2010 has been interesting for a number of political, sporting and other factors. However, Alchemis is focused on advertising and marketing and the Guardian article (July 12th) was a great sanity check as it mirrors our experiences over the first half of 2010.

The article focuses on the recent Bellwether report, published by the Institute of Practitioners in Advertising. It has found that one in five companies cut annual advertising spend between April and June. This compares with 15% that said spend was increased.

It was as recent as Quarter One when the report announced that more UK companies raised their marketing budgets than cut them for the first time in two-and-a-half years.

Advertising took a knock, although big events such as the World Cup meant the dip in this area was not as significant as it could have been. Sales promotion was hit very hard, with the report recording “the third fastest downgrade to spending on the sales promotion sector in the Bellwether survey’s history”

It is not all doom and gloom. For those in the digital sector spend went up, although at a very slow rate. Internet advertising continued to grow, with social media remaining a major focus. With ROI crucial, digital media’s measurability is very appealing to company bean counters.

Despite all of this, as a new business agency, we (and our clients) should latch onto Rory Sutherland’s (IPA President) comments – “Although this indicates a less optimistic picture than previously thought for this year, marketing spend is still set to increase.”

In fact, we are optimistic at Alchemis. As I mention above, our experiences have mirrored the positive first quarter followed by a slower second quarter with the digital sector remaining the growth area. We, and our clients, entered 2010 with a bang. New briefs were plentiful and outstanding proposals suddenly got the green light. We had a record quarter for clients converting business in all disciplines. The feeling from the market and our clients felt positive. Companies and marketing departments had stuck two fingers up to the recession and the combined efforts of Alchemis and our clients over the last hard 12 months were paying dividends.

Quarter Two did see a dip, although in fact, there were and are still lots of opportunities out there for small to medium sized agencies and results from the second quarter still smashed the figures from 2009. I am not an economist, but there is no doubt in my mind that the uncertainty both before and following the election was a factor. Those are out of the way now and the one thing that has not waned is the number of marketing professionals who have wanted to meet new agencies. We have set record numbers of meetings in May and June. If times are tough, you need to look at quality, cost-effective solutions. I’ve waxed lyrical about it before, but our client base of small to medium sized agencies offer exactly that and the market is really open to approaches from them.

There is still much uncertainty out there and whilst commentators will have their opinion, what happens next is anyone’s guess. However, we know that you will need to be prepared for both a down or upturn. If your current clients cut their budgets, you need to have irons in the fire with new business. If, as we all hope, the second quarter dip is short lived, you want to make sure that you have got the introductions out of the way before those budgets are released and allocated.

The Lib-Cons will be there for a while yet, Germany has beaten us again, but who knows what the rest of 2010 will bring? All I know is that everyone in agency land needs to be prepared for any eventuality.

I echo the views of Martin Hamish of the IPA following the news that Thomas Cook are to demand a ’signing on fee’ to the lucky agency who wins their business. The word Martin chose was ‘outrageous’ which pretty much reflects the views of most of our clients, who are typically creative, marketing and communications agencies.

This attitude of large brands and advertisers is having a major impact on the agency world and is one of the main reasons why we recommend getting our agencies ‘under the radar’.

This approach avoids the pain, expense and stretched resources of procurement and pitching which frankly most agencies can do without, particularly in this climate.

“Who does a CEO call first in crisis? Now it’s the PR” (Evening Standard 15th March 2010)

This article highlights the renaissance of the PR industry as it has bucked the trend of depleted budgets and spending during the recession. Chime Communications has recently unveiled a 15% increase in profits and Martin Sorrell concurs with the uplift, emphasising the rise in financial importance of his portfolio of PR agencies.

Undoubtedly, there has been, as the article explains, an increase in the importance of PR for corporations and high-profile individuals. Danny Rogers of PR Week (as he should) believes the discipline has “moved up the food chain” over the past 5 years. We would agree. Ten years ago, a high proportion of the Alchemis client base consisted of PR agencies of varying size, stature and sector experience. Since then we have seen a marked dip in the number of clients in this industry, and it has been a much smaller proportion of our turnover for some time. Whereas we used to work in financial, corporate, technology, manufacturing and pharmaceutical markets, more recent PR clients have been consumer focused and even here, it has been a tough environment to be working and driving business development. However, I believe the recession has helped the PR industry. Agencies are often viewed as a cost effective alternative to advertising and we have seen this, with several PR clients in varying markets enjoying successful new business campaigns over the past 12 months.

This perceived cost benefit is just one side of the coin. More importantly, corporate reputations are far more fragile with the rise of the internet, digital media and almost instant worldwide coverage. PR agencies have adapted in recent years to embrace a digital offer. Whilst a reputation can be damaged at the click of a mouse button, they can also be protected and enhanced. PR agencies that will survive and thrive will understand the importance of the digital space and be equipped to use it to good effect for their clients.

What is very interesting from a new business agency perspective is the identification that, despite prominent PR agencies being full of talent, the power and hence profits remain with the founders. This, Rogers believes, will result in the emergence of many breakaway agencies. I believe that this has always been the case to a degree as we have worked with many PR agency start-ups utilising that “big agency” experience as a key selling point. Additional agencies entering the market should only be positive news for a specialist business development agency such as Alchemis. We have always built strong relationships with PR people who tend to be extremely loyal taking us from agency to agency throughout their careers. The offers are diverse and the very nature of the discipline lends itself to more in-depth, engaging and interesting conversations for our New Business Managers. Not every sales person “gets” how to sell PR as it is not as tangible or quantifiable as other disciplines, but we have a real heritage in the area and a bank of highly capable people ready to fill a PR gap in their client portfolios.