Expect Mass Deflation to Mass Inflation within months
May 22, 2009
You heard it here first, in October 2008 everyone was looking at the great depression as the model, and rightfully so because if left unchecked we were heading down that path.
However the federal reserve, not any longer tied to the gold standard, had more options than it’s 1934 counterpart, meaning creating money out of thin air was on the table, or commonly called “printing money”. It will reach the point where within the next 8 to 12 months, expect to see advertising out there regarding how company X has “stable pricing” for it’s products.
Out of the two horrible solutions, 1934 vs 1974 the Federal Reserve choose the latter. As noted earlier they printed off a ton of money, to the tune of 4 trillion US dollars. The US at any given moment over the past few years had roughly 1 trillion in printed circulation…. but they printed off nearly 4 trillion think about that percentage change. Now most of the US wealth isn’t in printed cash or bank accounts, most of US wealth is locked up in your house and your car. You may live in a house that is worth about $200,000, but do you have $200,000 in cash in your pocket?
If those printed dollars were spread evenly you would be looking at triple digit inflation, but it wasn’t spread evenly, it was loaned to banks that refused to loan it to companies and individuals. Hence slowing the rate of how fast the inflation hit, but it’s hitting.
The reason gas prices have been moving upwards recently is because speculators have been been given TARP funded (IE: your tax money) loans to make gas futures buys.. it’s not because demand went up, it actually went down… it’s because more money has been thrown at the energy market.
$4.25 a gallon (like we experienced last summer) may not show up overnight, but it will show up again… most likely within 12 months… meaning brace for $100 dollar fillups.
See the problem was that we had general deflation, so to hedge against it dollars were printed and handed out to individuals that would speculate on driving up commonly costs to stop deflation in it’s tracks. Gas touches everything. You can’t get a product to Walmart to sell without a truck delivering it from a factory, hence the transportation costs have to be increased when fuel prices increase. Stopping deflation in the process and driving up prices on the very vulnerable 10% of Americans standing in the unemployment line.
Mark my words on this one, inflation is about to hit, and it’s about to hit really bad.
This women is burning German money directly prior to WWII, because it’s “cheaper” to burn money than to use that money to buy firewood.
Razorfish shutting down offices right and left
May 21, 2009
Agency Spy is reporting that Digital Advertising Agency Razorfish is shutting down offices right and left, Leaving their Webcams on a 24 hour loop to appear as if the offices are still running.
Going “Remote” evidently means that the existing clients will be shifted out of the now closed offices and moved to offices that are still somewhat staffed.
Why a digital firms needs multiple locations is somewhat confusing, it’s not exactly like you can’t FTP in if you are connected to the internet no matter what city you are located in.
Regardless, we wish the people that got the pink slip the best… it’s a rough economy out there. Eventually we will all be able to celebrate good times.
R/GA fires dozens of people
May 14, 2009
Agency Spy is reporting that R/GA is canning people… and what was hit was New York City.
“Due to the economic downturn affecting companies and industries worldwide, R/GA has decided to make a tough decision and reduce our headcount,” said the agency in an e-mailed statement. “It was the financially responsible action to take at this time. Only the NY office will be impacted.”
We tend to lose track of R/GA sometimes, once in a while it’s because we can’t use the websites that R/GA creates or the R/GA site is down.
R/GA is facing the recession like the rest of us, but some firms tend to thrive if they can show a positive ROI for the client…. in other cases they can’t show that ROI… and start to lose market share and revenue.
We wish them the best.
I fired all my employees now what?
May 5, 2009
In the current economic disarray we are seeing across the board, we have noticed two things.. the economy is starting to slowly pick up and a boatload of former advertising agency professionals have started their own firms.
We ourselves are starting to see more and more unsolicited RFP’s hit our doorstep and we have a sinking feeling that this might be worse than what you think at face value.
If our feeling is right this is the rock bottom, meaning that at this exact moment what do you have in terms of staffers for a potential ramp up? How did you treat them during the great recession, did you fire everyone .. or did you do everything you can to keep your people employed?
The reason this question is asked is because if you treated your employees to pink slips, the chances are you will be in a world of hurt when RFP’s start pouring in… do you even have the staff to handle more business? Or did you go though a draconian staff cutting process that destroyed your chances of enjoying the recovery?
