Summit Notebook

Exclusive outtakes from industry leaders

Recession’s perfect storm speeds up change in ad industry

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Why is it that the United States’ advertising as a proportion of marketing services is at its lowest point since 1977, maybe even lower than since the Second World War?

You may have guessed it it’s the recession.

But it will get better, Martin Sorrell, CEO of advertising giant WPP, said.

“The recession is less worse,” Sorrell said, repeating a favourite phrase of late, and while it’s the biggest recession since 1929 it is also “a perfect storm” that has brought forward change. 

“The recession has accelerated structural changes that were already happening,” Sorrell said at the Reuters Global Media Summit.

Will advertising ever go back to where it was? Yes, if you are looking at new media advertising on Kindles and mobile.

Upstarts!

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The U.S. government has pumped more than $100 billion into Detroit over the past year to keep automakers General Motors and Chrysler alive. But some of the sector’s remaining capitalists are having a hard time stomaching a $25 billion Department of Energy loan program intended to spark new developments in electric cars. 

Start-ups Fisker Automotive and Tesla Motors have won about $1 billion in combined funding, while longtime players Ford and Nissan have received substantially larger loans from Washington to work on vehicle electrification — a technology the White House and many in the industry hope will reduce the United States’ dependence on imported oil and lower emissions of carbon dioxide, a leading greenhouse gas. 

Toyota will not freeze out Iceland, bets on Russia bounce

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The world’s biggest carmaker, Toyota, will not follow the road of McDonald’s and abandon Iceland even though it is selling ‘very few’ cars there at the moment and its distributor has been seized by the banks as its owner went belly-up, Toyota Motor Europe President and CEO Tadashi Arashima told the Reuters Auto Summit in Paris on Tuesday.
“We have a big market share there, of 25 percent, and it is good for our after-sales,” Arashima said.
The banks are trying to sell the distributor but Toyota does not plan to take ownership like it does in its key European markets of Germany, France, Italy, Spain and the United Kingdom, and some Scandinavian countries.
 

Arashima said he believes the Russian market will recover sooner than many think, after the west European markets but well before the rest of East Europe — in 2011 or 2012.

AUDIO – The ‘new normal’ for the U.S. auto industry

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A few years ago, one of the guests at our annual Reuters Autos Summit — Tom Stallkamp from Ripplewood — pretty much stopped everyone dead in their tracks by predicting that auto sales in the United States was likely to fall to an obscenely low level of 14.5 million.

Those were the days.

Of course, Stallkamp was making that prediction at a time when U.S. car manufacturers were selling in the neighborhood of 16 to 17 million a year. If the number hits 14.5 million in 2010, people will be wild with enthusiasm as most now expect something in a range of 10 to 11 million.

AUDIO – A new emerging market for real estate

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Remember the good old days where — if you lived in the United States anyway — people would talk about “emerging markets”?

We’d nod our heads knowingly, wishing these poor folks the best as they tried to accumulate the swell things we had bought for ourselves. We knew that residents of Mumbai or Caracas or somewhere would never attain the great things we had in such abundance here in the good old USA (Hummers; his and hers monogrammed dishtowels; zero down, 110% mortgages on houses we couldn’t afford … that kind of stuff), but we still wished them well.

AUDIO – ‘Off to the Outlets’ — A new real estate mantra

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When it comes to shopping for bargains these days, retailers are expanding their window of possibilities the same way as increasingly price-conscious consumers.

While the concept of outlet malls and shopping centers was once considered a last-ditch way to unload excess inventory, Steven Tanger, chief executive at Tanger Outlet Centers, says the model is changing…and fast!

OPEC’s special relationship with the U.S.

The United States may fondly dream of independence from imported oil, but it would do well to remember that the traffic is not one way.
OPEC Secretary General Abdullah al-Badri told the Reuters Global Energy Summit he had been hearing for years that the world’s biggest oil consumer was seeking ways to avoid importing OPEC oil, but he was confident it would carry on burning fossil fuel for years to come.
“I am of an age when I can tell you I have been hearing this for the last 40 years,” Badri said. “We will see another president, with two terms, before we see any change.”
He also warned the U.S. it should be careful what it wished for.
“We would like to tell them they buy most of the resources of our member countries. We are sending them back more than 50 percent of that income to OECD countries, and the U.S. is one of them, to buy medicine, equipment, aeroplanes, spare parts, clothes.”
“Don’t forget the medicine,” he added.

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