Advertising world bullish on growth prospects

Almost three-quarters of advertising, publishing and design businesses expect revenue to rise this year, according to a survey, despite talk of toughening economic conditions.

Many picked interactive and new media activity would bounce back to drive the growth, even though the report's author, recruitment company Aquent, said a severe shortage of specialist staff was slowing development in that sector.

The research showed 73 per cent of the 115 Auckland businesses surveyed forecast revenue to rise this year, down from 93 per cent in last year's survey.

Seven per cent forecast a drop in revenue, while 20 per cent expected no change.

In a nod to the economic slowdown, agencies indicated clients were increasingly opting for project-by-project work, instead of committing a full-year advertising and marketing budget.

Communication Agencies Association president David Walden said advertising was often one of the first sectors to be hit during lean times.

"The minute clients get tight they look at what they can immediately cut that has an impact," said Walden, also chief executive of ad agency TBWA\Whybin.

"Advertising is a very, very good barometer of the economy and business confidence. So far we are seeing no sign that our clients are not optimistic and confident about 2007.

"The economy seems to be defying gravity."

Colenso BBDO creative director Rich Maddocks said ad agencies were spending more wisely and better profit forecasts did not necessarily equate to clients spending more: "It's not always about bigger budgets."

Aquent NZ manager Simon Lusty said steady demand for qualified staff was driving a forecast rise in average salaries in the sector of around 7 per cent.

He said the competition for high calibre staff was toughest for interactive and multimedia work, and was stifling growth in the sector.

Ad spending was increasingly channelled into new media - seen in viral ads and text messaging initiatives - said Lusty, but the lack of activity for several years after the dotcom bust was causing problems.

Aquent commissioned independent, Hong-Kong based research company WebDNA to do the research.