Do you have the year or train the new staff as you attempt to rehire them with everyone else doing the same thing? The 100k a year you were paying the guy now turns to 165k because he is getting offers from 7 agencies.
In other words, did you screw up?
The chances are from recent headlines is that you did layoff big numbers of people, and now it’s payback when your company lost complete capability to grow with the economy. Did your ad agency lose the very creative individuals that you need? Did your ad agency drop all those PHP programmers, right when you need them? Are you stuck outsourcing it at double the cost… or worse.. 1/2 the cost to another country where the quality of work is 1/2 as well?
Based upon the headlines we have been reading, from WPP group plc to Omnicom inc firing everyone and his mother, the chances are that you lost a substantial part of your in-house resources.
In a note to those firms, good luck pitching when suddenly you don’t look so “big” anymore with half your former employees starting their own ad agencies.
Why such a sudden “nasty post” … well because we caught wind that a big review is taking place with a 100 million or so media spend, and one of the agencies pitching is a startup filled with former employees of the current agency of record ………..that all got pink slips about 6 months ago… this part of course is developing…
Enjoy.
Ad Agency WPP Group plc in “mass firing” mode
May 4, 2009
WPP group plc has sent notice that they are cutting anywhere between 7,500 to 10,000 employees. The job cuts are deep and across the board. The 10% reduction in headcount is relative to the 10% loss of business as per George Parker
The problem that we are seeing is that there is limited “senior management” removals other than at Ogilvy, where Chris Wall will be out by July. Steve Hayden will take the reins until a Chris Wall successor is found. David Apicella is out, again as per George Parker.
Advertising Agency, WPP group plc is facing a substantial debt load that is starting to hinder it’s ability to retain talent. In 2009, it still has very limited capability in hot advertising areas such as social media and search engine optimization. Forcing the company to lose revenue as those higher ROI items are being outsourced to non-WPP group companies, and during this recession it’s all about ROI … and not about branding in other words, consumers and businesses are not willing to pay a premium for a “brand name” when their own balance sheet looks ugly.
There is a reason Wal-mart isn’t hurting as much as Neiman Marcus during this recession ..
Someone forgot to tell WPP that this is out of style.
Print Media down 26% for first quarter
April 16, 2009
The New York Times is reporting that print media has taken a nose dive, not that this hasn’t been expected for years, but it’s really crashing at a record pace.
Magazine advertising pages fell almost 26 percent in the first quarter, according to Publishers Information Bureau data released late Tuesday, signaling a difficult beginning to what is expected to be a dismal advertising year.
The problem is that they are saying “a dismal year” when in fact it’s been dismal for a decade, and it will be dismal for another 1/2 decade before it’s not a viable business any longer.
Ask yourself this question, would you open up a new magazine today with a hundreds of thousands of dollars in startup capital, or would you register an 8 dollar a year domain name and 5 dollar a month hosting package as a blog.. and get the same readers?
They’ll learn one day, just not today… sort of reminds me of the traditional advertising agencies, you know… the ones responsible for the 26% decline… because their clients want the $8 dollar a year domain name as well… something the ad agencies don’t understand…
People, this is the new reality …
10 steps for those that got laid off
April 13, 2009
This is going to be a quick, really quick outline on what your first steps should be… follow these really before you do anything else. It’s a numbered format, so literally print this off as a checklist.
1 - file for unemployment. Do not pass go, you will not collect anything until you file.
2 - clean up your resume, you’re gonna need this top notch.
3 - contact all your valid working contacts though e-mail or phone.. let them know you are ready to work.
4 - clean up your linkedin profile, facebook profile, Fire up your twitter feed, start making friends and following people that can help you get a job .etc etc. Social media CAN help you, I know of dozens of people that have landed good paying jobs in this economy using Twitter, Facebook and Linkedin. Log into these every day and keep them maintained.
