Marketers Cut Their Ad Budgets In Tough Economic Times — Adweek

Marketers, Consumers Grim in Latest Surveys

ANA sees budget cutbacks as public reins in spending, maybe long-term

Aug 25, 2008

NEW YORK Consumers, feeling less confident economically, are eating out less and downgrading to cheaper brands, marketers are slashing spending, and agencies are cutting or freezing their head counts. Such was the bleak, if not unexpected, picture that emerged from three separate research reports last week.

The findings came as no surprise, given mounting losses in major industries (automobile, financial services), the rising prices of commodities and the historically close correlation between ad spending and the country's gross domestic product. Still, they contrasted starkly with the more optimistic collective mantra -- "We're seeing no signs of significant spending declines" -- that Interpublic, WPP, Omnicom and Publicis Groupe have stuck to since the economy began unraveling late last year.

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"I'm not sure that this is necessarily a surprise. It really isn't. In fact, I would have been surprised if we didn't report this," said Association of National Advertisers CEO Bob Liodice, reflecting on the results of an ANA survey of 100 marketers conducted in late July and early August.

The survey found that 47 percent of respondents who answered a question about budget cutbacks planned to trim spending by at least 11 percent, and of those, about 10 percent would slash spending by more than 30 percent. The remaining 53 percent expected cuts in the 1-10 percent range. Respondents came from a wide array of industries, from financial services and pharmaceuticals to consumer packaged goods, technology and retail.

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"We all know that advertising and marketing is a discretionary item for a lot of CFOs who feel like that they can navigate some short-term changes in marketing spending, if appropriately managed," Liodice said. "That's the real key here. You've just got to be careful about your marketing mix, what you're keeping up and what you're trading off."