Marketers unlikely to increase spending

Stock market meltdown could implode budgets

Drastic marketing budget increases are not likely this year for most marketers worldwide, according to a survey conducted by the CMO Council and sponsored by Deloitte Consulting, Market and TechTarget.

More than seven out of 10 survey respondents said that there would be either no change in their budgets or that their budgets would increase by no more than five per cent in 2008. A little more than seven per cent of respondents expected to see budget increases greater than 11 per cent. The remainder either predicted a decrease in budgets or did not want to make a prediction.

A majority of respondents also said that marketing spending had represented less than four per cent of their companies' revenues for 2007. More than one-third said their spending fell between four per cent and 10 per cent of their companies' 2007 revenue. The remainder of those surveyed either spent more than 10 per cent of their company's revenue on marketing or did not make an estimate.

What do these marketer perceptions have to do with actual spending? For ad spending, at least, the perceptions agree with predictions made in GroupM's This Year, Next Year report. As of December the research company projected that ad spending would grow 6.8 per cent worldwide in 2008. That's an increase, but not a dramatic one.

Obviously ad spending doesn't account for other types of marketing, but the numbers definitely indicate subdued ad spending growth in 2008. The larger concern is the global economy. Since the beginning of December, when these projections were made, there has been only bleak news about the US economy. A US downturn inevitably drags the global economy with it. The marketing spending environment in 2008 could go from subdued to extremely conservative.

David Hallerman, senior analyst at eMarketer, said that an economic slowdown would affect some advertising and marketing directly.

"Paid search is 40 per cent of ad spending", Hallerman noted. "If consumers are buying less, they will be searching less for shopping. So paid search spending will drop".

Len Rust is publisher of The Rust Report

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