Marketers still cutting costs, though less aggressively
By: Mark HaslanFebruary 24th, 2010
American marketers are not out of the woods yet when it comes to the recession, as a high percentage of them are still trying to cut costs, according to a recent study.
The Association of National Advertisers reported that 83 percent of respondents are seeking out opportunities for cost savings and reductions in their marketing and advertising budgets, though this is an improvement over the 87 percent seen six months ago and the 93 percent seen last year.
In addition, the deepest spending cuts seem to have passed, as the report found that just 7 percent of respondents are planning reductions greater than 20 percent, an improvement over the 30 percent that said so in July 2009.
"The recession may be officially over, but it appears that marketers have reset their expectations and a greater degree of frugality has set in. Cost savings and reductions may be the ‘new normal,’ even when the economy improves significantly," said the report.
Yet consumers may not be seeing fewer postcards and brochures in the mail just yet – the most spending cuts seem to be coming from operational expenses. The study found that 76 percent of respondents plan to focus on reducing internal expenses, and 73 percent are reducing departmental travel and expenses.
Looking ahead, "current responses suggest some degree of optimism since the last survey," in that 59 percent of marketers think their budgets will stay the same in the next six months, while 19 percent anticipate increased budgets and 22 percent think budgets will continue to be slashed. However, the last figure is an improvement over the 39 percent that expected reduced budgets six months ago and the 49 percent that predicted further budget cuts last year.
Yet the fact that consumer spending has still not returned to normal levels indicates that companies should not scrimp on marketing, as it is an important contributor to sales.
A recent Harris Poll found that 63 percent of consumers have made efforts to purchase more generic brands, in addition to a variety of other cost-saving measures, making it more important than ever for businesses to sustain or even ramp up their marketing initiatives.
Businesses should keep in mind that not all marketing has to be expensive – simple postcard campaigns alerting customers to an upcoming sale can go a long way for brand building and boosting sales.
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