Mumbai: Advertising agencies foresee a no-growth year ahead and have started cutting costs to prop up their bottomlines. The year 2001 is being looked upon as one of the worst years in the history of the Rs 8,500-crore domestic advertising industry.

While estimates of growth rates vary between being flat and 2 to 5 per cent, there is no difference on the view that belts would have to be tightened substantially, in order to keep heads above water. The most popular methods of cutting costs being followed by various agencies are:
1) controlling manpower costs, and
2) cutting out on administrative costs.

Cutting out on manpower costs is obviously the first priority of any advertising company as it forms almost 40 to 50 per cent of the operating costs. The modus operandi here is to put a freeze on further recruitment, not filling up any vacant position to the extent of even downsizing and/or holding back promotions and, most certainly, increments.

Some advertising companies have decided against giving festival bonuses such as given during Diwali. Some of them have decided to give bonuses only to general working staff members and keeping the senior management staff out of such perquisites - its a way of saying that the burden of the slowdown should be borne by the senior management rather than lower- and middle-level employees.

About cutting out on administrative costs, ad agencies have already banned conferences and overseas travel. Most have put severe restrictions on domestic travel as well entertainment expenses. According to estimates, travel and entertainment expenses have been cut by almost 40 per cent, if not more.

Other areas of cost-cutting are:
1) Restricting usage of mobile phones that are on company accounts.
2) Curtailing 5-star hotel stays as well as dining.
3) Cutting out all discretionary costs.