The document discusses definitions and causes of recession. It notes that recession is a period of reduced economic activity defined as at least two consecutive quarters of declining GDP. Recessions are usually caused by downward economic spirals that follow periods of overinvestment and unsustainable growth. The housing bubble in the US fueled by easy credit and rising asset prices is cited as a key cause of the recent global recession, which spread through financial crisis and falling demand. The document outlines some effects of recession on media businesses, including delayed/cancelled campaigns, budget cuts, payment delays, and increased competition. It provides recommendations for advertisers, agencies, and broadcasters to focus on measurement, accountability, innovation, cost control, and value in recession times.

1. MEDIA BUYING &
SELLING IN
RECESSIONARY
TIMES
16th June 2009

2. Some definitions of recession
Recession is contraction phase of the business cycle.
Recession is a period of reduced economic activity or a business cycle
contraction.
Economists describe it as the reduction of a country’s gross domestic
production for at least two quarters.
“A Time when short term growth lags the long term trend by at least four
percentage points”
– Stephen King
Significant decline in economic activity lasting more than a few months,
which is normally visible in real GDP, real income, employment, industrial
production, and wholesale-retail sales

3. What causes a RECESSION ?
TWO PHASES OF ECONOMY
Upward Spiral & Downward Spiral

6. UPWARD SPIRAL, is usually caused by a sustained bull run in the stock
markets and/or some faulty monitory & fiscal policies adopted by governments
Any shock, be it financial / political / Climatic, which can shake consumer
confidence can cause a DOWNWARD SPIRAL
RECESSION IS THE RESULT OF
A DOWNWARD SPIRAL

7. DEMAND - SUPPLY CONUNDRUM
SELLER wants maximum volume at highest cost
BUYER wants lowest cost for the required volume
Demand & Supply determine the price
at which buyer is ready to buy and
seller is ready to sell
In stable market conditions demand is
correctly estimated and price is a fallout of
existing supply.
When the market enters an upward spiral a
buoyant mood results in excessive
investments in supply side resulting in over
capacity which causes price erosion and in
Sellers Price extreme cases leads to insolvency
Buyers Price

8. What goes up, has
to come down
Growing economy has to come
down if the production rate of
goods & services is more than
the actual consumption
One Pet per baby please !

9. What
Caused the
Recession?

10.  U.S.A – Consumption based Economy.
 2/3rd economic activity i.e. GDP –
comes from consumers.
 Credit - free flowing for U.S consumers

11. EASY CREDIT meant house
prices kept rising unabated
for over 5 yrs at a very high
rate. This price rise lead to
artificial wealth which further
accelerated consumption!
THIS RESULTED
IN A HUGE
ASSET BUBBLE

13. Unprecedented rise in stock market related wealth
added to the euphoria of financial wellbeing
* DOW JONES TOUCHED 12,000

14. Hectic rise in oil prices further
fuelled inflation
Rising oil prices a ~ $160 a barrel

15. Inflation rose to unprecedented levels!
ies
Ec onom
Em erging
ies
onom
ped G7 E c
Develo

16. To rein in
the raging
inflation,
US treasury
tightened its
credit policy

17. Impact of higher interest rates
Higher mortgage payments resulted in sub-prime crisis
Excess supply due to sub prime crisis led to fall in house prices
Falling house prices increased defaults even in prime loan portfolio
Increasing defaults led to failure of asset backed securities
All of these factors, led to failure of some very large financial institutions
as their credit ratings suffered.
It also created a slew of TOXIC assets which even significant capital influx from
Uncle Sam could not clean. This catapulted not only USA but most of the world
into a huge credit crisis leading DOWNWARD SPIRAL.

