The recession continues to take a deep toll on the marketing industry, even more so than the already worrisome predictions just six month ago, according to a new study by the Association of National Advertisers.
Marketers will be making more cost and budget cuts and will be putting pressure on agencies to help reduce expenses.
Almost all companies (93%) said they had identified specific cost savings and reductions, compared to 87% when the first survey was conducted in August. And the news gets worse, even more marketers (37%) plan to reduce budgets by more than 20%, up from 21% in the last survey.
When asked about specifics, marketers sited the following top five areas where they plan to reduce marketing and advertising costs or expenditures:
* Departmental travel and expense restrictions (87%, versus 63% in the previous survey
* Reducing advertising campaign media budgets (77%, versus 69%)
* Reducing advertising campaign production budgets (72%, versus 63%)
* Challenging agencies to reduce internal expenses and/or identify cost reductions (68%, versus 63%)
* Eliminating or delaying new projects (58%versus, 61% in the previous survey)
An increased number of respondents are also planning salary or hiring freezes (57%), versus 45% six months ago. Forty-eight percent of marketers are looking at reducing agency compensation, versus 32%, the survey found.
The deepening recession has quelled much of the cautious optimism marketers relayed six months ago. In the August survey, 53% of marketers thought their ad budgets would be reduced in the next six months, when in fact, 71% experienced a budget decrease. Thirty-eight percent thought their budgets would remain the same, but only 23% did. Nine percent thought they would see a budget increase, when only 6% did.
“In the current economic environment, there’s a need for brand building that’s right for the times—that acknowledges consumers’ financial circumstances, and offers them products, services and solutions that meet their needs,” Bob Liodice, ANA president and CEO, said in a statement. “For some marketers, that will mean skewing their media mix towards promotional spending and direct marketing. For others it will mean framing a new, relevant and timely brand message.”
The next six months look no brighter. Some 49% of marketers expected more budget reductions, 4% thought they would stay the same and 8% hoped to see an increase.
In both surveys, conducted online, marketers working in a range of industries were surveyed including pharmaceutical, financial services, consumer packaged goods, computers and technology, retail and others.
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