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Think BR: Doom and gloom before the boom

We've been there before, so why should we be surprised if we take another economic bath, asks Bob Willott.

Bob Willott, editor of Marketing Services Financial Intelligence

Bob Willott, editor of Marketing Services Financial Intelligence

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Collapsing stock markets, sovereign debt crises and social disturbance seem all so certain to ensure the arrival of a "double dip" in our economic fortunes, with the inevitable knock-on effect on marketing budgets.

Economists may wait for Sir Martin Sorrell to pronounce on precisely the shape of the economic dip as he searches for the most appropriate bath analogy. 

But it’s hard to envisage anything other than marketing budget cutbacks and even a few financial crises among agencies and clients during the next few months.

And all this when the industry was beginning to feel good about itself again.

It’s so difficult to get the balance right between expansionist investment and retrenchment, and it’s even harder for agencies that don’t have an abundance of cash with which to withstand a harsh climate.  

In an ideal world the next 12 months would probably be best spent planning how to advance market share and putting in place the skills to do it.  

That would be a better use of cash than opening up offices around the world or buying a few more businesses.

The story of how Iris nearly over-reached itself, by trying to take over the world with resources that were probably not even sufficient to take over a continent, should be studied by all ambitious marketing agencies.

Even more salutary was the story of Garfield Ricketts who tried to build a global agency group with very little long term capital at all. 

Not only did he fail, but in the process he almost wrecked the businesses he had acquired.

It’s far better to concentrate on keeping the core business efficient and the customers happy. 

That way, good agencies stand the best chance of keeping what business there is and gaining more from clients that become disaffected by other poorer performing or financially troubled agencies.

Of course it makes sense to make selective investments in people, resources and skill sets that will help create a competitive advantage. 

That will help to build client confidence in the short term, while offering the best opportunity to grow fats when conditions improve.

But shelve any uncommitted non-essential capital investments for the time being. 

It is sometimes astonishing what assets are bought or replaced by agencies.

Why replace something that delivers what’s required just because it’s not as whizzy as the kit used by a competitor agency down the road?

But the most obvious area where housekeeping needs to be top rate is in debt collection.

Rarely does an account executive like to press clients for payment - it seems so unseemly. 

Yet the moment an agency surrenders to indiscipline in this area, it is inviting clients to take advantage.  

Each month the payment period will get stretched a little more as the client puts the agency in the 'easy to keep waiting' category. 

Eventually the debt could get so big that collection may become almost impossible.   

Professionally run clients don’t respect a lax agency. 

If the account executive isn’t good at negotiating and collecting fees, why should it be assumed that he or she is any good at delivering the client’s brief?  

Maybe all this advice is already adhered to. And maybe things won’t get that bad anyway.

Bob Willott, editor of Marketing Services Financial Intelligence

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