Evan Davis on... the future of advertising

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Evan Davies: How is the world of advertising changing?

It's a very important point because, at the moment, there are two things going on:

• there’s this cyclical downturn in advertising that’s obviously extremely significant; and, though
• there are structural longer-term changes in the world of advertising too.

Always a very important point for anyone in business is to distinguish between those things.

There’s looking into the value of what is coming up, over the next two years say, in the downswing and the dip that they’re facing; but there’s also the business of looking across the valley, at the other side of the downswing, trying to, if you like, blank out the sort of cyclical bits, the depression, the recession, whatever it is, and to think about the long-term structure of the business.

And, in many respects, it was interesting that the discussion we had focused more on the long term rather than the short term factors. It's not just the economy and what’s happening to it, it's really a structural shift away from traditional media towards digital. And, I thought, particularly interesting was Martin Sorrell giving a really good example of a thoughtful response to that kind of structural change in a business.

He had worked out that what companies need is information. They need market intelligence, market research you might have called it. So his response to the move towards digital was to understand where, if you like, the new competitive advantage or skill was going to be - and it was going to be an understanding of consumers because digital advertising, if it's about anything, is about targeting very carefully.

So it was very interesting, I thought that Martin Sorrell could give us, if you like, I think, a rather ingenious or clever response to what is a very important change in the industry and a change that is a long term one that will go way beyond any effects of the downturn or the recession.