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Marketers Reducing Ad Budgets in Tough Economic Times

Marketers from a cross-section of categories and industries are feeling the pinch of budget belt-tightening - over half (53%) expect ad budgets to be reduced over the next six month, for example - according to a survey from the Association of National Advertisers (ANA).

Moreover, early 9 in 10 (87%) of the 100 people surveyed are already being challenged with identifying cost savings or reductions with current marketing and advertising efforts, the study found.

Marketers working in a range of industries were surveyed, including pharmaceutical, financial services, consumer packaged goods, computers and technology, and retail.

The survey, conducted this summer in light of the troubled economy, asked ANA members whether they believed their marketing budgets would be reduced and by how much, as well as specific cost-saving measures they were planning.

Of those who are already identifying cost savings:

• 53% believed that their overall marketing budgets would be reduced 1-10%.
• 27% thought their budgets would be reduced 11-20%
• 10% were envisioning cuts of over 30%.

The marketing or advertising areas cited by respondents for cost or expenditure reduction:

• Reducing advertising campaign media budgets (69%)
• Reducing advertising campaign production budgets (63%)
• Challenging agencies to reduce internal expenses and/or identify cost reductions (63%)
• Departmental travel and expense restrictions (63%)
• Eliminating or delaying new projects (61%)

“Historically, marketing budgets are among the first to be cut in a budget crunch, but marketers should be cautious about trying to find a quick fix,” said Bob Liodice, president and CEO of the ANA. “In fact, spending more during tough times when competitors may be scaling back is a good way to strategically boost market share, because this often helps brands come out ahead when the economy rebounds.”

“Effective marketing spending during economic downturns is not about how much you spend but how you spend it,” Liodice added. “Marketers must assess how consumers and customer behavior can be positively influenced during tough times. If it can, then marketers should give increased consideration to more spending rather than cutting.”