The city of Manchester became the focus of the civilised world last week as Manchester United’s football genius/petulant teenager Cristiano Ronaldo became the most expensive player in the history of the beautiful game when he was sold to Real Madrid for £80m. And while half of the city mourned his departure (and the light blue half of the city rejoiced) news networks across the globe such as Fox News and CNN threw the spotlight on the city debating the question, how can one individual playing for a ‘soccer’ club based in the industrial city of Manchester be worth such a vast sum of money?
But while the sports sector in Manchester appears to be temporarily awash with money, the creative communications community continues to find it tough going as budgets are squeezed by clients.
That said, widely regarded as the UK’s second major creative communications centre after London, Manchester and it’s marketing services agencies and support services companies are still pushing ahead to survive the current recession. But while confidence will clearly be high at the offices of Ronaldo’s accountants at the moment, how is confidence within the Manchester creative community and what trends are developing?
Paul Barnes, managing director at Salford-based Air Creative, believes that only now is the impact of this recession being understood confidence.
“A lot of businesses and their owners have only recently realised how serious an effect the last 12 months is really going to have on the next two to three years trading. I see it from most angles with High Street retailers, manufacturing, public services and even the legal sector all feeling the pinch. We saw the mighty ILVA appear on the scene with its magnificent new premises on Ancoats come and go in the blink of an eye. They aren’t the first and won’t be the last. Considering all of that, I think there is an air of confidence returning to both client and agency alike and I fully expect the next 12 months to be an exciting, challenging and rewarding time for most.”
Paul Watson of advertising specialists The Kings Arms says that as budgets have fallen there is a trend for agencies to expanded their services as they try to cling onto as big a share of the budget pie as possible.
“There are numerous design agencies, some are very good, but very few are what I would call advertising agencies. Everyone is claiming to be able to do everything. But you can’t be good at everything, right? In the future I think we might see more agencies shortening their offering and going back to being more specialist in a certain discipline - but at the moment everyone is trying to be all things to all people, like, everyone is suddenly a digital agency.”
Scott McCubbin, managing director of design consultancy Glorious, offers a view across the various sectors. “The market seems strong as far as we can see, although I say that and then hear the odd story about random design companies cutting back – but they tend to be ones that I’ve hardly heard of. As far as the major design agencies are concerned, they seem to be doing well, although I’ve not been hearing as positive noises in advertising and media buying. We found ourselves up against a major Manchester ad agency for what was fundamentally a strategic design job with identity at the core. I don’t reckon that would’ve happened a year ago.
“PRs have probably been the worst hit as a lot of PR firms were reliant on property. Agencies across the board that were dependent on property have been pretty stuffed. You may have noticed a number of social marketing directors appear on the scene to scoop up the NHS, COI work. Some folk have no shame. The public sector – ranging from RDAs to arts events/organisations – certainly stabilises the slower private sector sides.”
Turning to the PR side of the industry, Sandy Lindsay of Tangerine PR says that what is affecting them at the moment is the reluctance of clients to make decisions, especially when it comes to new business.
Speaking of the PR sector in general she says: “My current favourite saying, by one of the world’s most successful businessmen Warren Buffet, is ‘when the tide goes out, it’s easy to see who has been swimming naked!’ While I don’t like to speak ill of my sector, there have been some people swimming naked over the past few years and, while the money was slushing around and clients weren’t questioning the value of their spend too much, people were getting away with delivering very little. Now, with every penny being questioned, those companies which were not suited and booted are starting to feel the chill wind of reality.
“With our MERIT programme, via which we guarantee results, clients know exactly what their spend will deliver with us and so we take the fear and uncertainty out of PR budgets and I can see this is helping turn the tide of the recession.”
While sectors such as property, retail, manufacturing and financial services are going through your tough, certain sectors are holding up. Design and marketing consultancy Hemisphere works primarily in the arts and public sectors, both areas which are holding up well in these tough times.
The agency has been around for 21 years, so this is not the first time managing director Sue Vanden has been faced with tough times. And she says she has noticed a few trends that cause some concern.
She says: “The interesting thing is how many of the industry’s reactions to the early 90’s recession are being replayed now. The first is the thud sound made by the big London names landing in the regions in search of what they foresee will be ‘easy pickings’. When was the last time you heard of a legendary London agency coming up north and free pitching (when creative wasn’t even requested as part of the tender) for a £15k job?
“The trend for agencies to throw unrequested creative at branding pitches is undoubtedly on the up. The danger here is that this creates a climate where clients effectively go ‘shopping in the logo shop’ without any intelligent analysis being applied. This in turn can set the whole pitch process debate back by years. Clients will get so used to agencies throwing acres of creative work at them for free that it will undermine the perceived value of creative work for the whole of the industry going forward.
