Warc Blog

Brand owners seek savings

4 April 2012
NEW YORK: Brand owners in the US are still trying to make major savings, with media budgets and advertising agencies' in-house costs two particular areas of focus, a study has revealed.

The Association of National Advertisers, the industry body, polled 248 client-side marketers, and found 84% of its panel were being asked to place tight limitations on "controllable spending".

Such a total could be measured against the score of 77% logged in a similar report published last year, although it did mark a slight decline from the peak of 87% posted in August 2009.

"It's not just marketers who are feeling the pinch," Bob Liodice, the ANA's president/chief executive, said. "All of our partners feel the impact of this year's projected trends, as modest spending trends undoubtedly affect business processes throughout the supply chain."

In reacting to these shifts, 34% of firms plan to reduce outgoings on advertising, while 49% will freeze the resources directed to this discipline and 17% boost expenditure rates.

Among those organisations pursuing cutbacks here, 33% expect investment levels to fall by at least 11%, compared with 25% following this route in 2011.

More specifically, some 48% of companies intended to decrease media spending going forward as a means of making savings.

Elsewhere, 40% will alter the marketing mix to favour lower-cost channels, which may prove especially beneficial for digital. Procter & Gamble and Unilever, the FMCG groups, have both recently advocated this approach.

When discussing agency remuneration, only 17% of respondents anticipated trimming outgoings, the lowest figure recorded since 2008.

However, 52% of participants will request that their roster shops identify ways of lessening internal expenses. This amount has declined from 62% versus 2008, but does still put "pressure on agencies to share the cost-effectiveness load".

Innovation is another field which might come under scrutiny, as 36% of the featured companies had either eliminated or delayed new projects due to the difficult trading environment.

Other widespread strategies include "short-term" tactics like restricting travel costs, mentioned by 68% of the sample.

A further 28% of contributors are reducing their emphasis on professional development and 21% are employing more freelancers when hiring.

Data sourced from ANA; additional content by Warc staff

 
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