“Worldwide Partners CEO Survey” Indicates Mood Glum, But No PanicAccording to the results of a global survey of advertising agency chief executive officers, 60% of them said that economic conditions in their markets had worsened compared to the same time in 2007 and only 39% of the respondents felt that things would be better next year, yet the majority said so far clients are maintaining (46%) or increasing (15%) their advertising investment.
North American advertising agency CEOs took a dimmer view of the state of their economy versus one year ago than their counterparts worldwide, with 65% saying that the economy in North American had worsened versus 53% of their counterparts globally.
Those are some of the findings in the inaugural “Worldwide Partners CEO Survey”, which was conducted in July 2008 by Worldwide Partners Inc.
“The survey is a unique snapshot of the global economy from the perspective of top-level executives running ad agencies in over 140 markets,” said WPI CEO Al Moffatt.
“The respondents are agency CEOs who are on the front line when it comes to both client investment in advertising and marketing and the mood of the consumer. They are among the first to sense which way the economic winds are blowing and, because WPI is not a publicly traded entity with a share price to protect, we can deliver their input without bias.”
Of the 84 CEOs responding, 48 were in North America and 36 were in markets in Europe, Africa, South America, the Middle East and the Asia Pacific region. The agencies range in size from $5 million to $500 million in capitalized billings and are all partner agencies in WPI, which is the world’s largest privately held owner-operated advertising and marketing services agency network with in excess of $4.1 billion in advertising budgets under management globally.
The Union, based in Edinburgh and Leeds, has been a partner agency since 1999, and agency Group Chairman Ian McAteer has just been appointed Chairman of Worldwide Partners.
Commenting on the results he said, “Our World Meeting in New Orleans earlier this year was attended by a record 160 participants from partner agencies. These findings accurately reflect what I was hearing anecdotally – namely the world economy is not as homogenous as it once was. Agency CEOs were reporting widely differing views of their local economies. The doom and gloom in the UK, USA and other parts of Europe is not reflected widely elsewhere. Thus, there is clearly an opportunity for international clients to switch marketing investment towards economic hotspots, and our model of 96 independent local agencies gives our clients an ideal conduit to take advantage of these conditions.”
Thirteen percent of the responding chief executive officers overall said that economic conditions in their part of the world had improved since last year and 27% said they were the same. However, in North America, only 6% of the respondents felt the economy in the region was better than last year, and 29% said it was the same.
When asked to predict what their economies would be like next year, 39% of the respondents overall said that conditions would improve, and 38% expected no change. In North America, 38% of the CEOs responding said that they felt their local economies would be better next year, and only 10% said that they felt conditions would be worse. Outside North America, 42% of the respondents said they felt their economies would be better, but 39% responded that they thought economic conditions would worsen.
“Related to the economic perspective, only the Latin American and the Asia Pacific regions believe their clients will be expanding more internationally so this certainly indicates the optimism of emerging markets and a potential change in global business and advertising,” states Moffatt.
Client behavior in terms of sustaining advertising spending is regarded as a telltale indicator of general economic conditions. When asked if clients were increasing, reducing or maintaining spending levels compared with this time last year, 38% of the respondents on a worldwide basis said clients were reducing spending, and 46% said they were maintaining spending levels.
Forty-six percent of North American agency CEOs reported that their clients were reducing spending while 44% said they were maintaining spending levels. Twenty-two percent of non-North American CEOs reported that their clients had increased spending (versus 10% of the North American respondents), 50% said their clients were maintaining spending levels and 28% said they noticed reductions in spending.
Says Moffatt, “We’re literally at the tipping point, whereby this thing could go either way. But our prediction is that the current period of largely global stagflation will continue at least through the remainder of 2008. The money is still there, but clients and new-business prospects just aren’t acting as fast as they had in the past.”
When asked about their agencies’ staffing levels, a major barometer of the health in the advertising industry, 46% of the respondents on a worldwide basis said that they expect to maintain current staffing levels, and 37% said they would be hiring within the next year.
In North America, 44% of the CEOs said that they intended to hire staff next year, and less than one-fifth of the respondents said they anticipated layoffs. On a non-North American basis, less than one-third of the CEOs responding said they anticipated staffing up next year, but 58% said that they expect to sustain current staffing levels.
“The big take-away from this survey is that we may be seeing the end of the homogenous Global Village as we know, given the disparity among many economic, international and agency measures,” says Moffatt.
The Worldwide Partners CEO Survey will be conducted again early in 2009, said Moffatt, in order to give clients and partner agencies WPI’s perspective of the state of affairs at the close of 2008 and expectations for 2009.
The full survey responses from the CEOs can be found in the “media room” at www.worldwidepartners.com.