“Another trend is for silly pricing. With a number of recent tenders we’ve been involved in, we’ve been up against companies who have gone in at less than 50% of the published budget. They may get the work, but underpricing isn’t going to keep the wolf from their door eventually. The trend in public sector tendering isn’t helping either. One of our local authority clients recently put its design roster out to tender in a new process managed by consultants KPMG. This involved an online auction where design agencies had to bid their fees downwards against one another in real time in order to get on the roster. Unsurprisingly, we declined to take part.”
On a brighter note, one word that is being increasingly used to describe Manchester’s creative economy is “buoyant”.
Phil Marshall, a director of Shoot The Moon, the design and photography agency, says: “The creative sector is surprisingly buoyant, but there’s been a clear change of strategy among the client base. Activity has shifted to be far more tactical, focussing on more immediate results, but that’s to be expected.”
Meanwhile, Gary Young at Creation ADM says: “To tell the truth, the sector is surprisingly buoyant. There are still clients spending, they’re not sending as much, but they’re certainly spending it properly, which makes a pleasant change. Launching a new business just as a recession was taking hold was always going to be tough. Budgets are cut, companies are reluctant to take the ‘risk’ of testing out a new agency and lending to small businesses is virtually non-existent. However, we have found that by abiding by a solid, simple business model of providing high quality, cost effective design and marketing solutions to clients, our services have continued to remain in demand. There is always a requirement for design and marketing, companies are naturally just a whole lot more cautious about where and how they spend their money.”
Much has already been written about how digital has benefited to a degree by clients becoming increasingly focused on obtaining measurable results from their marketing spend. One of Manchester’s leading digital agencies Code Computerlove is well placed to comment on how the recession is impacting on the digital community.
Code’s chief exec Tony Foggett says: “Manchester’s digital market is still maturing and changing shape. The pyramid is getting fatter at the bottom and more pronounced at the top. The competition is fierce in the middle tier of design and build and digital marketing for three reasons. Firstly, an influx of agencies from outside of the region who tend to lead with sales and account staff; secondly offline design and marketing agencies are being woken up by the very real drop in offline revenues and therefore speeding up their digital offering; and thirdly, barriers to entry into this space are very low. It’s pretty cheap to set up and easy for agencies to look more competent than they really are.
“We feel the recession is creating the perfect opportunity for us. We are the right agency in the right game. The one thing the digital medium has above some other forms of marketing is its measurability, and an ability to be reactive and offer a very cost effective means of reaching target audiences. When marketers are under an increasing amount of pressure to make every penny count and deliver ROI and results, digital is a very viable option.”
One area, which is suffering as digital marches on and up the marketing agenda is the print and repro sector as Wayne Platt, sales director at print and repro specialists DXG Media explains: “I think we are quite fortunate that in Manchester we still have some of the most well known agencies, agencies that even in the present market are still generating great creative and therefore still winning new work. The print sector is suffering as per most other industries with falling prices, dipping sales, ever rising costs and a trend for much shorter run lengths all contributing to a much tougher working environment.
“We are witnessing most of our clients being forced to cut costs wherever possible and print tends to be one of the first budgets to come under scrutiny so we’re definitely feeling the pinch on sales. It’s difficult not to be affected by a lot of the bad news out there but the more flexible we can be for our clients the greater chance of us having even stronger relationships when we come out the other side of the recession (and a few new ones too hopefully!)
Likewise, post production companies are also finding it hard going as production budgets are reined in and clients shy away from highly elaborate and expensive productions.
The Basement’s Jim Mooney says: “Money appears to be tighter compounded with more players in the production field than ever before. There also seems to be a trend, certainly in retail and insurance commercials, to go with animation based concepts, which reduces budgets considerably and if a ‘live shoot’ to shooting on non film formats for the same reasons.
“To begin with we were very busy, so tended to not notice to much, March was pretty shit. From mid April things have improved. We’ve also found a number of jobs we thought were “live” have been put-back or delayed. People are more cost conscious than ever before. Not a bad thing as it should make using us and our full production/post production services more attractive.”
Likewise, Sumners also had a quiet start to 2009, but as creative director Paul Peppiate explains things are looking up.
He says: “Our core market is broadcast driven. We have been through a quiet period at the start of the year, but there are strong indicators of things picking up. Manchester production is in a strange ‘jam tomorrow’ state of semi-limbo with the detail yet to be established on the impact of the BBC move to Mediacity. Independent production is moderately stagnant, but many are optimistic.
“We have seen a downturn, but it is difficult to lay all the blame on the core recession. There is a feeling that some clients are using the climate as an excuse to squeeze deals. Additionally there have been other factors that have affected the regional commissioning round – such as the musical chairs that has been happening at commissioning level in all the major UK broadcasters. – this has delayed many green light decisions.
