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BBDO chief sees tough year ahead for ad industry

By Ed Zhang (China Daily)
Updated: 2010-02-06 10:48

DAVOS, Switzerland: People say the World Economic Forum held in the Swiss skiing resort of Davos every year is the place to discover how different the world is becoming.

But hardly anyone talks about that change more convincingly than Andrew Robertson.

As president and chief executive of BBDO, one of the world's largest advertising agency groups, he sees the change that is coming with the global crisis not just in its philosophical logic, but at the behavioral level.

Behavior is where professionals in marketing communications earn their "rice bowl", as Asians would say, and is "by far the richest source of real insight", as Robertson once said.

Now, 18 months into the global crisis, consumer behavior has indeed changed markedly in developed economies, and exporters from China and Asia must pay attention to it. "They really have," he said in an interview with China Daily.

Consumers used to shop like they were sleepwalking, but not any more.

Instead, Robertson said, consumers have been spending 20 percent more time shopping for the same goods since the crisis - checking labels, comparing quality and prices, and trying to find good reasons to spend their money.

This is what Robertson called "the over-riding trend", in which most consumers begin to either trade down, trade up, or simply trade out.

Most commonly, they trade down by settling for less prominent and less costly brands.

While there are a few who would insist on quality instead of quantity, there are people who simply stop being choosy because of financial pressures.

The implications of all these changes, for the global advertising industry, are clearly a challenge. After three successful quarters in 2008, things began to change. Industry-wide, 2009 was tough. And what about 2010? "My take is another tough year," Robertson said.

In a global industry breakdown, Robertson said, based on the BBDO's service to 1,200 clients around the globe, the telecom industry is the least affected by the crisis and investment in advertising has remained strong.

While the financial service industry is expected to go through some further structural shakeups, including some brand changes, the retail industry is already showing some signs of recovery. But the biggest question mark is the auto industry.

But he hastened to add that there will be growth, from new industries and especially from developing economies such as China and those in other parts of Asia, followed by Latin America.

"China has been an exception," he said, where most consumers stick to their brands and not so much behavioral change has taken place. As a result, BBDO's growth was strong in China in 2009.

And in an economy with "plenty of room to grow", it is expected to generate more of the same in 2010.