After the past couple of months of budget planning for 2010, a picture is emerging of the plans clients and agencies have - or should have - for next year. Compared with the train-wreck that was 2009, many are quietly optimistic.
Generally, budgets are expected to be up (not always by huge amounts, but up nonetheless). Headcounts should also rise - one regional network boss told Media it would be increasing its staff numbers by up to 15 per cent on the back of one account win.
Generally, budgets are expected to be up (not always by huge amounts, but up nonetheless). Headcounts should also rise - one regional network boss told Media it would be increasing its staff numbers by up to 15 per cent on the back of one account win.
Unsurprisingly, agencies from all disciplines say they expect to build their digital and activation initiatives next year. After the lessons learned in 2009, themes such as precision targeting and measurement are here to stay, say executives.
The scramble for digital staff is set to continue, with agencies across the board saying investment in this area is a priority. Public relations agencies in particular are focusing on social media expertise next year, as well as work related to taking Asian brands global. Vivian Lines, president and COO of Hill & Knowlton Asia-Pacific, points to LG and Haier as brands relying on PR to help them expand globally. “PR probably helps them link better with these global markets and can help them diagnose what to do in these markets a bit better [than other disciplines],” she says.
As for brands, according to Ogilvy & Mather’s global effectiveness director Tim Broadbent, planning for an upturn is an artform in itself.
He argues that any recovery gives brands the freedom to experiment with new channels. In 2010 that will translate into more digital and PR tactics in an effort to take products beyond their intrinsic worth and position them as something that “gives satisfaction beyond the product, that has either status or another clear benefit”. Doing this, he says, can help brands in the next downturn.
Broadbent also suggests that target audiences have changed. This is the case in China, where ads used to target the wealthiest echelon but will now shift to appeal to middle-income consumers. “Some who used to be super-rich are now part of this middle economy due to the effects of 2009, while a huge number of people are moving up from lower economic groups,” he says.
Assuming an upturn is on the cards, brands’ planning for it should take into account the strategies they implemented during the downturn. Typically, says Broadbent, brands that cut marketing investment in the downturn take four years to recover, and will have to spend a lot of money to keep up with brands that kept spend steady.
In terms of which markets brands should invest in, Dr Peter Steidl, partner of business planning at Mindshare, believes 2010 will be less about China than 2009. “The recovery will be more consistent and smooth in countries that rely to a great extent on domestic market demand - India is a good example of that,” he says, pointing out that China’s growth this year has been driven by Government stimulus.
But as clients prepare to raise investment, the question facing agencies is how much of that spend they will see. The fear now, especially in media buying, is that just because clients are planning bigger budgets, it doesn’t mean agencies will make more money.
“Average fees have shrunk,” says Steidl. “I don’t think clients will be happy to accept a rise in fees simply because they are doing better.”
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This article was originally published in 3 December 2009 issue of Media.
