With questions about the global economy weighing heavily on the minds of advertising executives, companies are increasingly taking a cautious approach to the ad deals they’re making for 2012.
According to Reuters’ Yinka Adegoke, executives who attended the Reuters Global Media summit last week are citing the crisis in the Eurozone and the political situation in the United States as reasons for shortening up advertising agreements and other partnerships.
Sir Martin Sorrell, CEO of advertising giant WPP told Reuters, “You just can’t run your business on the basis that something will turn up, so you have to plan on the basis that it doesn’t turn up“.
With that mindset, advertisers are increasingly committing to less, and seeking more flexible arrangements in an effort to mitigate their risk.
Needless to say, some will see the fact that executives are letting worries over the global economy influence their ad buying and deal making as a strong indicator that the concerns over the state of the global economy are not simply apocalyptic nonsense.
After all, major companies are sitting on trillions of dollars in cash, so their desire to act more conservatively hints at how seriously executives are taking the possibilities of a Eurozone collapse and further recessions in the developed world.
But there’s something else that should be considered: the influence of digital advertising.
While advertisers may be playing it safe due primarily to concerns over the global economy, it’s hard not to think that the ease with which digital ads are bought and sold in near real-time today could be shifting advertiser beliefs, even if subconsciously.
Thanks to self-serve platforms and sophisticated ad buying tools, few advertisers are forced into digital ad buys that are long-term in nature, or that can’t be backed out of.
So if an advertiser can adjust its AdWords spend and campaigns, for instance, in near real-time to respond to campaign performance and external market factors, why should that same advertiser feel compelled to make onerous commitments in other mediums?
Yes, there’s the television upfront, which isn’t going away anytime soon, but notwithstanding a handful of exceptions, the advantages of being able to make ad buys in nimble fashion should be increasingly evident to any advertiser that is active in the digital space.
Which begs the question: will the cautious approach being seen today become the norm across non-digital channels? Time will tell, but in the meantime, publishers should embrace the opportunities created by advertisers’ current demands.