30 Mar 2008 Wall Street Journal
Spending Trimmed For Slower Times
As concerns about the economy mount, some ad agencies and media-buying firms already have begun some belt-tightening. Some are slowing the pace of hiring, and others are trimming other expenses. Some forecasters believe U.S. ad spending will grow about 5% this year, powered by special events such as the presidential election and the Olympics.
Ad firms believe they are better positioned than some industries to ride out a down cycle because of the diversification of their business. Over the years, many have bought different types of marketing businesses, some of which specialize in so-called “below the line” marketing functions such as junk mail and public relations. In economic slowdowns, these services tend to perform better as marketers shift more dollars to mediums that are cheaper and more measurable.
One-thing ad firms won’t be cutting: digital talent. Most companies still are trying to catch up to marketers’ demand for online ads, and are searching for even more digital expertise. Moreover, even if the economic slowdown deepens, many believe the thirst for Web ads will be one thing that remains strong.
“Marketers will go there because many still believe there is a cost advantage in Web advertising,” says Brad Brinegar, chief executive of Havas's McKinney. Marketers are also able to better measure the success of Web ads.