Adweek has begun musing on the fall out of the financial sector on the advertising industry. I’m guessing it’s going to be HUGE. As the article notes:
For 2007, Nielsen Monitor-Plus reported that financial and investment services advertising amounted to $1.8 billion, up almost 15 percent from 2006.
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AIG put $119 million into advertising in the United States, Merrill Lynch spent $37 million and Lehman Brothers spent just over $1.2 million according to TNS. Lehman may not have been a big spender on media and (as the article notes) digital may plow firmly ahead, the piece doesn’t go into the ripple effect outside of media spending.
Agency Spy is here to pick up the slack. Let’s face it – the financial sector in New York alone has major consequences on tax revenue to employment. It may not be the great depression, but you may feel doing a bump of coke in a disco and burning down the Bronx like it’s 1977. The average income of Wall Streeters last year was about $280,000, which is nearly five times as high as the average of all other workers in the city. This means that with a loss of thousands of high rollers:
Read The Seven Realities On The Advertising Biz After The Jump
1. There will be less big shots being backers for start-up agencies, mobile ad suppliers, digital shops, etc.
2. Fewer small agencies will able to pick up wall street dollars to highlight side, start-up businesses from a restaurant to a clothing line. This filters way beyond New York, by the way.
3. Those laid off employees are going to be looking to go somewhere and those middle managers have great skills to be account directors and sometimes producers. Don’t think that competition won’t get tougher if you’re looking for a job on the account side of the advertising business.
4. Consumers felt a bit more confident in August due to a slide in gas prices, but analysts are betting that small gain will plummet. Warning! Warning! This could be very bad for brands like casual dining restaurants and luxury goods.
5. For retirees and those about to call it quits, who have lost some of their dough, it means they may be working a few extra years or stockpiling money in reaction to the loss of dollars on their upcoming statement. This means, yes that’s right, less consumer spending. That, most definitely, hurts the ad business.
6. An upside, is the corporate rents may go down as financial institutions vacate lofts and leave new leases to languish, which may lead your company to move to some nice new digs.
7. As a Reuters article boted: that when one sector is falling to pieces, another is making good. It behooves advertising agencies to recognize those growing markets and make a play for their business to off-set potential losses. Oh and yeah, push those digital services kids. Hard.
Zain Raj, chief executive of Euro RSCG Discovery, told Reuters that: “Normally, when Wall Street sneezes, Madison Avenue ignores it. In this case, Wall Street has pneumonia and Madison Avenue better realize it.”
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