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Agencies Better Positioned for Next Downturn

Recent changes in the industry have made many agenices more confident that they can better navigate the next economic downturn.

The ad industry is usually one of the first to feel the pinch during economic slowdowns. But changes at many agencies over the last decade, including a shift in the revenue mix, have many agencies better positioned than in the past to deal with the next recession, MarketWatch writes. Consolidation and global expansion, coupled with shifts to straight fee structures on media and below-the-line services such as digital, PR and direct mail, are among those changes.

Omnicom Group Chief Executive John Wren states that since 1993 the amount of his firm's business designated as "general-media advertising" has fallen from 73 percent to 43 percent. The majority of the company's revenue is therefore coming from more-predictable and less-cyclical services. Many other major agencies are now working under a similar business structure.

Moreover, agencies are now more productive and efficient than in the past. The end result is that the loss of an account, even a major one, doesn't have the economic impact that it would have had in the past.

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