18. MANIFESTATIO
NS OF
DOWNWARD
SPIRAL

19. CREDIT CRISIS resulted in delay, even
canning of proposed projects leading to
significant job losses

20. Because of layoffs, unemployment
started to rise which resulted in further
reduction in consumer spending.

21. Dollar value Stock market
Declined crashed

22. UNITED STATES IN

23. GLOBAL ECONOMY TODAY IS
HIGHLY INTERDEPENDENT

24. IMPACT OF GLOBAL
RECESSION IN NIGERIA ?

25. SOME MANIFESTATIONS OF A RECESSIONARY ENVIRONMENT
Liquidity crisis fuels cost of borrowing
Delayed payments
Capital investment in economy
diminishes
Equity funded growth plans halted
Expansion plans of MNCs up for review
Tough to get new business
Working Capital Costs increase
Excess inventory
Reduced government spending due to
falling crude prices

26. SOME MANIFESTATIONS TRANSLATED TO MEDIA BUSINESS
naman
Delayed new brand launches
Dropped campaigns
Savings challenge for buyers
Budget cuts
Difficulty in seeking premiums
Outstanding Payments
Lack of long-term commitments
Excess inventory
Shrinking margins
Significant increase in competition

27. THE ONE THING THAT RECESSION
CHANGES FUNDAMENTALLY IS
PERCEPTION OF RISK

28. KEY PREROGATIVES FOR
ADVERTISERS & MEDIA AGENCIES

29.  The word opportunity changes fundamentally in this scenario. Its
no more about a GOOD OPPORTUNITY!, rather IS THE
OPPORTUNITY GOOD ENOUGH?
• Conduct a thorough cost
benefit analysis
• Look for precedence and
study the impact
• Look for an alternative
• Negotiate for more
• Device impact multiplier
solutions

30.  ROI becomes central to all decisions as discretionary/
experimental expenditure is shunned for tried and tested
methods with very low failure rates
• Narrow casting
• Use direct response
techniques – have a call to
action
• Select fewer options but go for
dominance
• Drive share of voice
• Rethink ad size/length

31.  Measurement is key to calculating ROI and thus should be
central to all decision making
• Use all available research to
verify a decision
• Device measurement metrics
into the action plan
• Invest in sustainable and
accurate market information
systems
• Ensure the measurement
metrics are implemented and
reviewed post execution

32.  Need of the hour is innovation, and going the extra mile to deliver
better value to our brands for the same price!
• Seek and reward innovative
ideas
- what's never been done before is
likely to be undervalued!
• Make value-ads a norm to all
campaigns
• Look for ways to break
clutter

33. KEY PREROGATIVES FOR
BROADCASTERS

34. DIFFERENTIATED
• Understand your consumers
• Sharpen and align content
• Differentiate from competition
using established media
currencies
• Explore competitive
advantages and develop
USPs

35. ACCOUNTABLE
• Be open to audits, this
enhances confidence thus
reducing ‘PERCIEVED RISK’
• Drive accountability measures
both internally and externally
• Invest in technology to drive
processes
• Adhere to SLAs (Service level
agreements)

36. TIGHT
• Audit all internal processes
• Plug all leakages information,
financial ….
• Implement strict process
controls and query all
exceptions
• Drive compliance

37. OPTIMAL
• Don’t cut prices, increase
perceived value
• Feature price promotions
• Look to up-sell and chase
incremental business
• Treat Airtime and space as
perishables!

38. COMPETITIVE
• Track competitor’s business,
set-up/subscribe-to MI
systems
• Stay up-to-date on
competitor’s pricing and
promotions
• Benchmark your offering
using industry metrics

39. PRUDENT
• Contain costs, conduct
feasibility study for all new
ideas
• Conserve capital by
outsourcing rather than
investing
• Eliminate less profitable
programs/content
• Negotiate supply channel
discounts, credit and other
savings

40. LEAN
• Chase hard for all business,
stay hungry
• Automate processes, reduce
TAT (turn around time)
• Monitor closely any changes
in your market
• Be on your feet and flexible
during negotiations
• Be adaptable to any client
requests

41. INNOVATIVE
• Try NEW things not
necessarily expensive new
things!
• Be open to ideas from any
quarter
• Drive innovation across all
business functions, not only
the obvious ones!

42. The worsT Thing ThaT
could happen To a
fighTing man is To lose
courage. so,
Thank you