• Advertisements

The Economy’s Effect on Advertising

What will the economic downturn mean to the business of building brands? First of all, it won’t be good. For many companies, marketing consumes a large percentage of the overall budget. Pulling back on ad spending can equate to big savings. That means that jobs will be fewer in all sectors of the ad business:  in agencies, on the client side, and with vendors and support companies.

The pattern of past recessions suggests that ad spending lags behind consumer spending. According to Merrill Lynch managing director Jessica Reif-Cohen, this means the slowdown in advertising and marketing kicks in one or two quarters after the start of a consumer recession, and it experiences a similar delay in its recovery (see the MediaWeek article).

But all of this is nothing new, right? What else will the poor economy mean to the branding business?


As advertisers pull back on their marketing spending, there will be more decentralization. This means that in-house advertising and marketing departments will be smaller. Ad agencies are going to trim back to their core employees and key support staff. Companies (including agencies) will be more likely to hire a freelancer or a long-term temporary employee than to hire a full-time employee on a salary. This will create more freelancing opportunities. In times likes this, it’s really important to think like the entrepreneur. Long-term employment with one company is a thing of the past; it has been for a while. Smart careerist are taking control of their lives and not relying on their employer to make them happy. Read a great book called “Radical Careering,” by Sally Hogshead!


Supply and demand is like gravity – don’t fight it, just learn to use it to your advantage. When budgets are tight it’s a buyer’s market. There will be more aggressive price negotiations from clients. Media buyers will be able to command better deals. Account managers may need to be more flexible on proposals. Production managers will need to think of “Option C” when dealing with the client, and they will have more negotiating strength when dealing with a supplier.

This also means that there will be more competition for new business. There will be more agencies fighting for the same business, and they will be fighting harder than ever. The cutbacks will bring more changes to marketing departments. New marketing directors will mean more accounts coming up for review. There will be younger people making bigger decisions than before.


When times get tough, clients tend to want to be able to justify their decisions. They want to be able to cover their ass. Marketing directors have bosses, too. Marketing directors are number guys and gals; they feel comfortable with numbers. They hate that the success of advertising is often qualitative. In tough times it can be hard to justify a campaign with a creative award and a nice number of GRPs. It’s much easier to justify a direct-response campaign that directly produced a quantifiable number of sales. This means that direct mail and other direct efforts will be easier to justify. Remember the chorus from clients:  “I know that half of my advertising is wasted, I just don’t know which half.” Put the QVC on your speed dial and buy the book “Infomercials for Dummies.”

Traditions Become Stronger

Along the same lines as focusing on work that is accountable and justifiable with hard numbers, agencies and advertisers are going to focus on work that they know. We all know that the future is online and it’s interactive. It’s also a dirty secret in the business that many agencies don’t really know online and interactive as well as they should. As the finances get tighter, it’s smart to focus on what you know. Agencies won’t continue to explore new media at the pace that they did just a year ago. Traditional agencies will become more traditional. The divide between traditional agencies and new media agencies will become wider.

Fat Cats are Out

With the influx of freelancers and smaller budgets, fat cats won’t be driving the ship anymore. This is a time for new blood to seize the opportunities of change. How will these new opportunities present themselves? It’s all about pure entrepreneurial spirit. It’s all about fresh, smart thinking that will solve the client’s problem. Change makes opportunity for those ready to grab it. We will need to be smarter, more strategic, and more streamlined. Fat cats aren’t used to working in this space.

Design in Gray

Design will trend toward the conservative and away from the flamboyant. Design in gray might be a little harsh, but the idea is sound. Design to communicate the message in the context of today’s economy. Clients won’t want to communicate that they are not minding the purse while at the same time they are having layoffs and salary freezes.

Grad Schools Fill Up

Getting a job without experience is going to be tougher than ever. Entry-level jobs will be far and few between, and the competition will be fierce. After graduation instead of working in a job that won’t help their career, many students will take two years to polish their skills at grad school or at a portfolio school. When they graduate, the economy will be in a better place, there will be more job openings, and they can command a better job. The other option is to continue to look for a job while waiting tables just to compete with the recent grads for the entry-level jobs in a couple of years.


When competitors are scared and afraid to spend money, it’s easier to get noticed. A fantastic book is “Zag,” by Marty Neumeier.  When everyone else zigs, you need to zag.

There’s going to be less clutter and more opportunities. Remember the nonsense ads that were everywhere during the dot com boom?  During that time our business was creating clutter just because we could. Things are different now. It is a good time to review the opportunities that the market is opening up.

Purge The Hacks

Advertising is a tough business. There are a lot of smart, hard-working folks in the ad business. Let’s face it, there are a lot of hacks, too. In tough times the hacks are the first to go. The cream of the crop who have a passion for the business will remain. If you’re still employed in the business of building brands, be sure that your nose is to the grindstone and your brain is firing on all cylinders.

It’s Still About Opportunities

If you like to grab the bulls by the horn, now’s the time to put on your gloves and spit on your palms. The economy is in the tank, and times are changing. Change means opportunity.

The economy affects all of us. How are you making the most of the situation?  Please share your thoughts as a comment.



One Response

  1. […] The Economy’s Effect on Advertising […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: