Industry’s nerves jangled by Government cuts

THE State Government delivered the biggest blow in what has been an anxious year for the local advertising industry.

The Government’s decision to cut its advertising budget by 30 per cent came on top of reviews by a number of blue chip clients.

The budget cuts sent ripples through the entire industry.

The local branch of the Advertising Federation of Australia funded research to prove the social value of Government’s community service and public information campaigns.

“It was a period where Government business largely dried up, in excess of 40 per cent of the work disappeared,” 303 managing director Stephen Wells said. “The industry

is facing some major challenges.

“From my point of view we haven’t had a bad year but I think the industry is, to some degree, at a crossroads. I think the next six to 12 months will define where it is in five years’ time.”

The Government cut about $54 million out of State budgets, forcing some of the bigger players to cast their nets further afield to keep their business afloat.

A big number of blue chip account tenders has further fuelled uncertainty in the industry, including HBF, Western Power, Burswood Resort Casino and BankWest.

JDA general manager Julian Donaldson said that, aside from the uncertainty tenders injected into the industry, they also can carry a hefty price tag for agencies.

“I think the economic times are always cyclical but, in the past when there has been a cyclical movement, the industry has emerged pretty much the same,” he said.

Despite a tough business environment the major players remain resolute, if not overwhelmingly positive, about the future.

The Brand Agency account director Steve Harris said it had been a good year for Brand but the first six months of 2002 were unlikely to deliver any immediate relief for the industry.

“We’ve had a very good year. The key issue for us has been the Bunnings - Hardware House merger, which has provided significant growth for the agency,” Mr Harris said.

“I think the first six months of next year will be quite tough. A lot of clients changed their budgets in the mid-year review.

“Clients are clearly very cautious and not committing to anything long term.”

Mr Harris foreshadowed the collapse of a number of players in the next six months, in addition to other agencies looking to mergers to continue operating.

And it’s not just clients that have been casting around for new opportunities. Both Market-force and 303 have lost their creative directors following the arrival of industry newcomer Gatecrasher.

Many agencies have had to slim down to get through these lean times and that inevitably has resulted in redundancies across the industry.

No matter what the economic climate, good service is central to the success of any business. MJB&B director Craig Billings claims agencies need to continue to evolve and develop their service no matter what the economic climate.

“Our attitude is very much that we plan long term for all our clients,” Mr Billings said.

“I hope the same can be said for our clients.”

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