Talk of carnage put the grizzle on the bear

This week's 2009 advertising outlook forum, put on by the Commercial Economic Advisory Service, was the perfect trigger for the stoush, led by a grizzly bear from Macquarie Equities, Alex Pollak. He bluntly told his audience it was "carnage" in the media and advertising sector - and that was the good news.

Pollak typifies the growing divergence of views between media buyers, with their understanding of client advertising spending intentions, and analysts, with their view on broader economic and business conditions.

Pollak predicted extensive ownership changes to Australia's flagship media companies next year and was brutal on the advertising outlook. The metropolitan TV advertising market would be down 8 per cent in 2009, he said, newspapers back 6 per cent and online ad spending, while up, would be a "train smash, too".

"We are going into a world for media where multiples will be lower and earnings will be lower," he said. "It's just carnage and it doesn't get much better."

He was also highly concerned about the implications for cuts to advertising expenditure by multinational companies, particularly those from North America.

By the end of Pollak's session, media types in the audience were all struck with drop-jaw syndrome. The reaction was probably best summed up by Mitchell Communications Group chairman Harold Mitchell, who said: "Thanks, Alex, I've always enjoyed your presentations- except the last one."

Mitchell and a panel of media buying heavyweights then went on to question the basis on which the gloomiest of forecasters could justify their numbers.

"They've gone from boom to gloom," said Zenith Optimedia Australia and New Zealand boss, Belinda Rowe. "I'm a bit shocked by Alex's figures. In our business we've got visibility to mid-next year and we're not seeing that. Next year will be tight, probably flat. But it's not what's being talked about today."

Mediacom chief executive Anne Parsons questioned the most dire of predictions and argued that much of the "negativity has become self-fulfilling".

Starcom chief executive John Sintras said it was too early to make predictions but told the Herald later: "We need to be very careful how much credit we give to what the analysts say given that a lot of their sources of information come from the conversations they have with myself and my counterparts in the media agency world. They have a point of view based on what they are hearing but it is dangerous to put too much value on what they think is going to happen. Their track record hasn't been exemplary."

Sintras is not alone in his views. Says one of the biggest buyers in the country, who did not want to be named: "The reality is, the really aggressive negative sentiment is coming from analysts and they come to media buying agencies in the first place."

Almost without fail the criticism of investment analysts in the advertising industry carries across to journalists and how much weight is being given editorially to the gloomiest of views.

The chief executive of listed ad placement group Adcorp, Peter James, said exactly that on Monday. "Some of this is in part due to journalists," he told CEASA delegates, who all nodded in disgruntled agreement.

To be fair to those thick-skinned investment analysts, though, some of the largest media buyers in the country still privately acknowledge it's nigh impossible to predict conditions for 2009.

This week even one of the most upbeat advertising forecasters of the past decade, Fusion Strategy's Steve Allen, predicted negative growth for mainstream media advertising next year, with a decline of 0.5 per cent. Allen admits it's a first for him.

There is but one certainty in the frenzy of views and counterviews: the battle between adland's timid bulls and grizzly bears will rage on.