Marketers Budget Cutting Slows Down, New Projects Speed Up

by Jack Loechner, Wednesday, August 19, 2009, 10:57 PM Source: MediaPost

A year ago and six months ago the Association of National Advertisers polled its members to determine how marketing and advertising budgets were being impacted by the tough economic conditions. ANA repeated the survey again in late July/early August 2009 and found that marketers are still pressured to reduce costs and spending. Today, 87% of the respondents indicate they are identifying cost savings and reductions, the same as one year ago, and only slightly improved from 93% six months ago.

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