This month we've seen what some are calling the beginning of a double dip recession, although nobody has actually dared say that out loud. America's credit has been downgraded for the first time and they’re pulling money out of Europe, the Eurozone is causing nervousness by not adequately addressing the issues in Greece, Portugal et al putting huge pressures on Germany and France economies and their confidence to the point where the Euro itself is at risk. Alongside this, various agencies have also naturally scaled back their growth forecasts for this and next year and some large brands are starting to review their agency arrangements more than usual for a traditionally quiet summer for new business.
In 2003 Sorrell famously predicted a “bath-shaped” recession. I’m thinking its going to be more of a "Jacuzzi-shape" this time (see kindergarten quality diagram) and we are on the edge of our seats (ahem) waiting again to see how this will play out in adland.
As we hurtle towards Q4, naturally brands start to consider budgeting for next year and will be re-evaluating their marketing investments in light of the insecurity of consumer spending and growth potential in the market.
Is this all sounding rather familiar? True, but how might it affect our industry this time around? Will 2012 be any different to the madness of agency reviews we saw in 2009.
I think we may be seeing the beginnings of another round of 2009 style agency reviews. GM’s recent announcement of a $3bn kick-start
to this inevitable process rocked media agencies around the world. At the time we said 2009 would be the year of the pitch and indeed it was with a collection of behemoth global FMCG and telecom reviews. I expect that 2012 is shaping up to be the same, with a likelihood of many agency reviews commencing across Q4'11 to Q1'12
Over the coming days and weeks I want to consider the implications of this scenario for some of the key stakeholders; namely clients, agencies and media owners. Some of who are still battling with the legacy left from 2009 reviews where deflationary pricing triggered some very aggressive reviews and promises made in media.
I'm going to share with you a chain of related posts that I've been writing for the past few months in somewhat anticipation of this scenario happening.
Keep an eye open and stay out of the Jacuzzi for now…