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Marketers are cutting costs, putting pressure on agencies to do more with less, and reducing budgets much more than they were six months ago, according to a survey from the Association of National Advertisers (ANA), which finds that the recession is having a more profound effect than previously expected.

As a follow-up to a survey conducted in August 2008, a second ANA survey on this topic reveals that more companies are identifying cost savings and reductions (93% vs. as 87% six months ago) and 37% of respondents today plan to reduce budgets by more than 20%, up substantially from the 21% in the first survey.

According to the ANA, the top five areas where marketers plan to reduce costs or expenses in marketing and advertising:

  • Departmental travel and expense restrictions (87% vs. 63% in the previous survey)
  • Reducing advertising campaign media budgets (77% vs. 69%)
  • Reducing advertising campaign production budgets (72% vs. 63%)
  • Challenging agencies to reduce internal expenses and/or identify cost reductions (68% vs. 63%)
  • Eliminating or delaying new projects (58% vs. 61%)

Hiring freezes and agency cuts are other tactics that the ANA says are gaining greater consideration by marketers today vs. six months ago. Departmental salary and hiring freezes jumped to 57% from 45% in August and reductions in agency compensation rose to 48% from 32%.

This round of research also examined the difference in budget expectations and reality between the first and second surveys. In August, marketers were asked if they thought their budgets would increase, decrease or remain the same in the next six months. In this most recent survey, the ANA asked what actually happened:

  • Last summer, 53% of marketers thought their advertising budgets would be reduced in the next six months. The second survey revealed that 71% experienced a budget decrease.
  • ?38% percent thought their budgets would remain the same in the first survey, but, after the second survey, only 23% said they actually did.
  • 9% thought they would see a budget increase, when only 6% did.

When asked about their predictions for what will happen in another six months from now, 49%of respondents feel that their advertising budgets will be reduced, while 43% think that they will stay the same. Only eight percent have hope that their budgets will increase.

“In the current economic environment, there’s a need for brand building that’s right for the times – that acknowledges consumers’ financial circumstances, and offers them products, services and solutions that meet their needs,” said Bob Liodice, president and CEO of ANA. “For some marketers, that will mean skewing their media mix toward promotional spending and direct marketing. For others it will mean framing a new, relevant and timely brand message.”

About the surveys: Both surveys were conducted online among marketers working in a range of industries. These industries included pharmaceutical, financial services, consumer packaged goods, computers and technology, retail and others.

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