“We do believe that in the current climate true ‘value for money’ becomes paramount – and that is all about the real benefits that clients can glean from a complete professional facility service – quality, reliability, ability to guarantee delivery deadlines and always having the capability to ‘go the extra mile’. Like most businesses, it also can prove to be a necessary cost auditing exercise that will benefit the business in the long term.”
As Peppiate mentions, the imminent arrival of the BBC to Media City is one which has much of the industry waiting with baited breath. How that will impact on the city’s creative economy is yet to be seen, but one would hope it can only be a positive move and a move that will further strengthen Manchester’s reputation as a creative hub in the UK and indeed Europe.
So, what of the future? What positives are agencies taking out of the current situation to gear up for recovery in the future?
Air Creative Paul Barnes says: “The major positive we are taking is that we are still here winning new business and retaining long-standing relationships with key clients. A client of mine once said to me ‘Paul, spend my money as though it were you own’. That’s quite a profound thing to hear only a year into running my own business. I took his advice very seriously and have applied his advice ever since. If he’d have said ‘spend it like my wife’, I don’t think I’d be in business anymore.
“Owning a business is a very exciting prospect wherever you’re based. However, Manchester is one of the most exciting, creative, cosmopolitan and vibrant places I’ve ever worked. There’s something quite different about Manchester, which I can’t quite put my finger on. Maybe it’s the northern grit, humour and hospitality. I feel very welcome wherever I go, with the exception of Old Trafford. I’m a closet Arsenal fan.”
Rachel Emson of Viv-id is also remaining upbeat despite the pressures agencies are facing. She says: “We’re tough and savvy in Manchester – we’ve always demonstrated creativity, adaptability and that you don’t necessarily need a big budget for a big idea. So, in this time of uncertainty, we are seeing more and more creative work that isn’t being led by TV, but instead by mixed, cross media and digital.
“In advertising you always face adversity, but the confident ones fly in the face of it and come out stronger. The need for strong creative thinking that also works hard is as important now as it’s ever been. This has always been a key part of what we do and, as such, we have clients that trust us and have the confidence in us to deliver. However, we have had to adapt. We’ve especially looked at different ways to maximise campaigns and increase their depth or longevity. But, overall, 2008/09 has been our best year yet, with an increase in turnover to above the £500,000 threshold and an increase in profit.
“At Vivid we love a challenge – where is the fun without one? And it’s certainly not all doom and gloom. Great briefs for great clients are still out there: Yes competition is tough, yes budgets have been slashed and yes everyone wants more for less, but we simply have to be smarter about the idea and how to deliver it, how it engages with people and justify all that we do. If we can deliver this, with their vision and our great ideas we will deliver joint victories, then we will have a happy client and come out the other end stronger.”
Jane Kaye at Truth Design is eagerly anticipating the increased creative image that Manchester will earn as a result of Mediacity and the many new boutique creative shops opening as a result of redundancies by the larger agencies.
She says: “Manchester has always been an exciting place to work as it is such a close knit creative community. And I can only see it getting better. Mediacity will be interesting to watch develop and to see how it effects the London focused perception of creativity in the UK. There are lots of great little boutique agencies popping up everywhere on the back of big agency redundancies etc... all of which will have a say in the shaping of our already vibrant creative community.
“I think the most positive thing we have found is as budgets get smaller the large clients are prepared to give the smaller agencies a chance to prove themselves. Clients don’t want ‘Trophy Agencies’ anymore, they want more bang for their buck! Which is great, as competition drives creativity and increases the quality of the work and service as agencies fight to retain clients.
I think these are exciting times to be a small agency in terms of opportunity, and creativity if you are prepared to adapt to changing client demands.”
One thing that does continue to come through when speaking to agencies is that despite the tough trading conditions and what is still an uncertain future for many, there is still great humour to be found. After all this is supposed to be a fun industry to work in, isn’t it?
Tim Trapp, managing director of Pravda, concludes: “The advertising sector in Manchester is turbulent, the same as the sector across the rest of the country since out clients are all around the country we don’t specifically feel the movements of the Manchester economy. However, Manchester is holding its own and importantly, has steadfastly retained it humour in the economic downturn. If rumours are to be believed, trends across the sector include agency beers being downgraded from premium brands and creatives being encouraged to draw smaller scamps on both sides of the paper, under the guise of being environmentally friendly.”
So, it seems, that while the love affair between Manchester and Ronaldo is now over, the love affair between Manchester and its creative community is as strong as ever. The year ahead will deliver a few more knocks and no doubt the pages of The Drum will carry more sad news of agency closures, but overall the outlook for the city is bright. Well, with a new signing like the BBC waiting in the wings there’s still plenty to be optimistic about.
The full report will be available on the marketingindustrynetwork.com website from Tuesday 22 June.