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Samuel Helbling on the structural crisis in the advertising industryCrisis. Recession. Budget cuts. When the economy falters, the advertising industry is hit to the core: Fewer jobs, nothing to laugh about and clients who are increasingly brazen in exploiting their market power by making agencies bleed more and more in pitches. There is no question that the advertising industry has had a miserable year. The decline in turnover at BSW agencies doubled from 5.6 percent in 2001 to over 11 percent last year. A fifth of the staff has now been laid off. Price pressure and margin erosion continue. In 2002, advertising expenditure fell more dramatically than ever before, by around 110 million francs. The stock market hype and overinvestment have now been reduced, but the industry's shrinking process continues. The culprits are the service providers who, in contrast to the consumer goods industry, have drastically reduced their advertising investments. Banks and insurance companies alone have reduced their budgets by over 70 million francs.
Another problem is likely to keep some advertisers awake: the share of traditional commercial communication is constantly shrinking in favor of below-the-line measures. While the dialogue and specialist agencies organized in the BSW are confidently expecting an increase in turnover of over 6 percent in 2003, the full-service agencies are only hoping that the decline will slow down (-2.2 %).
However, this structural change is likely to fundamentally alter the communications landscape. In the crisis, fewer and fewer clients believe in the effectiveness of traditional image campaigns. Sales-promoting means are the order of the day, in which marketing departments want to escape the pressure of controllers. Those who do not want to get involved in efficiency discussions are choosing forms of communication whose success is easier to measure. Under the prevailing conditions, coupon tinkerers have a clear advantage.
> Samuel Helbling, Editor-in-Chief