Majority of WFA marketers feel weight of budget scrutiny

Top advertisers responsible for more than $44bn in ad spend report intense pressure from finance in light of the worrying economic situation, a new study from the World Federation of Advertisers and Ebiquity finds.

The most important finding is that 29% of the 43 major multinational advertisers surveyed plan to decrease spend in 2023 – though the same proportion on the other side say they will stay the same. Three quarters agree that their budgets are under heavy scrutiny.

Why it matters

While cutting ad spend in a recession has been shown to diminish growth upon recovery, in times of financial hardship marketing spend does tend to be an easy place to cut.

But more deeply, it speaks to a broader trend in which spending is shifting to media that can be bought (and cut) quickly – this means digital media are likely to continue to see spend, especially if they can compellingly prove their effectiveness. The risk, as ever, in a time of cuts is that attention shifts only to activation led channels chasing conversion while brand building for the future is left by the wayside.  

What’s going on

• A total 74% of respondents agree (52%) or strongly agree (22%) that their 2023 budget decisions have been influenced by the threat of recession.
• 28% of respondents say they will seek to boost performance, compared to 21% who are focused on increased brand spend in 2023.
• 42% say they will increase spend either slightly or significantly, with offline media such as TV, radio, print, and outdoor likely to suffer.

Around the world, the impact of potential economic trouble varies. In EMEA, 33% of respondents agree there could be a YOY decrease compared with the 30% who plan an increase.

APAC marketers are far more positive with just 15% anticipating a dip and 35% planning an increase.

Key quotes

“It is encouraging to see that a number of clients are planning on standing firm and taking heed of the well-taught lessons of previous recessions, which show time and again that those who continue to invest or increase their ad spend emerge stronger from periods of economic uncertainty” – Stephan Loerke, WFA CEO.

“Sustaining investment is one thing, but there is a risk to long-term brand health by over-investing at the bottom of the purchase funnel. It is a natural instinct to want to see immediate results from media investment but the longer-term trade off needs to be weighed carefully. It becomes more expensive to re-build brand credentials once they have slipped” – Nick Waters, Ebiquity Group CEO

Sourced from the WFA, Ebiquity