Marketers Make Deeper Cuts

FEBRUARY 23, 2009

The ad outlook has worsened.

Marketers are undertaking more drastic cost-cutting measures now than they projected even six months ago.

According to an Association of National Advertisers (ANA) survey, 93% of responding marketers said they were now making budget cuts—versus 87% in July and August 2008.

Nearly 37% said they plan to reduce budgets by more than 20%. Back in August, only 21% expected to cut that much.

The January–February 2009 survey found that 77% of marketers plan to cut advertising campaign media budgets; 72% plan to cut ad campaign production budgets; and 68% have mandated that agency partners identify additional cuts.

In the summer 2008 survey, 53% of marketers projected their advertising budgets would be cut in the next six months. Fast-forward six months and 71% report budget decreases. While 38% of those polled earlier predicted their budgets would remain the same, only 23% now say their budgets actually stayed level.

“I’m not surprised, given what’s happened to the economy over the past six months,” said Carol Krol, eMarketer senior analyst. “With so many marketers chopping their budgets, traditional media—such as print and TV—will see additional dollars flow online.”

Ad and media agency executives seemed poised for belt-tightening in August, when 63% of them told Reardon Smith Whittaker that the economy had already had a “somewhat negative impact” on their agency, and 14% took an even darker view.

They were right to be gloomy.

Clearly, agencies are feeling the pain. According to analysis by Advertising Age based on data from the Bureau of Labor Statistics, the US advertising and media sector cut 18,700 jobs in December alone.