Jeff Lanctot, chief strategy officer for Microsoft’s interactive agency Razorfish, told PEhub that based on client reaction to the economic downturn, he expects 2009 to be a very tough year for ad networks:
There are probably more than 300 ad networks up and running and they aren’t differentiated on technology. It’s all about arbitrage; they buy inventory for a low price and sell it for a higher price and add little value in between. I think there will be real shakeup in that business over the next year. In a downturn, it becomes imperative for people to become more efficient, and in an efficient marketplace, I don’t think there is room for these players. I’d guess that dozens and dozens of ad networks won’t make it through the next year.
Echoing our take — that display spending will actually shrink in 2009 — Lanctot said that despite “a movement from more traditional media to online” a year of flat growth is “the best case scenario.”
Lanctot said he’s not sure if that means layoffs will hit interactive agencies — “It’s premature to react now until we have a better sense of how our client’s services will be impacted,” he said — but his worries remind us of the mood at the turn of the century captured so gleefully by former ad man Joshua Ferris in his novel Then We Came To The End:
Layoffs were upon us. They had been rumoured for months, but now it was official. If you were lucky, you could sue. If you were black, aged, female, Catholic, Jewish, gay, obese, or physically handicapped, at least you had grounds. At one point or another we have all been deposed. We plan on being deposed for Tom’s suit — we have no doubt there will be one. Though he has no grounds unless arsehole has been added to the list. And that’s not just us talking. His ex-wife hates the guy. Restraining order. He can’t see his two young kids without supervision. She moved to Phoenix just to get away from him. We wouldn’t call him an arsehole without having reached a very high consensus. Amber Ludwig objects to the specific designation because she has objected to profanity since becoming pregnant, but really there is no other word, and her objection is really just an abstention.
When Tom found out he was being let go, he wanted to throw his computer against his office window. [A similar reaction to this Lehman guy]. Benny Shassburger was in there with him. Benny wasn’t like a great friend of Tom’s or anything but he was the guy who on occasion would have lunch with Tom and then report back to the rest of us. Word spread fast that Tom had been laid off and naturally Benny was the guy to go down there. He said Tom was pacing in his office like a man recently jailed. He said he could picture what Tom had looked like the night he went to the Naperville house with the aluminium bat and the authorities were called to restrain him. We had never heard that story before. Right there and then we had to stop Benny from telling us the story of Tom’s final hour so he could first tell us the story of the aluminium bat. Benny was shocked we had never heard that story; he was sure we had. No, we never had. “Get out of here,” he said. “You’ve heard that story.” No, we hadn’t. This was always how these conversations went. So Benny told us the story of Tom and the bat and then he told us the story of Tom’s final hour. Both were good stories and together they killed a good hour. Some of us loved killing an hour of the company’s time and others felt guilty for it afterward. But whatever your personal feelings on the matter, you still had to account for the hour, so you billed it to a client. By the end of the fiscal year, our clients had paid us a substantial amount of money to sit around and bullshit, expenses they then passed on to you, the consumer. It was the cost of doing business, but some of us feared it was an indication that the end was near, like the profligacy that preceded the downfall of the Roman Empire. There was so much money involved, and some of it even trickled down to us, a small amount that allowed us to live among the top one-per cent of the wealthiest in the world. It was lasting fun, until layoffs came.
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