It's often said that advertising is the canary in the economic coalmine, turning sickly well before the rest of the country catches a whiff of recession. But if the ad business is often first in to a downturn, history suggests it's also first out. When marketers start spending again it's a sure and early signal that the economy is picking up.
Well, adland's economic barometer has swung into the positive: this year the industry has recorded its first growth in marketing budgets since the middle of 2007.
And delegates at last month's annual Advertising Festival in Cannes didn't need telling twice. The week-long marathon of creative and digestive excess on the Cote d'Azur was real proof that the advertising canary is back on its feet and singing.
So is it time for the media industry, which thrives – or wilts – on the advertising revenue it makes from selling commercial spots and space, to start planning for recovery? Are three months of growth and a few jeroboams of rosé really enough to signal the end of the media recession? Can our TV channels start to think again about new investment in programmes? Will our newspapers and magazines consider adding back the pages that have been culled in the face of the advertising slump? Any chance of all those redundant journalists, writers and programme makers returning to rejuvenated media workplaces?
Not so fast. The last two and a half years have proved how quickly marketers' purses can snap shut in the face of economic uncertainty. And uncertainty there certainly still is. Three months of growth at the beginning of this year was swiftly followed by three months of reduced spending. This week's Bellwether study from the advertising industry body IPA did a fine job of bursting the party balloons. It reported that marketing budgets fell by almost 5 per cent over the last three months.
Despite evidence of a bottoming-out, US consumers still seem reluctant to spend, while closer to home the eurozone's economic prospects remain unstable and there's the small matter of a one-trillion-pound hole in the UK economy. And England's embarrassingly early exit from the World Cup didn't help; no hope of a football-shaped boost to consumer confidence now. It won't take much of a fiscal wobble to persuade big companies to put their ad plans on ice again. But if you believe the broader statistics, it does seem as though the media can look forward to a return to (relative) health more quickly than they might have previously expected.
In the last few months all of the big media forecasters have rushed to revise their figures upwards as confidence has begun to seep slowly back into blue-chip boardrooms. The global media agency Aegis has rewritten its earlier predictions for the growth in worldwide media spend, up from 1 per cent to 2.9 per cent growth this year.
Meanwhile over at the world's largest media buying network, WPP's GroupM, confidence is even more pronounced, with the company more than trebling its previous 1 per cent growth forecasts to 3.5 per cent. GroupM's respected This Year, Next Year report says growth is firmly back on the media agenda. Global ad spend in media channels such as TV and newspapers will reach $451bn (£295bn) this year and rise 4.5 per cent to $471bn next. In western Europe, media spend will rise 2.1 per cent to $102bn – and just to remind you how significant that relatively modest increase is, in 2009 spending was down 11 per cent on 2008 levels, which had itself collapsed.
It must be remembered that all these predictions of modest growth come on the back of crippling declines. And a small increase off a dismally low base is hardly cause for the casting off of cautious cost-counting.
Even so, the signs are definitely good. There's some early evidence that advertisers are switching out of direct-response commercial messages into brand advertising. To ad watchers that's early proof that marketers are starting to take a longer-term view again, and to value advertising as an investment rather than a cost, complementing short-term tactical work with a bullish investment in building brand values that sustain a brand's proposition over time. And some key brand categories that went into hiding in the recession are coming back to the ad market, particularly the finance, motor and DIY sectors, which had reined back marketing budgets as discretionary consumer spending slowed.
Over in the TV market, they're getting the flags ready. Aegis reckons that global commercial TV revenues will grow 6 per cent this year and will account for a whopping 45 per cent of spend, though online advertising will grow faster, up 10 per cent.
It's a buoyancy that seems to be borne out by the latest takings in the UK TV ad market, where revenues were up a staggering 27 per cent in May. And TV advertising airtime is likely to remain something of a bargain for the next couple of years at least. If you wanted to buy an audience of 1,000 adults in 2005 it would have cost you £6; by 2008 this had dropped to £5, and by 2009 to £4.29. Forecasts suggest that by next year the all-adult cost-per-thousand will only have crept back up to £4.67.
So television is likely to do better than most other media from the economic upturn. It's not such good news for publishers, though. Aegis believes that newspapers' ad revenues will continue to fall, down 2 per cent, and magazine ad revenues will slip by almost 4 per cent this year.
Enough of the statistics. Whatever the forecasters say, the media recovery will have to be hard won. The old "build it and they will buy it" approach to selling advertising spots and space is over. Advertisers have become used to a new commercial matrix of "bought", "earned" and "owned" media.
Paid-for ad slots on TV, in newspapers, magazines, on billboards and radio stations have by necessity diminished in importance as marketing budgets have shrunk. Advertisers have learned new tricks and found new opportunities that do not involve paid-for media. And now budgets are swelling again, the money will not simply flow back to the old media owners.
"Earned media" in the form of PR in editorial content, virals or word-of-mouth on social media channels is an increasingly vital tool in the marketing armoury. And "owned media" – advertiser-funded TV programmes, websites, blogs – offer advertisers more control and longevity than straightforward advertising can generally afford. So any media owners looking at the advertising forecasts and wondering when modest growth is going to finally translate into the sort of revenue lines they were enjoying four or five years ago should think again. For many, those revenues will simply not return unless broadcasters and publishers can find new products and new commercial offerings to pull in new money.
Post-recession media owners will have to be more aggressive in cross-selling (on-line and off-line, print and audiovisual), more confident in the power of their audiences, and more creative in their commercial relationships.
The good news is that consumers can't get enough content. From sales of Apple's iPhone 4 (1.7m in three days) and iPad (3m in 80 days) it's clear that we are still avaricious for new ways of consuming media and new forms of content.
Those media organisations that embrace the opportunities of these new delivery systems and are committed to becoming more innovative with the media brands they're selling will come off the blocks quickest as the downturn eases. Those that aren't might survive the recession only to find that they falter in the new media world that we're now entering.
The advertising canary is once more singing – if only softly as yet – but it's the most expansive and aggressively ambitious media owners who will hear it the loudest.
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