A recessão na indústria da publicidade

http://www.economist.com/businessfinance/displayStory.cfm?story_id=14140373&source=hptextfeature

The recession in advertising

Nothing to shout about
Jul 30th 2009 | NEW YORK
From The Economist print edition

Things are still getting worse for the advertising industry

“WE LED into the downturn, we’ll lag the upturn. Overall, it’s very tough,” says Sir Martin Sorrell, boss of WPP, a big advertising group. Advertising budgets tend to be one of the first things cut when times get difficult, he sighs, though it often costs firms more in the long run to recover the resulting lost ground. WPP had expected a hard 2009, budgeting for a 2% decline in revenues. But that now looks wildly optimistic, after a 5.8% year-on-year decline in the first quarter, and an even worse April and May.
These are global numbers, buoyed in part by WPP’s strong presence in emerging markets such as China, which have weathered the economic crisis better than most. In America, things are worse. Total ad spending fell by more than 10% in the first quarter (see chart) and predictions for the full year are even more dire. Spending on advertising will fall by a “normalised” 14.5% this year in America, from $189 billion to $161 billion, according to the latest forecast by Magna, a research arm of Interpublic Group, another big advertising company. The actual decline is even bigger, which is why Magna has adjusted the numbers to reflect the lack of big quadrennial spending events, such as last year’s Olympic games and American elections. The outlook is so bleak that some ad agencies have resorted to outlandish tactics to raise revenues (see article).

For many businesses that carry ads the pain is even greater still. Advertising in magazines is expected to fall by 18.3%. Radio advertising is predicted to plunge by 21.8% and newspaper advertising by 26.5%, which is why so many papers are struggling to survive. Even the much hyped rise of online advertising has been reversed, with spending forecast to decline by 2.2% in America this year.

Next year Magna projects a further decline in total spending of 2.1%—or of only 0.4% if spending related to the winter Olympics and America’s mid-term elections is added to the mix. But even this scenario depends heavily on a return to economic growth, says Magna’s Brian Wieser, who prepared the forecast. Unlike WPP’s Sir Martin, Mr Wieser believes that advertising spending moves in line with economic growth, rather than lagging behind it as the economy recovers.

Others in the advertising industry fear that when the economy does eventually pick up, the old link between GDP and ad spending will prove to have been broken, because the cyclical downturn will have accelerated several structural trends that were already hurting conventional advertising. One is that clients are becoming far more demanding. They increasingly want evidence that their expenditure is worthwhile. In April Coca-Cola said it was adopting a system of “value-based compensation” for the advertisers that work on its 400 or so brands, rather than paying them for time spent. This would cover the ad agencies’ costs, with a “performance” bonus of up to 30%. Procter & Gamble had earlier announced a similar scheme for 12 of its brands. If this catches on, it will spell the end of the billable hour.

At the annual gathering of the advertising industry in Cannes at the end of June, all the talk was of the accelerating shift away from established forms of advertising, especially the 30-second commercial, towards newfangled social media. The winner of the coveted Titanium prize was Barack Obama’s election campaign, which was a combination of “lousy advertising, but great marketing,” says Marian Salzman of Porter Novelli, a unit of Omnicom, another huge advertising group. This inspired much debate about how to turn every customer into an evangelist, and how to drive grassroots campaigns using Facebook and Twitter. A forthcoming book by Mr Obama’s chief campaign strategist, David Plouffe, seems destined to become the ad industry’s new bible.

Not everyone is convinced that a revolution is under way. John Deighton of Harvard Business School claims that social media were crucial to the Obama campaign only in the first half of the primaries, because using them is well suited to “insurgency”. After that, he says, the campaign reverted to a fairly standard effort dominated by television advertising. Indeed, Mr Deighton believes that the television commercial will remain the mainstay of the advertising industry for years to come. Magna’s Mr Wieser seems to agree, noting that, contrary to reports of its demise, America’s viewing habit continues to grow, and ad spending on national campaigns is likely to fall this year by only 6.3%—a triumph, in the circumstances.

Local television advertising in America has been hit much harder, owing to the car industry’s woes, especially the bankruptcies of Chrysler and General Motors. Car dealerships, which are closing in large numbers, are big advertisers. But Benjamin Swinburne, a media analyst at Morgan Stanley, is forecasting a surprisingly strong rebound in advertising, especially on television, because dealers’ spending on car and truck ads has fallen implausibly low: down by 65% in the first quarter of 2009 compared with the same period last year.

Perhaps the sharpest divide in the advertising industry is between those who think that as the economy revives consumers will rediscover their old spending habits and those who disagree, such as Ms Salzman of Porter Novelli. She says that American consumers “have changed in the same way there were Depression Babies who as adults would drive a car into the ground before replacing it.” Fast-food restaurants have been one of the few sources of higher ad spending this year, as they tap into newly value-conscious consumers, says Annie Touliatos of Nielsen, a media research firm.

Sir Martin, too, thinks that American and European consumers have been “scarred”, and will take a long time to rediscover the joy of splashing cash around. But as Mr Swinburne points out, advertising has done so badly of late that “it doesn’t have to come back all the way to have a strong recovery”.