Media spend can weather the threat of war

Predictions of a significant decline in media spending have been rampant in the U.S. and U.K. in recent weeks as world attention has focused on the prelude to war playing out against Iraq.

Predictions of a significant decline in media spending have been rampant in the U.S. and U.K. in recent weeks as world attention has focused on the prelude to war playing out against Iraq.

The expectation is that war will deliver a major blow that the U.S. and the U.K. likely won’t begin to recover from until 2004 – not just because they are leading the push toward Iraq, but also because the advertising industries of both countries are already floundering.

However, the same scenario is not expected to play out in Canada, where the outlook is bullish and the economy has continued to grow. Buyers are basing their media plans on the state of our nation, and not on the possibility of the war’s impact on the U.S.

Hugh Dow, president of Toronto’s M2 Universal, says 9/11 had little impact on media in Canada, with spending only affected by broadcaster pre-emption of commercials, a loss which was likely recovered by the end of 2001. He sees that trend continuing.

‘It was encouraging to see [last year] that there wasn’t an automatic withdrawal of [media] funds because of the U.S. economic situation. Budgets tend to be consumer-driven and sales-driven and there was pretty strong evidence that the Canadian marketing economy and business was very different from the U.S.’

The kinds of discussions Paul Maher, Toronto-based CEO of Starcom MediaVest Group, has been having with clients have centred on whether it would be appropriate for them to be actively advertising their brands if a war breaks out. Maher expects that rather than cutting budgets, media placements would change.

‘Part of what Sept. 11 and its aftermath taught us is that there are brands that clearly do not want to be associated with that kind of coverage. But I’m not sure that would necessarily mean those brands would reduce their expenditure. I think the more likely scenario is that they would just change the profile of the way we put campaigns together for them.’

David Cairns, partner at Toronto media consultancy Asylum thinkgroup, says that if there is a war, audiences for news and information will increase, providing new opportunities for some advertisers and media owners.

‘CNN became a viable media vehicle in the last Gulf War. Twelve years ago the world was tuned to CNN. As long as advertisers and media buyers can find appropriate news vehicles to be in, you might see CBC Newsworld and CTV Newsnet prosper.’

What the long dance between the U.S., the U.N., and Iraq has provided is time – time to discuss those two issues and to prepare contingency plans, a process that the surprise attack on Sept. 11 did not permit.

Sunni Boot, president of Toronto-based Optimedia Canada, is predicting that growth and investment in advertising will remain stable but that the cost of delivering the messages will increase because of advertising pre-emption and having to assess whether individual ad messages fit the media environment they’ve been placed in. But she says Optimedia clients aren’t looking to pull out of a medium such as television because of the possibility of war coverage.

‘I don’t see anyone changing their media mix because of the conflict. That would not be a recommendation we would make. But we’d avoid news programming for all categories. We buy environment and we can’t control that environment, so why go in?’

In general, says Boot, Canadian marketers will react only to hard facts, and the facts right now are that Canada has good employment, low interest rates and good housing.

‘Those are the real tangibles. Canadians are spending and I think that’s going to keep going,’ says Boot. ‘I think that only if we start seeing job losses – and that’s probably going to start with the travel sector – when you start seeing headlines like ‘Air Canada lays off 10,000 people….’ If that happens, those are the kinds of headlines that will erode consumer confidence and spending. I don’t think the conflict itself is going to do that.’

(A version of this article appeared in the March 10 issue of Strategy Media.)