The Great Recession wreaked havoc on the entire economy. A problem the economy has encountered in its fitful recovery is businesses have learned, it seems permanently, how to do more with less.
Marketing is no different. The Great Recession was an excuse for marketers to tighten their belts and scrutinize every expense for what it brought back. Corporate balance sheets have recovered significantly from 2007 to 2009, but that frugality represents a “new normal,” the Association of National Advertisers believes.
In a survey of its members, the ANA found that cutting costs remains a top priority for marketers. Four out of five said finding ways to decrease spending in advertising and marketing remains a top priority. Over half (55 percent) said they want to cut agencies’ pay even more than they already have. Nearly half (46 percent) are going after paid media budgets.
That’s the bad news. The good news is the worst appears over. Two out of three of those who said they need to cut costs said the reductions would be 10 percent or less in 2013. Four years ago, 37 percent said they needed to cut 20 percent or more.
On the agency front, marketers present a mixed picture. Only 15 percent want to cut agency compensation further. This is probably because there might not be that much more to cut, considering how compressed agency margins have become. Instead, 55 percent say they’re pressing them to “reduce costs internally and/or identify cost reductions.” The ANA drily notes that from the agency perspective this drive for “efficiency” will have the same result: drive down agency revenue.
The silver lining for media owners is clients are loath to cut too deeply into ad budgets. Over half (55 percent) said ad budgets the prior six months had remained the same or increased. About 73 percent said these spending levels would remain the same or increase over the next six months.
The ANA concludes that in this “new normal” the winners will be those on the agency and media side that are “accountable” in proving beyond a doubt that they’re providing real value for clients. That should, in theory, help online advertising, although attribution models for its effectiveness for brands remain in flux. The continued focus on cost savings will likely keep up the drive to reform the complicated, inefficient ad-buying system. That should continue the growth of automation technologies, for both indirect and direct buys.
The Rundown: Meta to put new ads all over Facebook and Instagram, including on user profiles
Meta is launching new ad formats this quarter, which are hoping to capitalize off of readers' appetite for discovery.
Productivity app Notion goes global with OOH efforts
As productivity app Notion expands its business, it is ramping up global OOH efforts to get in front of shoppers across the world.
Member ExclusiveDigiday+ Research: Facebook, Instagram, YouTube valued by brands and agencies, but ad spend lags — especially on TikTok
Brands and agencies are in alignment in terms of how confident they are that social media drives marketing success, but a significant gap exits between how they allocate marketing budgets on those platforms.
SponsoredWhy online search is foundational for a post-cookies environment
Derick Jaros, head of industry, commerce, Yext If there’s one definite thing about the past two years, it’s that consumer behavior changed significantly throughout the pandemic. From the shift to online-only life in early 2020 to the frantic Googling for new hours, policies, and stock updates in the first phase of reopening, consumers turned to […]
4A’s Marla Kaplowitz on 3 ways agencies can navigate the uncertain economy
The industry trade group is helping many agency members prepare their business for broader economic changes, from how to retain talent to honing their financial acumen.
Member ExclusiveMarketing Briefing: Marketers, agencies report it’s ‘the perfect storm’ as new business pitches slow
The second and third quarters of this year were slower than usual for pitches, according to agency execs, who said there's a sense of pullback across the board from marketers this year.