2008 State of the Agency Business Results Show Agencies are Holding Steady

Release Date: 08/01/2008

Agency CEOs Offer Conflicted Views on Global Economy

“Worldwide Partners CEO Survey” Indicates Mood Glum, But No Panic 

DENVER, COLORADO USA—According to the results of a global survey of advertising agency chief executive officers, 60% or them said that economic conditions in their markets had worsened compared to the same time in 2007 and only 39% of the respondent 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 rang 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.

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 maintain 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’s 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 to 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.

CONTACT: AL MOFFATT, PRESIDENT/CEO, WORLDWIDE PARTNERS
Tel: +303-577-9765 email: alm@worldwidepartners.com

Editor’s note:
About Worldwide Partners, Inc.
Worldwide Partners, Inc. (WPI) is the world’s largest owner-operated advertising and marketing communications network made up of 96 agencies employing 4,700 people in 143 offices located in 53 countries across Asia, Europe, Latin America, the Middle East and North America. Based in Denver, Colorado USA, WPI is owned by the partner agencies that make up the network. WPI exists to explore and capitalize on global business development opportunities with multinational clients for its partners and to act as a hub that harnesses the creativity, local expertise and resources of the agencies in the partnership and apply them to solve problems for clients on a local, regional and international basis. This allows partners to expand their existing client relationships geographically and to compete effectively for international new business. Clients gain access to best-in-class, entrepreneurially driven agencies steeped in local knowledge in all markets they engage WPI shops. WPI’s partner agencies manage in excess of $4.1 billion in advertising expenditures. Clients serviced in five countries or more include Avon Global Fragrance, Ciba Vision, Guardian Industries, Lehman Brothers, Walden University and Wal-Mart Centroamerica.

See full survey results.