Global Marketing Spend? Decline, Decline, Decline

About 2,000 marketers, agency executives and media owners deliver data to World Economics Global Marketing Index (GMI) each month, creating a global picture of “the state of marketing” by region.

Why should you care about the GMI? Many of the world’s leading brand-marketing companies are U.S.-based, or have significant business in the U.S. -- so it's helpful to have some global perspective.

The picture isn’t pretty, with many indices not just down for the month, but for several consecutive months. That’s not good.

Let’s have a look at the data. First of all: marketing budgets. Both The Americas and Asia Pacific are below the dreaded 0% growth line. In The Americas, this is no doubt driven by Brazil’s poor performance. Despite hosting the summer Olympics, the economic situation there is so dire that it is dragging the whole region down.

Asia Pacific is below the global average, but is slowly climbing toward neutral territory since the beginning of this year. Europe is in sharp decline since the U.K. voted to exit the EU, but is still above the global average. None of this paints a confident picture for our industry.



GMI offers a number of additional analyses that might explain some of the reasons for the declining trend. For instance, the Trading Conditions Index fell in August for the third successive month. This in a summer when, apart from the normal “big” sporting events such as Tour De France and Wimbledon, we also enjoyed a Euro soccer tournament in Europe, an Olympic summer games in Brazil and elections in the U.K. (Brexit) and the U.S. Despite all of these trading stimuli, the index fell.

GMI explains that budgets for all (yes, all!) traditional media continue to fall globally, while digital and mobile media continued to grow, but not fast enough to push the overall index away from its third negative month (traditional media budgets are a combination of TV, print media, radio and outdoor). In other words, traditional media are losing dollars faster than digital and mobile can make up the deficit.

GMI also reports a staffing index, which shows marketing staff numbers compared to the same period of last year. Europe is stagnant, while all other regions show a decrease. The global index shows five months of decreases, driven especially by the Americas. All markets are still adding staffing, but at a much slower rate than at the beginning of this year.

Where does all of this leave us? Well, I guess in the same place where the general economy seems to be. There is a real lack of optimism and growth opportunities. Uncertainty rules as a result of political instability in Europe, the Middle East and Latin America, and the unprecedented U.S election. The Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) are slowing down as a result of all the turmoil, and no longer provide the engine that makes all the boo-boo’s go away.

The immediate horizon doesn’t suggest any changes are close. In the marketing environment, it means a continued focus on cost savings, effectiveness and efficiencies. Don’t expect the role and influence of the procurement department to go away any time soon. Also expect continued pressure on innovation budgets.

There seems to be a new direction in venture capital as well as brand-marketing innovation budgets. The new mantra can be summed up as “it better work,” instead of an optimistic “let’s see what sticks.”

2 comments about "Global Marketing Spend? Decline, Decline, Decline".
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  1. Mark Scott from Sage Projections, August 30, 2016 at 1:44 p.m.

    I wonder what the root cause is? Is it the consolidation of corporations where there is less real competition?  Is it the lack of real innovation in products? Is it the minimal impact that digital and social media has in the marketplace since so few people really see any ads? Or is it that bean counters rule so many companies today and  that so few marketing people call the shots on investment? I wonder?

  2. Ed Papazian from Media Dynamics Inc, August 30, 2016 at 2:09 p.m.

    Mark, the root cause is probably that a lot of markets are fairly stagnant in terms of growth so more of the  advertisers' dollars go for short term promotional spend, while branding budgets, which have a longer term and "invest in the future" outlook are leaner and meaner. Just speculation, of course.

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