Ad chief not enthused about recovery

Happy Equinox,

I hope that everyone had a pleasant weekend – the biggest news for me is that the Broncos are 2-0. Who’d a thunk it?

There is a very telling interview today in the WSJ with the head of the largest advertiser in the world, WPP Group’s, Sir Martin Sorrell. In response to a question about future ad growth he states:

“We describe the recession as L-shaped, which implies that it will never go back to where it was before. The forecast for levels of increase in ad spending, both traditional and nontraditional, are pretty anemic for the next two or three years.”

Wow! That is a very pessimistic outlook and reflects a clear belief that consumers around the world have permanently changed their spending habits. This is a theme that we have been tracking here on ze blog for a long time. While I agree that there is strong evidence of a change in consumer behavior, I am less certain that these changes represent a permanent change. When yours truly writes a blog post about the evils of marketing and tries to rally support for a permanent shift away from consumer credit card use it should be obvious where I stand on Sorrell’s comments. But not so fast…

While I would consider myself an enthusiastic supporter of consumers becoming savers, I am not sure that real, deep, permanent changes have been made in consumer spending habits. Only time will tell. The environment where unemployment declines and monthly budgets feel more secure and there are new technology gadgets just out of reach of most people’s normal budget will tell the future.

Jason