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OPINION1 May 2009

New chapter for bleak house

Opinion

Let’s be honest, and just between ourselves, you can sometimes call the results of a survey even before the survey has taken place. You just know how things will pan out.

Let’s be honest, and just between ourselves, you can sometimes call the results of a survey even before the survey has taken place. You just know how things will pan out.

In the case of the UK’s Association of Users of Research Agencies (Aura) survey conducted among its members into 2009 spending plans, you could have called the results a good few months ago. Unfortunately.

Sixty per cent of research buyers are looking to reduce their spend this year according to Aura’s survey. In a similar client survey conducted by Virtual Surveys see page 38, the figure is put at a marginally more optimistic 46 per cent.

There are no major suprises here. Agencies are about to enter what was elegantly termed in Withnail and I “the arena of the unwell”. If your agency has not had a sizeable bite taken off the bottom line, keep the champagne on ice, the pain is on its way. Aura has effectively dismissed the notion that research is recession-proof. It may have ducked the consequences last time, but this time no one is safe.

So what is Aura’s advice to the market? What should agencies do in order to dodge the worst of the incoming discomfort? Aura chief John Buckle says, “Clientside researchers will be looking for yet more value from their suppliers as they attempt to stretch what will be tighter budgets.”

This has a very familiar ring to it. It’s pretty much the same advice given to agencies whatever the economic conditions.

Agencies will have to continue to provide hard-nosed business advice to their clients and illuminating insight. One also suspects that in the race to deliver value, margins will be squeezed. After all, the real value proposition is measured in service delivered against cost. It’s an insight thing, but it’s also a money thing.

And here’s the problem. Few industries bitten by the recession are planning a full return to the pre-crash glory days. The media world, for one, doesn’t believe that the advertising will return in the same volume. One gets the distinct impression that this recession will enforce a correction on spend.

So, agencies will want to think hard about tightening their margins in the quest to boost value. Once squeezed, the margins may prove very palatable to buyers both in bad times and good.

If, Pavlovian fashion, agencies fall over themselves to undercut their competitors to keep buyers onside, it could prove a damaging move for the entire industry.

It may well be that agencies’ hands are forced on this issue. What the client wants, the client gets. But bear in mind that what the client gets, the client will want to continue to get.

@RESEARCH LIVE

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