Even seasoned media veterans have been stunned by the severity of the recession that has gripped the industry since spring 2008. But at long last, there are signs the economy could be on the slow road to recovery.
"This is my third recession," says Marc Mendoza, chief executive of MPG. "For the first six months we were all thinking: ‘We've never seen anything like this.' If we are coming out of it now, this recession is pretty much like the others." He pauses. "But if we are not coming out of it now, then I really have never seen anything like it."
Reading the headlines right now, the media industry is justified in feeling a little confused. At the start of September, both the UK's National Institute of Economic and Social Research and US Federal Reserve chairman Ben Bernanke declared the recession is "very likely over at this point".
In early September, the Bank of England warned that consumers saving money would damage the potential for economic growth. And by late September, news broke that Government borrowing hit a record £16.1bn in August, on the same day the number of insolvencies fell to its lowest for the year. It looks as though the recession may be ending - or does it? The question is: just how green are those shoots?
Lorna Tilbian, executive director at stockbrokers Numis Corp, believes the current sense of relief is inevitable - but it doesn't mean we're out of the woods. "There has been massive stimulus through low interest rates and quantitative easing, and that was always going to stabilise the potential for a depression," she argues. "The problem is, no one knows what will happen next - it's as though we are being given a drug by our GP that has never been trialled and the GP is making up the dose.
"What's going to happen when taxes and interest rates have to go back up? I'm personally expecting an L-shaped recession, although I believe the media industry has so far fared relatively well - we certainly haven't seen any massive bankruptcies on the scale of Cordiant in 2003. Media companies acted quickly to shed staff and keep costs low. Hopefully, this will stand them in good stead when the upturn comes."
According to Martin Greenbank, the director at Arena BLM who runs the company's Crunchanomics survey, there are changes in consumer confidence that could support the upturn. "We have been out in the field in February, April and September," he explains. "We found a strong sense of resignation at the start of the year that appears to be lifting; people definitely have more confidence.
"That doesn't seem to have had an effect on spending yet - people are taking decisions very late. The old advertising model of running a campaign at one point in the year and reaping the rewards at another has completely broken down. Advertisers will have to be far more cunning and thoughtful coming out of this slump."
Over at the Institute of Practitioners in Advertising, the picture from its Bellwether Report is a little murkier. Chris Williamson, chief economist at Markit Economics, which produces the report for the IPA, says: "The rate of advertising budget-cutting certainly peaked in the last quarter of 2008 and the first quarter of 2009. The rate of cutting is slowing, but brand owners are still cutting budgets."
He adds: "The fourth quarter of this year could be worse than last year in terms of ad spend. Unemployment is rising and advertising usually follows that. But there is scope for hope. It is
possible people cut too heavily at the end of last year; no one expected GDP to recover so quickly, so budget cuts could be front-loaded. We can also see the rate of unemployment slowing, but we need more data points to be sure."
If there is light at the end of the tunnel - no
matter how dim - the media industry still standing can permit itself a brief sigh of relief. A recent PricewaterhouseCoopers report said 211 advertising companies went out of business in the year to 30 June, but business insolvencies are down.
Bobby Lane, partner at accounting firm Denver Chase International, believes those that have made it this far should survive the rest. "It is all about the firms that used the three "Cs" - control, control, control," he explains. "Control cash flow, control costs and control your business."
Mendoza agrees. "Those businesses that acted fast are in good shape right now," he says. "We made changes in July last year. You are faced with harsh decisions: if you have to save £100,000, do you let a few junior staff or one senior staff member go? If you're not adding value to your company, you will be found out in a recession. This means companies come out of downturns with stronger, leaner teams."
But coming out of the recession will not mean a return to the good old days, according to Jim Marshall, departing executive director of Starcom Media Group and chairman of the IPA's media futures group. "If you look at the forecasts for 2008 to 2010, you see that between 25% and 30% of revenue has been stripped out of the media industry," he explains. "We're not going to get all that money back.
"The old models of media businesses will have to fundamentally change. There simply won't be enough advertising revenue to go around, because we have too many newspapers, TV channels, radio stations and magazines. Agencies are billing less, so fees are down, but they are expected to work as hard, if not harder. We will have to adjust accordingly."
Jed Glanvill, chief executive of Mindshare, agrees. "The agencies that have been hardest hit are those that failed to start diversifying before the recession. Anyone who still relied on the big money and the big turnover of TV ads was hurt very badly. We had been moving into digital, but also into research and insight, so our clients could retain a relationship with us rather than just stop spending any money with us at all. The recession has accelerated trends that were already underway."
Some people have taken the downturn as a cue to diversify into unusual places. Vice magazine's newly launched ad agency Virtue stretches the old-school lines between client, agency and media owner. Bartle Bogle Hegarty recently launched Zag, a product development subsidiary led by former Unilever client Neil Mann, which has created products such as a line of vegetarian meals for Tesco, and a website and book based around Michelle Obama's dress sense.
