Articles are flowing about how big companies are cutting away at their budgets, if they are not cutting then they are renegotiating costs with their agencies, here and here...
The article on AdAge explains how companies are also taking a look at consolidating:
PepsiCo last week reported a 43% drop in fourth-quarter profits on write-downs and restructuring and a 9% drop in full-year profits. During Coca-Cola's fourth-quarter earnings call on Feb. 12, CEO Muhtar Kent said the marketer has slashed its agency roster by more than half. "We have consolidated, " he said. "Agency numbers have gone down by more than half, and I think we have driven a lot of efficiencies in our marketing, our market-research costs."
The survey in the above emarketer article indicates cuts are increasing in the various marketing and advertising areas.
The survey also demonstrates it is not always about cuts in spending but also about reallocation of Ad spending. We are seeing during this time of recession that ROI and the ability to provide hard data about ROI is important. There is a distinct move of money from TV to Digital and big companies are putting their money behind the idea that there is a better return on investment in digital media.
Being more efficient with money that is available to spend on advertising is therefore very important. You see so many catch-up campaigns where companies are just trying to better their competitor without looking about being innovating and really thinking about what will allow them to provide interesting and hopefully even innovative services to their customers. There is great article from the creator of the subservient 'chicken campaign', not really innovative or providing an interesting service but as memorable ads go this is right up there with the effective few.
But even though it is cold outside, paying attention to clients needs does pay off and companies that are doing a good job in this arena, like Google, are getting top scores.
“Since new customers are harder to come by in an economic downturn, firms need to pay even more attention to building loyalty with their most important customers,†wrote Bruce Temkin, author of Customer Experience Correlates to Loyalty.
Companies that have a good brand, that people will trust and who also advertise efficiently are highly likely to come out of this recession far better than the others...
Note: there is a new article on emarketer (20 March 09) concerning a Myers Publishing survey providing a new view on how ad spending will evolve.