Marketers Indicate Ad Budgets Coming Under Fire

ana-advertising-budgets-in-6-months-april2012.jpgMarketers are twice as likely to say their advertising budgets will decrease in the next 6 months than increase (34% vs. 17%), finds the Association of National Advertisers (ANA) in a survey of client-side marketers, the full results of which were publicly released in April 2012. The proportion expecting budgets to decrease is 17.2% higher than 2011 (29%), and is the highest level since the mid-2009 survey. Similarly, the proportion predicting a budget increase fell 22.8% from a high of 22% in January 2011. Overall, 84% of respondents said they were currently challenged with identifying cost savings or reductions in their marketing and advertising efforts, up from 77% last year.

More B2B Cos. Say Budgets Will Take a Hit

The proportion of B2B company respondents that expect their advertising budgets to decrease is higher than the sample average, at 40%, and almost rivals the proportion who say their budgets will remain the same (42%). B2C company respondents are slightly more optimistic, with 32% saying budgets will decrease, compared to 17% who say they will increase.

The report notes that the subgroup average may not equal the total sample average because not all respondents shared their firm’s information.

Big Spenders Have Brighter Outlook

Marketers working for companies with annual advertising budgets of more than $100 million are the only subgroup to see more respondents predicting an increase in advertising spending than a decrease (27% vs. 24%). At the same time, marketers from companies with annual revenue of less than $10 billion are 64% more likely than those from companies with annual revenue of more than $10 billion to say their budgets will be increasing (23% vs. 14%).

Budget Reductions More Severe Than 2011

Of the 84% of respondents who said they are challenged with reductions in their marketing and advertising efforts, two-thirds said they would reduce their marketing budgets by 10% or less. Even so, this is a decrease from 2011, when three-quarters said they would reduce their budgets by this much. This means that one-third plan a decrease of more than 10%, up from one-quarter a year earlier.

Agencies Asked to Find Their Own Reductions

Data from the ANA’s “Recession Survey, 6th Edition” indicates that only 17% of marketers surveyed plan to reduce agency compensation, less than half the proportion who responded that way last year (37%). However, more than half said they will challenge their agencies to reduce costs internally. Other cost-saving techniques identified grew in popularity from last year, including a reduction in professional development activities (28% vs. 24%) and using freelancers to fill open positions (21% vs. 17%).

Among marketers challenged with identifying cost savings and reductions, the leading ways cited to reduce costs are through departmental travel and expense restrictions (68%) and challenging agencies to reduce expenses and identify cost reductions (52%). Close to half said they would reduce their advertising campaign media budgets, while 4 in 10 said they would alter the mix of marketing channels to lower cost channels. Results from a DataXu survey released in March 2012 suggests that these marketers might be moving from traditional to digital channels: almost three-quarters of the enterprise decision makers surveyed reported a shift in budgets from traditional advertising to digital in the past year, with more than 4 in 5 of those expecting the shift to continue this year.

About the Data: The ANA survey was conducted in January 2012. 248 client-side marketers participated, including members of the ANA survey community who are periodically surveyed on a range of topics. Respondents to this survey have an average of 12 years of experience in marketing.