Liverpool advertising agencies 'well-placed to survive recession'

By Alistair Houghton on Jul 7, 09 07:30 AM

LIVERPOOL'S "diverse and resilient" advertising sector can ride out the recession if it shows its adaptability, a leading accountant says.
New research from Begbies Traynor shows the North West advertising sector is continuing to struggle as the number of companies facing 'significant problems' remains high.
Accountants Begbies Traynor's Red Flag Alert shows 136 advertising companies saw "significant and critical" signs of distress in the second quarter of 2009 - up from 95 in the same period last year.
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But David Moore, partner at Begbies Traynor in Liverpool, pictured, says Merseyside companies could well-placed to win new business from their London counterparts.
He said: "Following a dramatic rise in the number of financial, property and construction companies in significant difficulties, it is an unfortunate but natural consequence that the businesses which supply these sectors will follow them in the downwards spiral.
"As budgets are slashed and job cuts move up the agenda, it becomes more difficult to justify big advertising spends and in some circumstances, marketing budgets have been cut to zero. Although completely doing away with advertising and other business development activities is a short-sighted move for those who largely attract business in this way, it can seem the obvious way to address immediate cash flow problems.
"Cost cutting and streamlining of the business may help ad agencies stay afloat in the short term but some may need to take a long hard look at the foundation of their business and closely monitor the health of the markets they supply.
"Liverpool's advertising sector is diverse and resilient, with some agencies reinventing their services and launching low-cost options to match the advertising needs of those businesses still spending. With smaller overheads and rates than those of their counterparts in London, there is still hope for agencies that are built on a solid financial foundation and are quick to adapt."
The research defines companies with "significant problems" as those with either a court action or average, poor, very poor insolvent or out date accounts. Companies with "critical problems" are those with CCJs totalling £5,000 or more, or with wind-up petitions against them.
The Begbies Traynor survey follows yesterday's news that UK advertising spend is set to fall until 2011.
One light in the gloom, however, is that online advertising will continue to grow in importance.
Another area predicted to see growth is advertising within computer games.