5 - Start your blog up.. inform the public that you are ready to work, and here is your skillset… blog every single day focusing on your expertise and thoughts in your industry…. you need to be painted as an expert in the field.. reply to all questions, reply to all comments… I suggest a domain name and self installed wordpress ( wordpress.org ) it looks bad with just a free blog…
6 - look at your household expenses, start cutting back on everything you can reasonably do. Your life radically changes when you are unemployed. You have more free time than you can handle… and no money to use during that free time. The reason some companies offer a severance package is because they know that you’re going to be in deep water within months.. if not weeks… one thing you can’t afford to cut back on is Internet Access… 90% of the time this is where you will find your job.. on the internet.. e-mail.. blog posting.. social media site.. whatever.. but don’t cut back here.
7 - avoid credit cards at all costs… unless you need it to pay for a medical emergency … it’s a last option.. you are unemployed… get that though your skull that now is not the time to start participating in the stimulus program. Now is not the time to buy a new iPhone.
8 - After you have done steps 1,2,3,4,5,6,7 … now visit the job boards… there are 12-15 people looking for a job for each job available, in essence if the job is listed on Monster.Com, the chances are your resume will be #19382 for that position.. this is virtually a last step, not a first.
9 - go back every single day, and follow though with 2,3,4,5,6,7,8,9 … comply with whatever the timeframe is to refile for step one. I hate to say it, but this is your job until you find one that pays… so honestly 8 hours a day allocated to the above is not too much to ask.
10 - For some, they continue to follow this sheet for 1/2 a year until literally it appears that nothing will come though.. at that point… you might want to follow this guide. or follow it sooner if you feel you can pull it off.. just remember.. it’s ugly out there… really ugly… it might or might not be the right time to start a business..
Anyone have any other tips.. leave a comment…
TREASURY TELLS GM TO PREP FOR BANKRUPTCY
April 12, 2009
Drudgereport has a note that the Treasure Department has told the General Motors Corporation to prepare for bankruptcy, there is no more funds coming to the company….
Story is developing, but the most educated guess is that General Motors isn’t going to be getting any more bailout cash, and it’s pretty much game over for the company. Bankruptcy will put virtually all the financial decisions on the bankruptcy judge. Non-essential things that don’t relate to the cost of steel, payroll and power bills most likely will not get paid… a prime example will be whatever dollars they were spending with their advertising agency thrown out the window… and it’s unknown if the advertising agency will.
Chances are this will send one hell of a nasty run though all the auto suppliers and any industry that touches general motors… this is going to get ugly… fast..
Advertising Agency Doner facing huge layoffs
April 8, 2009
Twitter feed “Ad Agency Layoffs” is reporting a major restructuring at Donner. This is rough, people are finding out that work at Donner that they are about to be fired via Twitter and a few blogs. Evidently no announcement has been made internally as of yet… and everyone is citing that tweet as their source.
@adagencylayoffs we hear: major reorg at Doner this week. Lots of layoffs.
A one sentence tweet is wrecking havoc because of the early announcement.
Advertising Agency JWT Chicago shuts down
April 3, 2009
After 118 years JWT Chicago closes it doors forever. Adage is reporting that the advertising agency has ran out of clients.
The speed at which JWT went from stable to shuttered is earth shattering, JWT formerly boasted the city’s second-highest billings, and one of the country’s top creative departments.
In 2007 it was still the primary global ad agency for Kraft Foods, the world’s largest food marketer, and also for Federated Stores, one of the top U.S. retailers but by 2009 there was no work left and the office is being shut down.
Ugly, really ugly people. This recession is the worst most of us can remember, 2001-2002 was not this bad.. not like this. JWT Chicago has been open for 118 years … it survived the Great Depression, World War I, World War II …… but it couldn’t survive this economic disaster.
“JWT, Chicago, began as a one-man operation in 1891. Charles E. Raymond was dispatched to Chicago by J. Walter Thompson’s management to see if the 1893 World’s Fair might create some business opportunities. In his first eight months, Mr. Raymond and his fledgling the shop netted $1,600, and in the next decade, the office grew with the help of banner accounts such as Swift & Co., Pabst Brewing, Cream of Wheat, Holick’s Malted Milk and Aunt Jemima pancake flour.
Chances are however that a few startup advertising agencies will show up in Chicago… there’s a bunch of talent and a vacuum now that JWT has left.. we wish the city luck.
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