Little Sign Of Relief For Marketing Budgets, Agencies

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Marketers continue to be under heavy pressure to reduce costs, and agencies are feeling the squeeze even more than a year ago, confirms the latest recession-driven trends survey conducted by the Association of National Advertisers (ANA).

ANA's previous recession-focused surveys were conducted in July/August 2008 and January/February 2009. The latest, conducted in late July/early August, drew responses from 128 client-side marketers.

This time, 87% of respondents indicated that they are focused on cost savings and spending reductions -- the same percentage as a year ago, and only a small improvement over the 93% who reported this focus six months ago.

Cost-reduction measures being employed have remained consistent. In the latest survey, 81% reported that they are reducing department travel and expenses; 74% that they are reducing advertising media budgets, 71% that they are challenging agencies to reduce internal expenses and/or identify cost reductions; and 64% that they are reducing advertising production budgets.

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In addition, there has actually been an upswing in the number of client organizations planning to reduce agency compensation, with 56% indicating this now, versus 32% a year ago and 48% six months ago.

Actual spending levels have declined more than projected at the start of the year. In the Jan./Feb. survey, 49% of marketing executives expected their budgets to be cut within six months, but 62% now report that this has occurred. Similarly, 43% predicted status quo, whereas budgets have actually held steady for just 31%. Eight percent expected a budget increase; 7% actually saw increases.

The number that are planning to reduce their budgets by more than 20% -- 29% -- is down since the start of the year, when it was 37%, but up since a year ago (21%).

The most positive indicator reported was a decline in the percentage of marketers reporting that they are eliminating or delaying new projects (53%, versus 61% a year ago and 58% six months ago).

In short, marketers have reset their expectations, and "more tempered spending has become the new norm," said ANA president/CEO Bob Liodice.

Still, 17% (versus 8% six months ago) now say they are "hopeful" that there will be budget increases within the foreseeable future, and 39% (versus 43% in the last survey) are expecting cuts. The number projecting status quo changed very little (44% now versus 43% in the last survey).

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