After a year when local ad agencies trimmed staffs, scaled back salaries and cut operating budgets to compensate for sagging revenues, executives expect growth and even some hiring this year.
In the meantime, economic pressures forced many of their clients to make quicker shifts to use of digital marketing and Web site development and social media, in which modest amounts of money can sometimes go a long way.
"The economy forced them to try new things and pushed us to adapt faster," said Tim McMullen, founder and executive creative director at redpepper advertising agency and president of the Nashville chapter of the American Advertising Federation.
His small firm bucked the trend a bit and hired five workers this past year. It ended up farming out less work to outside production companies and undertook more interface programming and designing in-house as staples of traditional ad campaigns made room for more online advertising, McMullen said.
The state's largest advertising agency, The Buntin Group, saw a slight decrease in activity in 2009 but, because of readiness planning the year before, did not lay off workers and even managed to give raises and bonuses and make some hires, President and CEO Jeffrey Buntin Jr. said.
Elsewhere, though, accounts shrank or went dormant, forcing layoffs and other cuts.
"The last 18 months have been enormously difficult for advertising agencies," said David Bohan, chairman and CEO at BOHAN Advertising, noting that heavy ad spenders in hard-hit sectors like finance and automotive pulled vast amounts of money out of the advertising market.
Nearly 70 percent of ad agencies said 2009 revenue dropped, according to a national survey by the American Association of Advertising Agencies. Nearly 30 percent said they would lose money or break even, and one-third said profitability would be in the range of 1 percent to
10 percent.
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