The theme of this week’s American Association of Advertising Agencies conference in New Orleans will be the consumer, but it might as well be the economy. These days they are one and the same, because the recession is changing all sorts of consumer behavior, perhaps permanently.
To better understand the challenges the media business faces in this economic climate, TelevisionWeek contributing writer Daisy Whitney spoke to Marc Goldstein, CEO, North America, at GroupM and the chairman of the 4A’s Media Policy Committee, who will speak at the conference Thursday. An edited transcript of the interview follows.
TelevisionWeek: How bad is the advertising business right now?
Marc Goldstein: We are certainly challenged as an industry. Our clients are looking at everything they are doing. Some mediums are being affected more than others, like the automotive industry and the retail industry. We have read and seen about magazines being shuttered. Clearly there are issues facing us as media professionals and communications professionals, and I think as we move ahead in 2009 we are hopeful it will get better and we would like some signs it will improve.
TVWeek: Is this a gut-wrenching systemic change to the business going on?
Mr. Goldstein: You can’t look at advertising as an entity unto itself. Multiple businesses and industries in our economy are all having difficulties and challenges, whether banking, automotive or retail. This is not something isolated to the ad industry. This is part and parcel to the entire economy.
TVWeek: When will it get better?
Mr. Goldstein: I’d like to be as optimistic as Sir Martin Sorrell, who heads up WPP—he believes 2010 will be a better year. We need to be optimistic. It’s important for us to be optimistic. The pervasiveness of the doom and gloom is only going to continue if we continue along these lines, and it will create a bigger and bigger hole from which to climb out of. We need to modify our attitude and be more optimistic and take hold of our individual companies and take the view that we will come out and implement the kind of efforts internally to make it through.
TVWeek: What are the specific challenges the media business faces?
Mr. Goldstein: Clients are sharpening their pencils and determining if they want to continue with spending of the past, and there are more and more choices for advertisers to spend money, whether it be the traditional side of television, magazines and radio or the entire digital side and video side and opportunities in search. They are all seeking some portion of what is a reduced budget. So it gives us an opportunity to be selective and be very targeted in delivering to our clients the consumers they are looking for at an advantageous pricing.
TVWeek: What areas are doing well now?
Mr. Goldstein: Despite everyone pointing fingers at TV, it’s holding up well on a relative basis. Advertisers are still looking at TV to play an important role in their media and communications mix. If you look at most of the forecasts, the one area [where] everyone is pointing to growth in 2009 is digital and search. Early forecasts were double digits, and those have been scaled back, but the general consensus is this is the one area that will in fact grow in 2009 over 2008. TV will do well, but doing well may be relative. It may be down but may not be as down as other mediums.
On a broad economic basis, we are generally measured by the percent change on a year-over-year basis, and that’s a metric that may not hold well in 2009, not just in advertising but in any industry. Does it make a difference if you didn’t make $500 million? Did you have a terrible year if you made $475 million? I am not sure in 2009 it is truly a valid measurement.
TVWeek: What are you recommending to clients right now?
Mr. Goldstein: Different clients’ needs are very different. Clearly they understand the value of marketing and they understand the value of advertising. We don’t see clients disappearing from the landscape and going to zero, but we are seeing clients reducing their spending. We see clients more open to new ideas and taking some risks with mediums. Whether it’s TV or digital, they want to do things that stand out and be visible. They really want to make their dollars work hard for them. In this environment, where consumers are husbanding their financial resources, advertisers need to maintain visibility and they need to maintain as best they can their share of voice as they are battling every single day at supermarkets or retailers.
TVWeek: How do you balance reducing budget and maintaining market share?
Mr. Goldstein: Very carefully. You can change your mix of media. You may look to get more efficient media so you can get more impressions with every dollar you spend, and you may eliminate some media that aren’t working as hard.
TVWeek: Will there be experimentation with new mediums this year?
Mr. Goldstein: If they have tried something and are rolling it out with other brands, they have realized learnings. For instance, if the use of branded entertainment and the things beyond a 30-second announcement or a full-page magazine spread have yielded positive results, they will apply those to other brands.
TVWeek: What would you have done differently last year if you could do it over again?
Mr. Goldstein: The problem with answering that question is it makes whatever you did a year ago appear to be incorrect. The fact of the matter is we all make decisions at a moment in time that we believe are based on valid data and information, and sometimes we find out six or 12 months later that what we were looking at wasn’t accurate, but that doesn’t mean the decision was wrong at that moment in time.
TVWeek: What have you learned in the last year?
Mr. Goldstein: I learned last year there was more out of my control than maybe I thought. We all went along with a belief for a very long time that this particular economy was going to continue and we were going to continue operating and the growth horizon was going to continue year-over-year. What we found was there were other factors that played a significant role, and in effect we were all blindsided.
TVWeek: How will the industry be forced to change this year?
Mr. Goldstein: We will learn much more quickly how to develop processes to be more efficient and we will learn how to work in a better, smarter, more effective way and we will learn to work more collaboratively sometimes with different industries and trade organizations.