Catching Up With Adland Over Coffees and Cocktails

Advertising Week attendees From Twitter, Condé Nast, Kraft, L'Oréal, Coca-Cola and agencies share predictions

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By moving Advertising Week so it would no longer coincide with the UN General Assembly, there were fewer logistical headaches than in the past. Attendees could find Manhattan hotel rooms for under $900 a night and didn't have to grapple with street closures.

But the affair, now in its eighth year, remained too exhausting in terms of number of events and too short on fresh thinking. A lot of it was the same old, same old.

Coca-Cola CMO Joe Tripodi
Coca-Cola CMO Joe Tripodi
Since it's less about what's said during panel discussions than what's said over coffee and cocktails, Ad Age staff decided to use the week's meetings with top execs as a chance to take a temperature check: How is the lack of confidence in the economy affecting marketers' plans for 2012, and how are agencies behaving accordingly?

"Marketers are reacting to the current economic uncertainty the same way consumers are," said Zain Raj, president-CEO at the SolutionSet MediaWhiz Partnership. "They're managing their current spending conservatively while adopting a wait-and-see attitude on making aggressive investments. Unlike the last recession, which was caused by consumer fear that quickly infected marketers and caused a lot of knee-jerk reactions, the feeling right now is more akin to a low-grade fever that refuses to go away."

Most marketers say there is no pressure to slash marketing budgets. But budgets aren't rising, either.

"We're doing our plans now for next year and we're doing everything we can to keep spending at the same levels as this year," Kim Bealle, Kraft's senior director-consumer marketing group, told Ad Age . The company is adjusting its media mix, however, with certain brands, such as Kool-Aid, spending 50% or more in the U.S. Hispanic market.

Compared with packaged goods, there seems to be a bit more clamming up when it comes to the restaurant and beverage business. Tony Pace, top marketer for sandwich chain Subway, said he's observed restaurants are doubling down on value messaging to entice customers who might otherwise conserve their cash. A drop in gas prices, however, could free up some disposable income, which in turn could mitigate some consumer fear about a double-dip recession.

L'Oréal CEO Frederic Rozé
L'Oréal CEO Frederic Rozé
"We're certainly concerned about the economy, only because in many parts of the world there's not the confidence level," said Joe Tripodi, chief marketing and commercial officer, Coca-Cola. "Our business gets hurt when the economy is down and people don't go to restaurants. We have a huge fountain business, a huge restaurant business, quick-serve restaurants, cafés and bars." The beverage giant predicts consumers could start gravitating back to lower price points, and is working with its restaurant partners on different "ways to bundle the product with food, to drive value for the customer."

Condé Nast CMO Lou Cona - fresh off a trip from Europe where he met with a bevy of chief marketers and CEOs -- said things look solid for luxury advertising despite recent turmoil in the financial markets. "What I have heard is -- and I was pleasantly surprised -- is that many of them have posted double-digit gains in their sales year to date, and their expectation was that they would end the year in very positive territory."

Mr. Cona observed similar bullishness for the beauty market: "If I look across the beauty business and some of the early talks we're having for 2012, we're not seeing any wholesale cancellation of schedules. We're actually seeing some pretty robust requests for proposals."

Frederic Rozé, CEO of L'Oréal USA, likewise said he sees no slowdown yet in the U.S. beauty market. "It's due to the polarization of the U.S. economy," with unemployment still low among college-educated consumers and high among others.

What's common across all marketing sectors is that social media and mobile will likely continue capturing more ad dollars, according to people who work in the realm.

Said Adam Bain, Twitter's president of global revenue: "As we continue to grow our audience and expand our ad offerings, we expect to see even more demand as brands look for cost-effective and measurable solutions."

Conde Nast CMO Lou Cona
Conde Nast CMO Lou Cona
"I see no slowing of growth [in mobile investment]," said Anne Frisbie, head of North America for mobile ad network InMobi. "I haven't seen bad signs yet, but even if that was to happen, I think mobile will be fine because 2008 was different; mobile hadn't yet gotten its foothold."

When it comes to digital overall, the focus is increasingly on measuring how ad dollars are providing return-on-investment. As Shane Ginsberg, VP-corporate development at Omnicom Group agency Organic , put it: "We're in a "prove it' economy," and what's on the chopping block in tough times is "advertising that doesn't lead to a sale tomorrow."

"On the management of agencies side, we're trying to be as thoughtful as possible about our costs, and strategic about who we bring on to staff now," said Mary Baglivo, CEO of Saatchi, New York, and CEO-chair of the Americas. "We are being pretty conservative in that regard."

At the end of the day, it's all relative.

The Motor City, of all places, is finally a bit more upbeat. Said David Demuth, CEO of Doner: "Despite all of the rhetoric about uncertainty in the economy, here in Detroit it feels pretty damn good relative to how bleak it was just a year or two ago. So, we're focused on growth."

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