The recession so far…

Feb. 11, 2009 | by Philip Buxton

The joy – if joy is the right word – of last night’s panel session, which I chaired for Chinwag Live on the topic of ‘Advertising woes’, was that it was a first opportunity to hear what the actual effects of our long-awaited slump have been on the digital sector so far and therefore how 2009 is really likely to shape up.

The panel’s combined years of experience in advertising in general, and digital in particular, as well as their mix of roles and standpoints, were useful indeed but not more than their ability to tell us what is already happening. Patterns of spend have already changed, budgets for 2009 are being set, and the clues to the real impact of a recession that – for digital – is not necessarily a bad thing were in their pockets. So, what the hell is going on?

First, the panel: representing clients and the large media owners was Guy Phillipson, IAB chief exec and former head of advertising at Vodafone (where he ran a £70m budget). For publishers (and client advertisers) was Time Out Group head of marketing Catherine Demajo. In the digital [creative] agency corner, was Wayne Brown, client service director at glue. From networks (and online ad exchanges) we had Damon Reeve, Unanimis CEO and co-founder of OpenX. Last, and representing technology and tracking, was DoubleClick head of product specialists David McMurtie.

What’s most useful about the headline insights that follow is that – thanks to Guy’s knowledge of the media owner figures already emerging as the IAB conducts the now industry standard PWC online ad spend research for the second half of 2008, as well as the rest of the panel’s (particularly David and Damon’s) real-time knowledge of where ad money is going – they are predictions based on realities.

And those insights are none too surprising. Digital – as the accountable ‘channel’ – will have been up in the second half of 2008 on the year before (my guess – and it really is a guess – is by between 15 and 20%) and even up by a [perhaps significantly] smaller amount compared with the first half. Its most accountable sub-channels – search – will claim even greater share, though growth will be slower. And the accountable versions of other channels – CPA display, for example – would fare better than their less accountable brethren – like CPM banners. Experimental budgets like mobile are likely to be cut or axed completely. Brilliantly, Wayne Brown, who oversees the Toyota account at glue, was also able to confirm that no one is buying cars.

So, what lies beneath?

The upshot was that advertisers are starting to fall into two camps:

1.       The back-to-basics types that will hammer the numbers (and their DR suppliers) harder to reach tougher targets in tougher times. Their bosses have said to them: “You’re in online, get me out of this mess. You won’t get any more budget, but you will get more of what you had last year than everybody else.”

2.       The innovators. Usually in marketing-led businesses, there are those that see the recession – and the potential desperation of innovative suppliers – as the time to buy and try new ideas to get what money they have working harder for them.

This was, essentially, the view of our panel though they’re all of course fully aware that splitting people in such bilateral fashion is always a dodgy business. People aren’t really glass half-empty or half-full kind of guys. The clever ones, for example, are ‘my glass is at 50% capacity’ sorts – and so are most advertisers.

I suspect that what our experts expect – as do I – is for good advertisers to be both the first and the second and the bad ones to be just the first. That means every single one of them will be hammering down their DR work so hard that the industry might resemble Wile E. Coyote after a particularly amusing anvil incident come the recovery.

However, along with that effort – indeed as a fundamental part of it – the good ones will be looking to get even cleverer in what they do, which means innovation. It means innovation, yes, in insight and analytics, and bid strategies and the like, but also in creativity, in formats, in brand work (and measurement), and in technology. If you do something new that helps drive efficiency of spend, you’re in a good place.

Further to that, the common theme to emerge from last night’s discussion was that, to drive efficiency, advertisers will be seeking to truly understand their customers’ paths to conversion – the user journey – more than ever before. Digital – as Wayne Brown commented – understands user journeys far better than any other ‘channel’ (because it can be the platform for an entire one). The agencies, publishers, and technologies that can help clients both develop that understanding and act accordingly will survive – and possibly even thrive. 

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    Comment (1)

    • Roger, Online PR Agency C&M

      No doubt we'll all by Coyote'd for a while.... but I don't necessarily see this as a bad thing in the short term.  This kind of straight thinking is a little overdue in our neck of the woods... I'm kind of expecting it to cull a few firms along the way - so that leaner, fitter, and more visibly successful agencies survive.  Bit of a daunting prospect, but it's looking to me like 80% or more of firms are in this camp.  It's up to us to prove our worth and get them thinking ahead to more innovative / breakthough things...Feb 11, 2009 08:26 pm

     
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