Marketing Budgets Showing Resilience.

By Kate Maddox

While many companies are cutting marketing budgets in response to the economic downturn, a surprising number are increasing them during these challenging times, according to several recent surveys.

The Association of National Advertisers, which held its annual conference in Orlando, Fla. last month, conducted a quick poll of more than 1,200 advertisers and agency executives in attendance. The survey included b-to-b and b-to-c marketers.

While 33% of respondents said they were cutting their marketing and media budgets in response to the financial downturn and 33% said they were reallocating marketing dollars, 27% said they were increasing their budgets in response to the downturn. The remainder said they were making no changes.

“There could be a feeling that the downturn is a sharp slide of shorter-term duration and the economy might start to bounce back in the second half of next year,” said Bob Liodice, president of the ANA.

The ANA poll also asked marketers by how much they plan to increase or decrease their marketing spending next year.

Nearly 40% said they plan to increase marketing budgets in 2009, with 26% planning increases greater than 10% and 13% planning increases between 1% and 10%.

On the flip side, 19% of marketers said they plan to cut spending by more than 10% next year, and 14% said they plan to cut spending between 1% and 10%. The rest plan to keep their budgets flat.

“This is much more bullish than expected,” Liodice said. “It could be a little bit of savviness on the part of marketers. In an economic downturn, this is the time for marketers to capture a greater share of market by investing robustly in a well-defined marketing mix. Your competition may be letting their guard down.”

According to an instant pa11 taken last month during a BtoB webcast on how marketers are dealing with the economy, 29.1 % of respondents said their budgets would be up next year, just slightly lower than the percent of those who said they would be decreasing budgets (30.3%).

The online poll was taken by 162 b-to-b marketers participating in the webcast.

It found that 19.8% of b-to-b marketers plan to increase their marketing budgets between 1% and 10% next year and 9.3% plan to increase budgets by more than 10%.

The poll also found that 17.3% said they would decrease budgets between 1% and 10%; 13.0% said they would decrease

budgets by more than 10%; and 40.7% plan to keep budgets flat.

In an online survey of 382 marketers conducted in September, research firm Marketing- Sherpa looked at budget plans and attitudes among b-to-b, b-to-c and large organizations (more than 500 employees).

It found that 56% of large organizations had cut their marketing budgets in response to the economy; 34% of b-to-c companies had cut their budgets; and 24% of b-to-b companies had cut their budgets.

The survey also found that only 2% of large organizations had increased their marketing budgets; 8% of b-to-c companies had boosted their marketing budgets; and 7% of b-to-b marketers had increased their marketing budgets.

“To a certain extent, this reflects the conservative nature of larger organizations at any time,” said Stefan Tornquist, research director at MarketingSherpa. “Smaller organizations can be more fluid in planning their marketing budgets.”

The MarketingSherpa study also looked at the differences between large organizations and smaller ones when it comes to budget attitudes.

When asked how they would respond in a challenging economy, 46% of large organizations said they would cut across the board, including marketing; 19% said marketing is the first area to be cut; 14% said they would invest in marketing; and the rest said they would make no significant changes.

For smaller organizations (fewer than 500 employees), the attitudes were different. Only 32% said they would cut across the board, including marketing; 13% said marketing would be the first area to be cut; 24% said they would invest in marketing, and the rest said they would make no significant changes.

The MarketingSherpa survey also looked at how large b-to-b marketers are investing in specific marketing tactics.

It found the greatest increase in Web 2.0 applications (with 48% of marketers investing in these) and e-mailing to house lists (also 48%).


Marketing Budgets Showing Resilience