UK Ad Body Urges Steady Spend During Recession Threat

21 March 2008

LONDON: UK agency body, the Institute of Practitioners in Advertising, is urging marketers to spend their way through the current economic uncertainty in order to safeguard the future of their brands.

The rallying call, which comes as no great surprise to those whose living depends on maintaining current adspend levels, is uttered in a new report, Advertising in a Downturn, produced after a recent IPA-hosted seminar in London.

The report poses a simple question: What it the impact on those who cut their marcoms expenditure versus those who maintain or increase theirs?

Among the report's key conclusions is that it is better to maintain share of voice (SOV) at or above share of market (SOM) during a downturn. Also that if other brands are cutting budgets, the longer-term benefit of maintaining SOV at or above SOM will be even greater.

The consultancies* that contributed to the report claim that although it might look healthy in the short-term for companies to cut their marketing spend, it is a dangerously misleading view.

Mid-to-longer-term business harm caused by reducing spend will not at first be noticed but will be considerable, warn the consultancies, with those that cut their budgets relative to competitors at greater risk of share loss.

IPA director general Hamish Pringle was careful not to talk down the market but said: "It's all too easy to make a snap judgment about a discretionary budget like advertising; but the reality is that short-term gain leads to long-term damage to the brand, and the cost of recovery is three to four times greater than the saving made. 

"We would urge marketing chiefs to do the sums with their finance directors before allowing such big decisions to be made."

*Millward Brown, Data2Data Decisions, Malic PIMS (Profit Impact of Market Strategy), and IPA dataMINE.

For more details of the report's findings click here.

Data sourced from IPA (UK); additional content by WARC staff