Study: Marketers' Budgets Likely To Plunge Further

[Michel Eek]

A new survey finds that 53% of major marketers expect their ad budgets will be reduced within the next six months because of the spiraling economy. And 87% say they have already made cutbacks in their marketing and ad plans.


The poll, fielded by the Association of National Advertisers, also finds that while the majority of marketers (53%) expect additional cuts to be modest--ranging from 1% to 10%--27% expect cutbacks to be more substantial, in the 11% to 20% range. A smaller group--about 10% of the respondents--are expecting that their budgets will be gutted, with decreases of 30% or more.

The ANA also asked its respondents--100 marketing executives from a wide range of industries--what kinds of spending would most likely be cut or eliminated. About 69% say that they expect to reduce media budgets, 63% expect to trim ad production budgets, 63% anticipate travel and expense restrictions in their department, and 61% say they will either drop or delay new projects. And 63% also plan to put more pressure on their ad agencies to identify cost reductions.

"Effective marketing spending during economic downturns is not about how much you spend but how you spend it," the trade association says in its release. "Marketers must assess how consumers and customer behavior can be positively influenced during tough times. If it can, then marketers should give increased consideration to more spending rather than cutting."


August 2008 - mediapost.com

[James Stratford]

The statistic based upon reductions of 69% of media budgets and 63% of ad productions budgets are troubling as are the 63% that plan on putting more pressure on their ad agencies to identify cost reductions. Consider this that in the times of recession the advertising must be kept up and in some cases increased just to reach the people required to sustain operations. The end result with the logic is continued scaling down of the respective companies as the revenues drop in proportion to the reduction of the budgets. If the ad agencies happen to be for print ads in order to reduce costs and maintain a profit in order for them to be sustained it'd potentially have to go into a publication with lower rates and there will most likely be less conversions so it's doubtful it'd be cost effective.

The instincts of many are to protect their companies revenues, but they have historically been produced in advertising. In times of prosperity companies will spend more making sure to test the results from all of the media. Why would they do that? It's not to throw money away it's to scale up the company. Companies will need to focus on how the money is spent and be more selective on what's offered, who it's offered to, and if a line item needs to be reduced then it sounds like it's time to transfer the funds to market research to make the right choices if they are that uncertain. After the market research is complete then it's time to have the line item restored and fully funded if not increased some more and then on to more profitable times.