Commentary
Marketers Budget Cutting Slows Down, New Projects Speed Up
- by Jack Loechner , Staff Writer @mp_research, August 19, 2009
The top four ways marketers are reducing costs and spending remain the same:
- 81% are reducing departmental travel and expenses
- 74% are reducing advertising media budgets
- 71% are challenging agencies to reduce internal expenses and/or identify cost reductions
- 64% are reducing advertising production budgets
Reducing agency compensation continues to gain greater consideration by marketers:
- 56% are planning to do this today
- 48% six months ago
- 32% a year ago
Fewer marketers are eliminating/delaying new projects, compared with past surveys:
- 53% in the most recent survey versus 58% six months ago and 61% a year ago.
- 30% of respondents today are planning to reduce their budgets by more than 20%.
- 37% of respondents were planning to reduce budgets by more than 20% six months ago. The deepest cuts may already have been made
Marketer spending in first half 2009 was worse than forecast in ANA's previous survey:
- In January/February 2009, 49% of marketers thought their advertising budgets would be reduced in the next six months, when actually 62% experienced a budget decrease
- 43% thought their budgets would remain the same, but only 32% did indeed stay the same
- 8% thought they would see a budget increase, whereas 7% did
Marketers continue to forecast lower spending for the balance of 2009:
- 39% think their advertising budgets will be reduced (versus 49% in the last survey)
- 44% think budgets will stay the same (43% in last survey)
- 17% are hopeful their budgets will increase (8% last survey)
Anticipated Amount of Reduction In Overall Marketing Budget (% of Respondents) | |||
| Study Period | ||
Reduction (%) | Jul/Aug‘08 | Jan/Feb'09 | Jul/Aug'09 |
1-5% | 19.2% | 15.1% | 21.9% |
6-10% | 33.3% | 22.7% | 22.9% |
11-20% | 26.9% | 25.2% | 26.0% |
21-30% | 10.3% | 17.6% | 11.5% |
> 30% | 10.3% | 19.3% | 17.7% |
Source: ANA Recession Survey, August 2009 | |||
Planned Reduction in Costs And Expenditures Within Marketing Or Advertising Efforts (% of Respondents; Multiple Response OK) | |||
| Study Period | ||
Expenditure Reduction | Jul/Aug'08 | Jan/Feb'09 | Jul/Aug'09 |
Departmental travel and expense restrictions | 62.7% | 87.1% | 81.3% |
Reduction in advertising campaign media budgets | 69.3% | 76.7% | 73.6% |
Challenge agencies to reduce internal expenses and/or |
|
|
|
identify cost reductions | 62.7% | 68.1% | 71.4% |
Reduction in advertising campaign production budgets | 62.7% | 72.4% | 63.7% |
Reduce agency compensation | 32.0% | 48.3% | 56.0% |
Departmental salary and/or hiring freezes | 45.3% | 56.9% | 56.0% |
Eliminate/delay new projects | 61.3% | 57.8% | 52.7% |
Alter mix of marketing channels to lower cost channels | 40.0% | 44.0% | 46.2% |
Reduce/eliminate use of outside consultants | 36.0% | 43.1% | 41.8% |
Reduction in spending on research | -- | -- | 34.1% |
Conduct compliance audits for recovery of misbillings, over-payments | 13.3% | 13.8% | 17.6% |
Use freelancers to fill open positions (instead of hiring fulltime employees) | 24.0% | 18.1% | 16.5% |
Use open bid sourcing among agencies for projects/campaigns | 12.0% | 11.2% | 14.3% |
Decoupling of services from the agency and buy direct from supplier | 21.3% | 14.7% | 8.8% |
Use online reverse auctions to bid down/identify lowest cost supplier | 12.0% | 9.5% | 4.4% |
Source: ANA Recession Survey, August 2009 | |||
For additional information, please visit the ANA here.
Jack Loechner is the Editor of The Center for Media Research's daily Research Brief. You can reach him at jack@mediapost.com.
Interesting to see the 34.1% of consumers planning on making research cuts now. When you combine that with the #1 cut for T&E, it makes it even more compelling to channel qualitative research dollars into the asynchronous video online focus groups provided by Qualvu which, even without T&E, is on average 30% cheaper.
What is truly remarkable is that the survey doesn't indicate that corporations are focusing any effort at all in being more efficient about how they manage agencies as a resource. See AdAge August 17 article “Want More Out Of Your Agencies? Write Better Briefs” by Rupal Parekh. http://adage.com/agencynews/article?article_id=138468. It details findings from the 2009 Jones&Bonevac study on the quality of client input to agencies. More information at www.jonesandbonevac.com showing that agencies managing work for Fortune 500 brands believe 30% of their time is made inefficient or wasted due to poor briefing and input from clients.
Think about the delta between the savings from pushing an agency to cut costs vs. asking the agency to do less wasteful work. Give the agency less. Give them fewer re-directs; fewer approvers to deal with; clearer target audience and competitive intelligence; in short, less off-target direction. They may be the experts in creatively executing your assignment, but you are the officer in charge; you, the manager, are responsible for the quality of the direction you give them.
Ask yourself constantly, "What can I do as a marketer to better direct my agencies?" Cutting agency fees often results in less qualified, less experienced and therefore less expensive team members. This is an often risky proposition. Focusing at least some effort on directing the agency more clearly and precisely as well as limiting the number of decision makers and approvers, is never a risk. Live by the axioms that the larger the committee directing the agency, the higher the likelihood that the work will be mediocre and more expensive. And the less time and energy putting into writing a brief or RFP, the more wasteful the agencies’ efforts to hit the desired business target. Samuel Johnson once said, “What is written without effort is in general read without pleasure.” The marketer version of this should read, "What is written without effort is in general hellaciously expensive."
Casey Jones
CEO
www.jonesandbonevac.com