Agency Seminar Forecast: Tough Short-Term With Brighter Times Ahead

Attendees at MediaTel Group’s ‘Future of the Media Agency’ seminar this morning heard some powerful figures from the media world look at a potential advertising downturn and how long it could last.

Mark Read, Strategy Director, of WPP felt that although 2009 will be a difficult year, it will not be as tough as in 2001, where advertising revenues fell by 3%. However, Read did say that it will be bleaker for some media owners compared to others, with regional and national newspapers likely to suffer more than digital-only businesses.

Greg Grimmer of Hurrell Moseley Dawson and Grimmer, looked to draw parallels with other industries, believing advertising to be more of a ‘flat line’ with a small decrease in 2008 potentially offset with a small increase in 2009 whereas other industries are struggling with double-digit declines.

Nick Manning of Ebiquity felt that next year will be a struggle, but the media agency sector is in a good position to come through it well – an opinion echoed by Paul Gooden of RBS in an initial investment presentation.

Gooden said that history showed now is the moment (Q4 2008) to buy media agency shares. All the possible bad news and more for 2009 is already factored into agency prices, and Gooden expects a 30% short-term increase in earnings in the next nine months followed by a plateau for 12 months with a much bigger rally to follow. “In media it pays to be premature,” he said.

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