WPP Group CEO Sir Martin Sorrell, announcing a 6% drop in overall revenues (after acquisitions and currency fluctuations) for 2002 over 2001, addressed the looming war head on, describing it as the "rogue factor" in any ad recovery. The current political uncertainty was already beginning to damage ad revenues, he said, with many companies delaying big decisions on campaigns. "If there is a war and it's over quickly, that will stabilize the Middle East and will be to the benefit of the industry. It's just impossible to say," he said.
Although Publicis Groupe CEO Maurice Levy announced a 20% hike in revenues the week before, this was due almost entirely to its acquisition of Bcom3 Group. Without that boost, there would have been a fall of more than 3%. Mr. Levy, like many French with a lot of business in the U.S., didn't mention the war: "The year 2002 was in no way in line with expert forecasts. It was notable for its climate of prudence and uncertainty, making forecasting extremely difficult."
Havas CEO Alain de Pouzilhac, reporting an 11.3% drop in revenues, also steered clear of the "w" word. Havas said trading was poor in the U.S. and in Europe. This passed for a new line in Gallic understatement.
London based Cordiant Communications Group, having announced an 11% drop in revenues, appears to have resorted to "plan C" in its long struggle to stay afloat. New CEO David Hearn is to sell off the German-based network Scholz & Friends, its strong Financial Dynamics PR company, leading Australian agency George Patterson Bates and-perhaps-its 25% in Zenith Optimedia. Is this enough? Who would dare forecast Cordiant's 2003?
Sir Martin, however, is a consistently accurate forecaster. His belief is that the presidential elections of 2004, together with the Athens Olympic Games and the European Football (Soccer) Championships, will each contribute to a global upturn. He acknowledged U.S. clients, in particular, were worried about advertising during rolling war coverage and some were insisting on war clauses. But he said that he did not think hostilities would have an impact on advertising revenue unless the war is protracted.
In typical Brit fashion, it's unlikely that U.K. advertisers would demand war clauses like those in the U.S. Instead, both sides would have an "understanding" that sensitive industries, such as airlines, would expect media companies to allow ads to be pulled under certain circumstances, whether or not it is written into the contract.
It really is difficult to see how things can get better without first getting worse. So, don't be rash. Don't boycott those French cheeses and wines just yet. You may need all the solace you can find.
Stefano Hatfield is contributing editor of Advertising Age and Creativity.