For Bold Marketers, Downturn Can Point Up

Advertising, public relations and marketing businesses have experienced years of disruption caused by the digital revolution, and if the forecasts are right, they can add an economic downturn to their list of challenges.

While everyone in Washington's communications industry worries about whether 2008 will bring a recession, I think too many may be overlooking potential opportunities in those economic headwinds, not to mention the inherent strengths of our region.

Typically, a downturn prompts advertisers to pare back spending, but there is a silver lining in those economic storm clouds. "The reality is that down economies offer a tremendous opportunity for companies to grab market share," said Matt White, chief executive of the Herndon ad agency White & Partners and a veteran of previous downturns.

As advertisers cut marketing budgets to focus on activities that are of provable worth, agencies that can respond to client demands for more-measurable results will be able to take market share from less nimble competitors. The winning firms won't necessarily be the biggest, but the ones with the greatest mastery of the latest technology.

New interactive media -- issue-specific Web sites, e-mail campaigns and banner advertising -- make it easier than ever to provide services that can be measured down to the click. Social media sites such as YouTube are making traditional methods, like the 30-second television spot, seem obsolete. U.S. advertising expenditures in emerging media are expected to increase by 30 percent each year in 2007 and 2008, to approximately $15 billion, according to a report prepared by Magna Global.

In the Washington area, there are more than 1,000 advertising agencies, public affairs firms and lobbying shops that together employ more than 40,000 people, according to Dun and Bradstreet. Many of those communications firms draw an added benefit from working in the nation's capital: the business never stops, even when times are tough.

"Federal policy debates drive enough communications and public affairs spending in Washington to insulate our market," said Joe Clayton, president of Washington-based Widmeyer Communications.

Government agencies spend billions each year on everything from public service announcements to recruiting for the military, while private-sector organizations constantly seek to influence policy.

Lobbying expenditures alone reached $2.59 billion in 2006, and they are on track to increase in 2007. Since these expenditures have risen every year since 1997, there is no reason to think that 2008 will be an exception. It's no secret that millions are spent every year on advertising to support these lobbying efforts.

And then there are the elections. Divided government and an upcoming election in which the balance of power is at stake are good overall for communications businesses in this region.

Candidates and cause-based organizations will drop billions next year. Most of that money will eventually land in the pockets of TV station owners around the country. But a lot of this cash will certainly pass through our home town in one form or another.

"The prospect of changing parties means people will have to revise their Rolodex," said Linda Dove, senior vice president of the American Association of Advertising Agencies. "The D.C. communications business will prosper from this need and that will help to counterbalance any downturn."

Yes, it will be scary for firms to continue to try new things during a downturn. Many firms will not have the courage to continue to innovate, despite the fact that our communication habits have fundamentally changed and continue to do so. First it was e-mail, now it's texting and then tomorrow it's going to be some other mobile application. Change is rapid and ongoing, which is why those firms that have not adopted these technologies will fall further behind.

Astute leaders will see the downturn as an opportunity to stay fresh and reach an increasingly fragmented audience more cost-effectively. And an aggressive firm that may not have launched innovations will have the opportunity to overtake a firm that had a first-mover advantage.

A downturn can be either a stumbling block or a stepping stone. You decide.

Dan Solomon is chief executive of Virilion, a nationwide interactive services firm with offices in Washington (http://www.virilion.com) and is co-author of "Media Rules: Mastering Today's Technology to Connect With and Keep Your Audience" (Wiley 2007).