And BBH is not alone. Euro RSCG, a full-service unit of French advertising group Havas, acquired music label The Hours in 2008 and is signing budding artists as a standalone profit centre. Havas also bought event-planning agency Cake, while Ogilvy & Mather has launched green consultancy OgilvyEarth and US ad agency Brooklyn Brothers makes Fat Pig chocolate and is developing a furniture line.
If you are going to change, argues Spencer Berwin, managing director of JCDecaux Sales, then change quickly. "The best strategy is to get your most creative people in the frontline of the business as quickly as possible," he explains. "We put together a team that looked at who was going to do well out of the recession, what our rivals would do and how we could beat them.
"The key was flexibility. The retailers were running fast, aggressive pricing campaigns, so we took short-term business with short-term creative work and just got it up on the streets as fast as we could. As a result, retail advertising on outdoor is up 35% across the first half of the year."
The recession has certainly created a chance for clients to change. Over the summer, Unilever asked its roster shops to accept less profitability upfront and a major media review, while other advertisers are taking the opportunity to review their agency roster. "I can't remember when we have been pitching so much," says one agency boss. "Doing two or three pitches a year is fine - you can go balls out and then recover. At the moment, it seems as though there are two pitches a month."
And that change, Lane believes, means this could be the perfect time to set up a business, picking up some of those newly mobile accounts. "There will be good people out there who have lost their jobs but are more prepared to take a risk,"
he argues.
"Office space is cheaper and it's a good time to do deals on equipment. There is a long
history of media companies setting up in a recession and taking advantage of the situation to found long and successful businesses."
Of course, things could get worse. Some economists are still warning of a double-dip, or W-shape, recession - in which case all bets are off. And the Bellwether findings suggest it's still going to be a tough autumn for the media industry, even if the rest of the economy is expanding again.
If media is a boat and the recession is a storm, we can certainly see land. We had better keep things battened down however, as there could be a nasty current before the shore.
Case study: Recession start-up Media Bounty
Jake Dubbins, one of Media Bounty's three founding directors, found his employer, radio industry magazine X-Trax, collapsing around him on 1 December, 2008. "The company just ceased trading," he explains. "So with two of my colleagues, Emma Tozer and Matt Webster, we decided to set up by ourselves."
The new company, Media Bounty, borrowed enough to cover start-up costs, salaries for the partners and three extra staff, as well as rent for six months, because the team knew it could "take time to build revenue".
The founders located cheap office space in central London and haggled down the price quite aggressively. "There is always other space available right now and landlords know that," Dubbins explains. "Likewise with office equipment."
Even with costs pared to the bone, it was a relief when the company won its first big client. Dubbins says: "We offer a kind of mix between editorial and advertising. We create branded competitions and ensure coverage for our clients in the pages of newspapers and magazines, as well as on TV and radio.
"I don't know if we would have been as successful launching at the peak of the boom, because clients are considering the bottom line all the time right now, so they are more open to cost-saving, efficient ideas. We are also in a position where costs are low enough to allow us to work on a job-by-job basis. Obviously, we hope that translates into long-term client contracts when the squeeze ends."
Since launch, the company has expanded sufficiently to take on three new staff and has added a green tinge to its proposition.
Dubbins says: "We are all concerned environmentalists, so we have joined forces with the World Land Trust, which is tackling the problem of deforestation in South America and India.
"For every campaign a client books, we purchase an acre of rainforest and we give staff time off if they want to volunteer. That's the kind of thing you can only do if you set up by yourself - and I don't think we would have struck out on our own if our old company hadn't closed."
Never forget: How to survive the next recession
1 Cash is king
This is never more true than in a downturn. Getting your cash flow right can mean the difference between a profitable business that survives and one that doesn't
2 Stick to your priorities
Companies are cutting costs - estimated at £6.96bn in 2009 to date - but don't cut important costs or you'll struggle when the economy picks up. Marketing budget is clearly an important part of businesses' costs
3 Remember how the last recession felt
During the present downturn, many businesses were run by people who had never experienced a recession before, and they either stuck their heads in the sand or panicked
4 Limit your expenses
In good times, people use expensive cab companies or entertain in the top restaurants. If you watch costs in a good economy, you will be better placed to deal with a bad economy
5 Monitor your balance sheet
Make sure you review income and costs on a monthly basis so you always know what's going on. You'll spot dips early and know how well-equipped you are to cope
6 Staff up to a full team
Plug any skills gaps now while there is a good range of talent in the job market
7 Trust your instincts
JCDecaux's Spencer Berwin says: "If you can smell smoke that probably means there is a fire. So take tough decisions and don't dither while you are making them."
8 Be objective and harsh on yourself
"It's easy to ride a growing market and think everything is fine," says MPG's Marc Mendoza. "You need to take a long, hard look in the mirror to make sure you're really as good as you think you are."
9 Renegotiate key contracts and relationships
The only certainty is that the recession will happen again. Ensure you're as protected as possible
10 Remember that any business is only three phone calls from catastrophe
Make sure none of those phonecalls - should they happen - come as a surprise. Know and anticipate the needs of key business partners as if every day was a recession