The ad outlook 12 months ago was dismal-and predictable. "So many signs suggest the business cycle has turned south that it's starting to feel like recession," we wrote on this page last Jan. 1. The recession began in March. Sept. 11 made things far worse. Yet while the scale of the ad industry's decline was greater than anticipated, the lockstep pullback in ad spending and at media companies and ad agencies was standard procedure for a downturn.
Managing a downturn is doable. Control costs. Look for ideas-value pricing, for example-that can resonate with penny-pinching consumers. Managing an upturn is more appealing. Invest for growth. Look for ideas-products, messages-that play into consumers' newfound optimism.
Managing in 2002 will be more difficult: You must sort through claims that recovery is under way vs. assertions that recovery is still far off. We're betting a) economic expansion will resume this year, b) recovery will bring moderate growth rather than boom times and c) the ad market will lag, with no growth in spending till 2003.
The ad world is far better positioned now than a year ago to begin its next act. Agencies are lean and hungry. Secondary media outlets and media built on ill-conceived business plans are going or gone, leaving a competitive market of stronger media. Overall media prices have moderated, shifting the balance toward the advertiser.
A year ago it was prudent to be pessimistic. It now makes sense to be optimistic about an upturn yet cautious about its timing. This is a good time to plan-to prepare media launches or other products, for example, to be ready when there is an upturn. The turnaround isn't here yet, but we are closer to the end of the recession than to its beginning.