation?

As the UK's biggest advertisers gathered for their annual conference in London last week to pick over the recessionary rubble, it was very clear where the industry's leaders stood on this particular dilemma: advertising is an economic driver and it should be leading from the front by continuing to spend on advertising.

So, "Keep on, keeping on advertising" was the rallying cry at the Incorporated Society of British Advertisers' get-together. All of which would all have been manna to ITV's ears, if the broadcaster's chiefs hadn't been otherwise tied up on the day of the ISBA shindig.

The beleaguered broadcaster was rather busy elsewhere, announcing a £2.6bn loss last Wednesday. Mind you, the previous day a blaze of wild speculation had spread round adland that ITV was about to declare itself bankrupt, so in the end £2.6bn didn't seem quite so bad.

Naturally ITV's huge losses were accompanied by cuts: 600 jobs are going, £65m is being slashed from the programming budget, Friends Reunited is being sold off. Clearly, advertisers haven't been spending enough on ITV lately to make up for some poor strategic decisions.

It seems that the ITV commercial department is likely to lose about 15 per cent of its people. Sad. But when ITV brought in Boston Consulting to advise on a restructure last year, the commercial team is said to have been braced for a 25 per cent reduction in its head-count.

It was only asked to cut 9 per cent of commercial roles, to the bemusement of some sales chiefs who thought that a 25 per cent cut was about right. Ironically, spies tell me that ITV has a big, bold branding ad campaign ready to go, celebrating optimism and cheeriness, all rather ra-ra. Not surprisingly, ITV apparatchiks are wondering whether now is a good time to unleash that message on the viewing public.

Meanwhile, the financial collapse of ITV has left advertisers with another conundrum. Should they cut the ailing broadcaster more slack?

Advertisers have been on ITV's case ever since the merger of Carlton and Granada in 2003. Back then they fought for the establishment of a rule to prevent ITV abusing its dominant market position and the torturously convoluted Contracts Rights Renewal policy was conceived.

ITV has been arguing that the CRR binds are commercially crippling and that the TV and wider advertising markets have changed so significantly since 2003 that the rule is unnecessarily restrictive.

The OFT has just completed a consultation period over the future of CRR and advertisers have lobbied for the principles of protection against ITV abusing its power to be retained.

The trouble is that with ITV on its knees, advertisers are in danger of being seen to twist the knife and hinder its recovery. And who wants to be held responsible for killing Ant and Dec, Pop Idol, Coronation Street?

And the recent suggestion that ITV has mooted a merger with its terrestrial rivals Channel 4 and Five as a means of salvation will have sent advertisers into a flurry of panic.

No matter that the idea of such a terrestrial behemoth would be legislatively and practically unworkable. Or that Michael Grade has dismissed the plan as simply a "wheeze" to help ITV to shed the CRR shackles. Faced with a choice, advertisers would rather have a strong ITV than an even stronger merged terrestrial broadcaster.

The truth is that advertisers need a strong ITV. Advertisers still require a mainstream TV channel delivering mass audiences in healthy numbers. ITV is their best chance of having that.

Best in show: Lurpak (Wieden & Kennedy)

*I admit that first thing on a gloomy Monday might not be the best time to remind you of the joys of Saturday morning. And I strongly counsel you against viewing this week's Best In Show if you're feeling at all peckish.

Because Wieden & Kennedy's latest TV ad for Lurpak is a joyous celebration of sleepy Saturday mornings accompanied by deliciously comforting Saturday breakfasts.

The directing is beautiful, Rutger Hauer's syrupy voice-over is scrumptious, and the whole commercial is guaranteed to have you yearning for your duvet and a pack of butter.