Report From New Orleans

AD BUSINESS IS IMPROVING; SPENDING ON THE UPSWING

Optimism Breaks Through the War Gloom at 4As Media Conference

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NEW ORLEANS (AdAge.com) -- Despite the looming threat of war with Iraq, media executives and their marketing clients at the American Association of Advertising
Photo: Doug Goodman
'Things are improving,' O. Burtch Drake told the conference.
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Agencies' 10th annual media conference here expressed confidence that ad spending will increase this year, with a recovery possibly beginning at year's end.

The 4A's media conference, which began today, was surprisingly well attended, as an estimated 1,000 executives gathered in an atmosphere of guarded optimism about the state of the advertising industry.

$9 billion upfront predicted
Already, the scatter TV market has experienced rising prices and by all indications the forthcoming prime-time upfront selling market will be a boon for media companies. Some executives here predicted almost $9 billion in ad sales.

While many advertisers and their agencies who spoke to AdAge.com said the threat of war warranted a cautious attitude, contingency plans are in place should a war force preemption of paid advertising on TV. This preparedness, unlike last year when advertisers were struggling to make sense of the possible economic repercussions of war, has added to their confidence heading into the second quarter.

'Things are improving'
In his keynote speech at the meeting, dubbed the "media in a time of change" conference, O. Burtch Drake, president-CEO of the 4A's, lent a strong voice to that confidence. "There is a general feeling among many in our business that things are improving, and if not dramatically in 2003 than certainly in 2004."

Although new-business reviews had gotten off to a slow start this year -- in January there were $490 million in new billings that changed hands, compared with $1.9 billion the same time last year, according to Media Analysis Plus, a Chicago-based media consulting and research firm -- advertising executives on the floor of the trade show said there has been a significant spike in pitches that began in February. Media Analysis Plus reported $603 million in billings shifted last month, compared with $410 million last February.

Mr. Drake's buoyant speech also acknowledged challenges facing the industry, as illustrated by two new books, The End of Advertising, by Sergio Zyman, and The Fall of Advertising and the Rise of PR, by Al Ries and Laura Ries.

Paid media still essential
"While both books raise valid points ... they each contain what I consider to be a fundamental flaw," said Mr. Drake. "Paid media advertising, television, radio, outdoor or the Internet remains the essential element of virtually every marketing campaign."

Mr. Drake's speech became a call for

Photo: Doug Goodman
Steve Forbes predicted an economic upswing after the Bush administration wages its 'fast war' in Iraq.
advertising and marketing executives to stick to their knitting, despite the threat of TiVo, which can zap ads, and other technologies that are slowly altering the ways advertisers can deliver brand messages. The fundamentals are not about to go away anytime soon, Mr. Drake said.

"The agency business did not become an $18 billion business in revenue in the U.S. by failing to provide marketers with smart and bona fide strategic counsel and effective marketing communications solutions. ... Paid media advertising is going to be with us for a long, long time, and it will continue to be effective for a long, long time."

Renetta McCann, CEO North America of Publicis Groupe's Starcom Worldwide and chair of the 4A's media policy committee, echoed that conservative assessment.

Madison & Vine
"The sky is not falling," she said. "Paid media is here to stay. The news heralding the death of the upfront has been greatly exaggerated. And 'Madison and Vine' could simply go the way of the dot-coms and the 10,000-point stock market." With Madison and Vine, Ms. McCann was referring to the term used to describe the growth of product-placement deals and other marketing partnerships between advertisers and entertainment companies.

Overall, attendees seemed less frightened or intimated by a war with Iraq than last year, even after word of President Bush's press conference tonight traveled quickly through the conference rooms.

"It's the delay of war that slows business," Steve Forbes, president-CEO of Forbes Inc., told Adage.com. "President Bush has shown remarkable restraint. I think we should have gone into Iraq right after Afghanistan."

Mr. Forbes, a presidential candidate who ran against President Bush in the Republican primary in 2000, was at the conference moderating a panel on technology and consumers. "Once we get through this thing, which will be a fast war, just two weeks, the economy will come back strong."

New billings initiative
Also, at the conference, the 4A's media policy committee announced a new initiative that would create a code of conduct and formal procedures for address media verification discrepancies. At issue are inconsistencies between the advertising schedules that run and the amount on the invoices that are billed by the media company.

According to a statement released by the 4A's, discussions between the organization and Ernst & Young have established "the groundwork for a media verification audit" that will gauge discrepancies between the realized schedules and the invoices. The audit will create permanent guidelines for media owners and agencies to follow. Charlie Rutman, president of Aegis Group's Carat North American, was appointed to lead the initiative.

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