Commentary

Marketers Still Frugal, But Deepest Cuts Behind Them

According to the most recent contiguous six month poll by the Association of National Advertisers (ANA), 83% of the respondents indicate they are identifying cost savings and reductions in their current marketing and advertising efforts. While that represents a high percentage of respondents, this is improved from six months ago (87%), one year ago (93%), and eighteen months ago (87%).

Marketers Being Challenged to Identify Cost Savings/Reductions in Current Marketing/Advertising Efforts (Base: Total Sample)

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Survey Period

% Challenged for Savings, Reductions

January 2010

83%

Jul/Aug 2009

87%

Jan/Feb 2009

93%

Jul/Aug 2008

87%

Source: ANA,  January 2010

The report concludes that "The recession may be officially over, but it appears that marketers have reset their expectations and a greater degree of frugality has set in. Cost savings and reductions may be the "new normal", even when the economy improves significantly."

In the most recent survey, 41% of respondents are planning to reduce marketing budgets by 1-5% and 70% plan reductions of 1-10%, up substantially from 55% in the July 2009 survey. Only 7% plan reductions greater than 20%, which is down sharply from 30% in July 2009. This indicates that the deepest cuts may have already been made.

Planned Reduction in Marketing Budget(Base: Those Reducing Marketing/Advertising)

 

Percent of Budget Planned to Reduce (rounded)

Survey Period

> Than 30%

21 - 30%

11 - 20%

6 - 10%

1 - 5%

January 2010

4%

3%

23%

29%

41%

Jul/Aug 2009

18

12

26

23

22

Jan/Feb 2009

19

18

25

23

15

Jul/Aug 2008

10

10

27

33

19

Source: ANA, 2010

The top four ways marketers are reducing costs and spending:

  • 75% are challenging agencies to reduce internal expenses and/or identify cost reductions
  • 73% are reducing departmental travel and expenses
  • 53% are reducing advertising media budgets
  • 50% are reducing advertising production budgets

Challenging agencies to reduce internal expenses and/or identify cost reductions has increased in each of the surveys. But just about every other category declined in the most recent survey, notes the report.

Areas Where Marketing/Advertising Efforts Are To Be Cut Back(Base: Planning To Reduce Advertising/Marketing Costs)

 

Survey Period (% Planning Reduction

Area of Cut-Back

Jan 2010

Jul/Aug '09

Jan/Feb '09

Jul/Aug '08

Challenge agencies to reduce internal expenses and/or identify cost reductions

75%

71%

68%

63%

Departmental travel and expense restrictions

73

81

87

63

Reduction in advertising campaign media budgets

53

74

77

69

Reduction in advertising campaign production budgets

50

64

72

63

Eliminate/delay new projects

47

53

58

61

Reduce agency compensation

35

56

48

32

Reduction in professional development activities such as conferences and training

35

na

na

na

Reduce/eliminate use of outside consultants (e.g. management consultants)

34

42

43

36

Departmental salary and/or hiring freezes

29

56

57

45

Alter mix of marketing channels to lower cost channels

29

46

44

40

Reduction in spending on research

24

34

na

na

Decoupling of services from the agency and buy direct from supplier

16

9

15

21

Use freelancers to fill open positions (instead of hiring fulltime employees)

14

17

18

24

Use open bid sourcing among agencies for projects/campaigns

11

14

11

12

Conduct compliance audits for recovery of misbillings, over-payments

9

18

14

13

Use online reverse auctions to bid down/identify lowest cost supplier

8

4

10

12

Other

6

na

na

na

Source: ANA, January 2010

Current responses suggest some degree of optimism since the last survey. But the deepest cuts may have already been made.The majority of marketers forecast no change in spending for the first half of 2010:

  • 59% think budgets will stay the same
  • 22% think budgets will be reduced
  • 19% are hopeful budgets will increase

The report concludes by saying that the recession may be officially over, but it appears that marketers have reset their expectations and a greater degree of frugality has set in. Cost savings and reductions may be the "new normal" even as the economy improves. However, the deepest cuts are likely to have already been made.

For more details and access to the full report, please visit the ANA here.

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