Budgets Are Slashed, But They Will Return

There is no real way to sugar-coat this -- advertising and marketing budgets have just seen their worst drop since the global financial crisis of 2008.

The latest IPA Bellwether report, compiled during March as the lockdown began, reveals that marketing and advertising budgets are down by a record level.

The report never gives figures for how much spend is down, in monetary terms. It's an index of who expects budgets to go up and who is seeing them go down.

Unfortunately, as you could easily imagine, more executives are seeing budgets being reduced right now than at any other time since the aforementioned recession.

Drilling down into the figures, there is a surprise that events are not the hardest hit. They're faring just a little better, in terms of budgets being reduced, than market research.

Clearly, nobody is that bothered about probing the market for views and insights when there is so little activity in the economy. At the same time, events are still very hard hit, but one can imagine that some budget is being put into virtual conferences and webinars.

Then we have main media advertising, where the difference between those expecting budget to go up and down stands at -10, meaning 10% more people are seeing cuts than rises. 

Direct marketing is the least affected channel, which presumably means that when people are in lockdown at home, offers and catalogues are propping up direct mail. I have certainly noticed a lot more on the doormat, with money-off offers that appear to be increasing each week. 

The one silver lining here is that, as Mediatel reports, there is huge optimism among marketing and advertising executives that budgets will spring back next year.

In the aforementioned main media advertising category, although it currently stands in negative territory, +8.4% of execs believes budgets will grow within twelve months.

So the figures are pretty clear -- on expectations at least. During March, marketing and advertising companies saw budgets drop or even freeze as lockdown was approached and then launched. The figures include the first week of the Government's advice for people to stay at home and work -from-home order.

At that time, more agreed that budgets would bounce back by this time next year. Whether that confidence has been dented by the month of lockdown that has followed the report's survey period, we will have to wait and see.

For now, the picture is one of a lot of pain right now, but optimism that budgets will be back and growing by -- or during -- 2021. 

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