Top London agencies feel the heat as IPA Bellwether survey confirms ad slowdown

Top London ad agencies including Wieden+Kennedy and DDB are believed to be cutting staff as the UK economy falters and more marketers say they are cutting budgets.

28 per cent of marketers surveyed in the UK ad trade body the IPA’s quarterly Bellwether survey say they are feeling less optimistic about the economy than in the previous quarter compared to 31 per cent who remain optimistic. This is the lowest optimism measure since the recession in the UK supposedly ended in 2009.

And those agencies dependent on a small number of big accounts seem to be suffering. W+K, for example, is facing challenges as Nike regroups after last year’s World Cup and prepares for the 2012 Olympics while another huge client, Nokia, is in disarray as it waits for a new generation of Windows-powered smartphones to bring it back into the game against Apple and Android-powered phones.

DDB London has failed to score heavily in the new business stakes recently and is heavily dependent on Volkwagen spend which has not been significant recently although this might change with the UK launch of the much-praised new Beetle, assuming VW chooses a DDB campaign rather than adapting its much-praised US work by Interpublic-owned Deutsch.

Agency morale has also been hit by the departure of highly-regarded planning chief Sarah Watson to BBH New York and the tricky business of amalgamating digital agency Tribal DDB into the main agency.

As for the marketers it’s hardly surprising that they’re feeling increasingly gloomy as the economy is flatlining at best. Office of National Statistics (ONS) figures due out shortly are expected to show that the UK economy grew by no more than 0.2 per cent in the second quarter of the year and, maybe, no growth or even a reduction.

UK output fell by 0.5 per cent in the last quarter of 2010 (blamed on the bad weather by chancellor George Osborne). It grew by 0.5 per cent in the first quarter of 2011 (so no overall improvement in half a year).

A further set of poor figures wouldn’t technically create a recession (that requires two successive quarters of lower output) but it would certainly feel like it.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.