Effect of financial meltdown
What will be the effect of the incredible financial meltdown and looming recession on advertising?
In the US and worldwide.
In the US and worldwide.
Tags: advertising, financial, meltdown, recession, us
Replies to This Discussion
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Permalink Reply by Steve McNamara on -
Hi Sunil:
I have a different perspective on this situation.
I was in Jakarta during the Asian financial crisis. I remember going to the bank to withdraw some USDs. The teller said, “Sure. But the government has imposed a 50% tax if you want to make that withdrawal.”
How did that crisis affect the ad biz? Here’s a clue: the main TV stations aired the same three commercials morning through night.
Things won’t get that bad in America. Or in India. And if we are lucky enough to find a little wise leadership we will avoid a financial crisis.
Cordially, Steve
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Permalink Reply by Sunil Shibad on
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Hi Steve,
The subprime crisis seems to be the elephant in the room that no one wants to talk about.
Our stockmarket has crashed from 21K points to 13K in a few months.
A good view is that of Jim Rogers.
Look him up on youtube.
Best,
Sunil
in Mumbai
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Permalink Reply by Rouchos on -
Well Cash flow is struck. And the lack of cash flow will hinder everyone. The companies which need to meet their payroll obligations, generate funds to expand (or even maintain) their business endeavours, Customer Service and of course Advertising.
According to a Mediaplannerdaily article published today marketers aren't expected to cut spend until Q3 09 for some odd reason.
Though I don't think we have dodged the bullet quite yet
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Permalink Reply by philip chudy on -
Before this gets too old and everyone gets too grave here is an email that is doing the rounds.
But first - Advertising is always cut in a recession (esp the production bugets) despite that everyone always says that that then is precisely the time when it should be increased and improved.
I am not sure if that is right. If I am depressed am I likely to be 'inspired' by a great ad? - probably it will be lost on me. Can advertising actually inspire one and drive one out of depression? - probably not. During the good times it has probably scraped the bottom of every barrel in the caves of the unconscious. There is likely nowhere left in a tired psyche that is not already bruised, defensive and dead to 'great advertising ideas'.
--------------------------------------------------------------------------------------------
Dear American:
I cordially correspond today to request you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused urgent need for large transfer of funds of 800 billion USD. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gramm, lobbyist for UBS, who (God willing) will be my replacement as Ministry of the Treasury in January. As a former U.S. congressional leader and the architect of the PALIN / McCain Financial Doctrine, you may know him as the leader of the American banking deregulation movement in the 1990s. As such, you can be assured that this transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred. For this inconvenience you will be rewarded with grand fees of 1/1,000,000th of 1% of possible profits due to off shore laundering of skim funds due to reprinting of said funds.
Please reply with mother's maiden name, routing and account numbers of all of your bank account, IRA and college fund accounts and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully,
Minister of Treasury Paulson
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Permalink Reply by Rouchos on
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Yeah I think Paulson and the other American trustee's do not understand the depths they have gotten their indigenous people in. I happen to be from Cyprus a country facing a similar problem (which I first identified in my infant blogs in 1999!!!!!!!!!!!!!) that if you are making e.g 500 dollars monthly there is no way in the world you should be granted a housing loan to buy the taj mahal!! Plain and simple economics
But no; they had to pump the market with more than enough cash flow it could handle and now the whole thing is imploding. If the banks had not gone too far their plan would have succedded; that is they would have put half the population in prison for 7 years over default charges!!
It really is a sticky situation but I managed to get out of debt through hard work and sacrifice; your bailout will fail whether it goes through or not.
Society is based on correspondence, compation and coexistence and you have to merge more than one entitities to truely bring forward a breath of fresh air and positive change. Sadly our short sightedness in North America and our self instilled beliefs of individual grace get the best of us.
Again citing Cyprus as an example, if you are seeing brothels (or complete and utter sh!T all around you to be blunt) then you automatically your alarms of the distress of the matters around you arise and you are a bit more vocal about advocating change. What Canada and the US are doing (both nations which I am living and working within) raise "store front windows" in front of these brothel esque scenarios; thus giving you the placebo effect that society is as neat, clean and organized as an Ikea catalogue. The red lights are there and all around us and unless our collective synergies, or collective synergies in the upper echelons of society and within our indigenous industry combine in stead of clash, we are all doomed...
Thank you Mr Paulson for your sincere regards and consideration; but sadly I am one man and cannot bring forth the changes you are imposing on us and other tax payers. I am afraid you will have to appeal to demographics elsewhere.
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Permalink Reply by Lena K on -
This is how karma works. When you bite off more than you can chew, you will choke. Greed and ego have brought this country to the place its in now. Now, the innocent hard working people will have to pay for the faults of the corrupt.
In a way, im glad the wakeup call has taken affect. Maybe this is going to be a process of cleansing the system and weeding out the trash that festers within. But we all know that the trash is massive and it will have its hands in our pockets forever. Our 30% tax rate is chump change in comparison to the 60% our children will be paying.
As far as advertising budgets... smaller agencies will probably benefit. Crunch time means cutbacks across the board. But companies still need to advertise. They will be turning to smaller studios to help them with probably half the budgets they used with larger agencies.
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By the way Lena karma means action and not law of retribution.
I found Paulson's letter to be hilarious.
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Permalink Reply by Lena K on
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Karma (Sanskrit): physically, action: metaphysically, the LAW OF RETRIBUTION, the Law of cause and effect or Ethical Causation. Nemesis, only in one sense, that of bad Karma.
I would say all actions taken by wrong do'ers will sooner or later be exposed and revealed. One way or another. There is only so much you can get away with until its starts catching up to you.
example:
http://www.dailymail.co.uk/news/article-1063356/Credit-crunch-banke...
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Lena,
I strongly disagree.
In our Vedas "karma" means action or duty.
I will post the relevant passages soon.
Sunil
Mumbai, India.
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Permalink Reply by Rags on
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Hey Sunil,
What Lena is saying is correct, Karma mean actions - good or bad, Vipaka is the result of Karma or phalam or fruit of action.
Yes US recession definitely has impact on advertising across the world. Asian giants China/India major exporters to US & UK will see impact of it into its 2 digit growth which in turn will impact consumer buying and thus advertising.
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Hi Rags,
Karma ( as in Hinduism) means action, good or bad but over time it has become twisted to mean law of retribution or destiny.
Many men( and these are the so-called "educated" ones) in India refuse to use a condom saying it is in their "karma" when they will die! It really gets my goat!
I worked on an AIDS awareness project and studied the Vedas to get to the root of all this so I know.
It is nice that Lena knows about Eastern cultures and I respect her for that.
By the way the stockmarkets have crashed in India to their yearly lows.
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Permalink Reply by tucker on -
Let's see. What will the direct ramifications be?
1 Big clients with big dollars might see an interruption of cash flow, halting many advertising campaigns dead in their tracks.
2 With such a major change in economic climate, the clients are also likely to adapt their marketing strategies to directly address this issue with consumers. I've already received multiple assignments from various clients to directly address rising gas prices. These new directives will change even more as it gets worse.
3 It's going to change the rules for credit card companies and other financial institutions. I expect a change in voice to become more understanding of the consumer and less chest-pounding self-confidence. Let's not forget that some of these companies have been boldly promising financial stability to their consumer base, meanwhile going out of business because of financial instability. Which leads to my next point.
4 Consumers are going to be much more skeptical about advertising promises, especially in the financial sector. And as a result, the consumer will feel obligated to do more research on their own before making big financial decisions. That scenario would beg for a revamp of web page content to more directly address these concerns.
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