Is marketing the first casualty of an economic downturn?

Published on: 2015-02-05

MarketingCharts would seem to think so, according to this article:

Nearly two-thirds (65%) of CMOs and marketing execs say their ad budgets will decrease because of the troubled economy, but more of their money will go toward digital/interactive marketing than before, according to a new survey from Epsilon.

Roughly the same percentage (63%) of the 175 CMOs and marketing execs surveyed report that their spending on interactive/digital marketing has risen, while 59% report a decrease in traditional marketing spend.

The study also finds that though CMOs are facing tough challenges in the current economic climate, 94% of those surveyed agreed with the statement, “A tough economic period is precisely the time when marketing plays a key role.”

Our take:

Statistically speaking, marketing is usually one of the first things to get cut as retailers and CPG manufacturers feel the heat from shareholders.  However, traditionally these groups also tend to fare the best over the long-run, taking smaller percentage cuts than other areas quick to get reined in (including human resources, manufacturing and all sorts of middle-management). The reason is simple: marketing must ramp up before manufacturing can again, in order to build demand. Consequently, cuts to marketing are typically earlier but smaller. Bumps to marketing also happen more quickly, and sooner than to other areas of business development. Given the trend towards accountable marketing, we predict that above-the-line marketing programs, particularly for TV, will get cut most deeply during this down cycle.  The winners will be Internet and shopper marketing programs, which are less expensive to run, more accountable, and, according to many, more productive.

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