War shaking marketers around the globe

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The war in Iraq hasn't started, but it's already taking its toll on the industry.

Marketers are nervously eyeing consumers, afraid that war fears will take a toll on spending and bring on a dreaded "double dip." And fears that anti-war sentiment overseas will translate into boycotts of U.S. goods is in the back of marketers' minds, even if they see only spotty evidence of that so far in their sales figures.

Ed Keller, CEO of market researcher Roper ASW, said studies of U.S. consumers found that six in 10 feel the war is having an impact on their buying moods. They are still interested in spending for certain things, but are becoming more careful on big-ticket items.

Overseas consumers are harder to pin down on feelings about the war, since they are worried about the world economy, he said. U.S. culture still appeals in many countries, but some differences are showing, although it is hard to tie the changes to the war, as opposed to other factors, such as opposition to globalization and the loss of local culture.

"There is a mixed story as it relates to America and American goods. Out of close to 25 countries, that we have tracked, some-Canada, Australia, Mexico, Japan, the Philippines, Italy, the U.K. and Russia-now feel closer and more positive towards America and its culture," he said. "Going the other way are Argentina, Brazil, Hong Kong, Taiwan, China, India, Indonesia, Thailand, Germany, the Czech Republic, Hungary, Poland, South Africa and Turkey."

U.S. marketers say, so far, there is no evidence of boycotts overseas, but they are watching for signs of a backlash, as well as for increased expenses, such as material costs, that would result from the outbreak of war.

Some Middle Eastern groups have called for boycotts of U.S. goods, although many companies point out that their business there is conducted through local franchisees. Coca-Cola Co. and PepsiCo have said the boycott has pressured sales in the region.

Procter & Gamble Co. had been dogged by an Arab boycott of its Ariel detergent based on rumors that the brand is owned by Israeli Prime Minister Ariel Sharon. But a P&G spokeswoman said sales bounced back, thanks to a campaign that included a visit by Egyptian Prime Minister Atef Abeid to an Ariel factory.

Asian ad-industry insiders noted that consumers there can distinguish between American foreign policy and brands, and so far, the threat of war is having no effect on marketing.

Khai Meng Tham, co-chairman, WPP Group's Ogilvy & Mather, Asia/Pacific, said there is no evidence of anti-American sentiment hurting sales in key markets. But he speculated that U.S. brands might suffer in Malaysia, given the experience during the last Gulf War, when Washington Apples, Coca-Cola and McDonald's Corp. were all boycotted. Thailand, Cambodia, Vietnam and Laos are predominantly Buddhist, so it would be business as usual there, he said, while the Philippines is dealing with its own internal problems.

Meanwhile, U.S. media companies are listening carefully to the beating of war drums. A top executive at a media agency speculated print would be hardest hit.

short, ok. long, bad

"Magazines don't have the flexibility to pull out an ad at the last moment, so advertisers will think twice about running a schedule," he said. "Television is easy. You pull a spot and make it up down the road. Once you run a print ad, that's locked in. "

Douglas McCorkindale, president, chairman-CEO of Gannett Co., said some advertisers have mentioned concerns about advertising scheduled for late February and early March.

"If there is a war, it may not have much of an impact if it is short." But "if it drags on, that's bad news."

The market would have rebounded already had international tensions not emerged, said Phil Dusenberry, retired chairman of Omnicom Group's BBDO Worldwide. He believes increasing spending during a shrinking economy will bear fruit for clients.

"Now is the time to turn up the heat, while your competitor is pulling in his horns," he said. But many companies tread gingerly on the creative front in times of turmoil, jeopardizing potentially successful advertising campaigns, he said.

Some agencies have begun to see the uncertainty take its toll on production schedules. Alan Kalter, CEO of Doner, Southfield, Mich., said production companies warned him that "shoot" insurance, which covers the loss of time and money, may not cover those disrupted by war.

The travel industry is expected to take a serious hit if war breaks, with a spike in fuel prices worsening airlines' financial problems, said a spokesman for AMR Corp.'s American Airlines.

"We have several scenarios in place, but we'll just have to wait until the shooting starts to find out how it affects our company as well as our industry, and then react to it." Asked if advertising would be affected, he said "further belt-tightening" is expected.

"We will just be at the mercy of the news," said Randy Curtis, VP-creative, Wal-Mart Stores. "We will ride it out like everyone else in America."

contributing: advertising age staff

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