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Bright forecast clouds some heavy weather

THOSE working in the media and marketing industry must wonder if they are living in the same country as the rest of us some days.

The relatively upbeat economic forecasts doing the rounds are obscured by some very heavy weather in advertising land and, according to forward projections, the industry appears to be grappling with an unexpected renaissance.

The terrorist attacks in the US last September dealt a body blow to an industry that, in Australia, was already on the ropes.

Local industry insiders admit the rot had set in well ahead of September 11, with the State Government’s advertising budget policy affecting people from industries as diverse as printing and public relations.

A survey undertaken by one of Australia’s biggest media buying outfits, Starcom, confirms the industry is facing a very lean year.

The big question is whether this is indicative of cost cutting or a shift in the way businesses use advertising agencies and develop their marketing strategies.

Twenty per cent of the national advertisers surveyed by Starcom expect a decrease in their advertising budget for 2002, and it’s not just the financials that are under pressure.

With management demanding smart, effective advertising, the pressure to come up with clever ideas that deliver revenue has perhaps never been stronger.

The Starcom survey also shows some worrying patterns for the big players in media.

In fact, pay TV comes out on top as the best performer in the media market, with the biggest growth in advertising revenue in 2002.

The media moguls can take some comfort in the results that suggest the entertainment, automotive, pharmaceutical and retail sectors will grow their advertising activity.

The media recession is not exclusive to Australia, although it has proved more difficult to analyse in light of the good performance of the national economy against a backdrop of global doom and gloom.

Australia also has had a raft of corporate collapses to contend with.

Analysts believe the collapse of OneTel, HIH and Ansett cut $70 million worth of advertising revenue out of the industry.

While the 2002 Winter Olympics have produced a hopeful spike in advertising spending in the US, the Australian industry has had no such luck.

If anything, the fall-off after big spends on the Olympics in Sydney in 2000 account for some of the downturn in advertising growth in 2001.

Attitudes to advertising have changed since the industry’s ostentatious heydays.

The long lunches have all but evaporated and creatives are expected to sell ideas to clients demonstrating a sound appreciation of the importance of a return on an investment for a business.

The big fear in the media and marketing industry is that the sensational advertising revenue has dried up as businesses look to alternative media, including the Internet and direct mail, to get the message out.

Increasingly, television is the media for the elite and cashed-up few, serious players with serious money.

With the advent of digital television and digital recording devices that can skip past commercials, the industry is being forced to answer some very hard questions.

Online advertising has proved a very competitive and successful model for a number of different classified markets, including the lucrative employment advertise-ments.

At the same time, media companies have poured millions of dollars into websites that have become financial black holes for the companies concerned.

The Internet has proffered a number of exciting and seductive opportunities for media outlets without any serious revenue model.

Despite all this, growth opportunities remain. The building industry, propped up by the first home owners’ grant, has sparked a buoyant property sector and associated marketing activity.

However, as the federal grants scheme winds up, these opportunities also may slow down.

The number of advertisers predicting an increase in spending is down by as much as 42 per cent for television advertising.

For media buyers the most worrying news is not just the depressed sentiment, but that 90 per cent of national advertisers anticipate a change to their marketing budget for 2002.

Surprisingly, sales are driving the need for change in only 12 per cent of the respondents.

A change in strategy accounts for the biggest group of respondents in this area. This suggests that, while the bottom line is important, a sound strategy is valued above a simple spend measurement.

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