Hard sell

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When the American arm of Hyundai, a South Korean carmaker, said last week that it was worried about the economy and may cancel its plans to advertise in the Super Bowl, American football’s grand finale, on February 3rd, the advertising and media industries shuddered. Marketing spending is one of the first things companies decide to cut when faced with slowing sales. Suddenly a recession in ad-spending seemed imminent. In the event, Hyundai decided to stay in, but buyers and sellers of ad-space know that it is only a matter of time before someone somewhere pulls out for real.

Yet, even as stockmarkets tumble and economies falter, some ad-men expect the knife to cut most deeply in 2009 rather than in 2008. Maurice Lévy, chief executive of Publicis Groupe, a French advertising firm, reckons that despite the chance of a recession in America, 2008 will be a good year for space sellers. Three big-ticket events—America’s presidential election, the Olympics in Beijing and the European football championship—could add as much as 1% of additional growth to advertising expenditure, he says, which could partially offset economic weakness.

Sir Martin Sorrell, chief executive of WPP, another big advertising group, admits people are anxious. But his clients are not cutting their ad budgets yet and he expects 2008 to be a reasonable year. By contrast 2009 does not have big “quadrennial” political or sporting events, so could be painful. A new US president will dole out any unpleasant economic medicine immediately, ahead of the mid-term elections, says Sir Martin. That would hit 2009 too.

It is just possible that advertising budgets may prove more resilient than in the past. That is because the internet has brought greater accountability to advertising. Marketing chiefs can now prove that a click on an online ad produces a sale. Firms are trying to impose the same discipline on television and other media spending.