ANA: Agencies Face 'The New Reality' Of Cost-Cutting

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ANA Bill DugganThe U.S. has had  26 straight months of job creation, the stock market has held on to the 13,000 point for a few weeks and expectations for the coming TV upfront season are practically exuberant. That said, unemployment is high, the economic recovery is anemic, the housing market is still in the doldrums and the threats to global finance system abound.

So what does all this mean for ad agency budgets? In the Association of National Advertisers' sixth "recession"survey (download the PDF here),  248 client-side marketers told the group that marketing budgets will remain largely unchanged -- even though there appears to be some acceptance that things have gotten better since the depths of the downturn in 2009. Similar to people who experienced The Great Depression in the 1930s and made frugality a permanent way of life, marketers have taken lasting lessons from the past few years as well.

While other parts of the agency structure could be squeezed more, the nature of internet advertising being more accountable than other media formats should keep that segment safe. The same is true for analytics and research functions, which are seen as an investment as opposed to an expense, said Bill Duggan, group executive vice president of the ANA, in an interview with AdExchanger.

"Marketers are telling us that they are constantly looking for ways to save more, whether or not we're in a recession or a recovery," Duggan said. "This is the new reality."

Duggan didn't want to speculate on the value of internet advertising in particular in terms of the survey. But he did note that there are still areas that marketers are want to take aim at.

"One thing we’ve heard a lot of chatter about is the briefing process," Duggan said. "Agency briefs have been around since the dawn of time and complaints about the expense and length of that process have been around just as long. To many marketers in our surveys, the prevailing view is that briefs are poor and that leads to a lot of rework -- and that adds up to higher agency fees and a lot of waste. Inefficiencies in the briefing process need to be improved."

Most of the marketers surveyed (84 percent) say they still need to keep a tight lid on spending. That's a slight rise from last year 77 percent), suggesting that marketers may have found that after years of thrift, the continued ability to wring out more savings is becoming more challenging.

Case in point, less than half say they want to reduce campaign budgets, suggesting that the actual work still commands support. And only 36 percent want to cut back on new projects. However, agencies will be doing more of it from their own desks, as  68 percent of marketers said they want to restrict travel and related expenses.

"I think that you're going to see more mobile video conferencing and webinars, which allow for that personal touch that marketers and agencies want, but without the hotel, airline, food and other expenses that go into those communications," Duggan said.

By David Kaplan

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