Chill strikes services, too

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It is a nice theory: When traditional ad spending tanks in tough times, it posits, marketing services will prosper as marketers flock to disciplines that would produce more measurable results. Yet marketing-services suppliers in this year's downturn have been doing a lot more firing than hiring. It's now up to the marketing-services field to prove the theory, and its worth as the place to turn in tough business environments.

Ad agency holding companies have been gobbling up direct-marketing, promotion and public-relations specialists and talking grandly about the opportunities ahead. A diversification strategy is hardly surprising given that holding companies a) have already swallowed most ad agencies and b) need to keep acquiring since their organic growth in the maturing ad market won't be enough to satisfy Wall Street. Besides, Omnicom Group said it's not diversifying into cement factories (as our Adages column reported May 28), so it's got to buy something.

It's also not surprising that the marketing-services field has hit a bump in the road. Marketing-services disciplines rocketed in the 1990s upturn, with U.S. revenue up 20% last year. But smart marketers this year are evaluating every dollar of spending. (And dumb marketers, also known as dot-coms, are out of business and no longer employing PR firms.) A lot of marketing projects have dried up. At best, the category's growth rate has slowed this year. That's translating to hundreds of job cuts as reality hits home.

Marketing-services practitioners now must prove themselves. Those who are good, and deliver results that ring the cash register, will come through the downturn just fine. Those who don't deliver will fail, clearing the decks. Survival of the fittest is a fine thing.

We hope marketers challenge their marketing firms to perform. We hope marketers don't simply accept the hype that marketing-services specialists such as direct shops are more accountable and produce more measurable results than ad agencies. Prove it.

We also hope the recent pullback gives Wall Street reason to be skeptical when ad agency companies hype the future of marketing services. The future of marketing services is bright, but that really means the future of only some marketing-services providers is bright. Prove it.

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