There's a lot of money at stake. The U.S. government is the
country's 56th largest advertiser, laying out $738.5 million during
2011, according to Ad Age's DataCenter.
"We are prepared for the worst," said Robert Mathias, CEO of
North America at Ogilvy PR, who recently served as
president of Ogilvy Washington, which supports the business of at
least seven government agencies. "Today I'm not revising my budget,
but we could talk tomorrow and there could be a dramatically
different situation. We're doing this day-to-day."
The Army, which is the government's second-largest ad spender,
behind the U.S. Postal Service, will likely feel the pinch. The
Army spent $47 million on advertising in the U.S. in 2011.
Spokespeople for the Army declined to comment. But it's likely
that it, like other federal agencies, will examine more closely the
cost-benefits of its marketing programs, which could put pressure
on their shops.
Not all agencies would be affected. The USPS, whose spending
doubled that of other government megabrands, including the Army and
Marine Corps, said it won't feel the crunch. The organization spent
$95.8 million on measured media in 2011, according to the Ad Age's
"Sequestration doesn't really affect us directly because the
Postal Service doesn't receive tax dollars. We get our money for
operating expenses from sale of postage products and services,"
said a spokeswoman. "Our operations will continue as usual."
Amtrak, which spent $17 million on advertising in the U.S.,
according to the Ad Age DataCenter, recently ended its contracts
with Havas agencies, an industry executive told Ad Age. The agency
declined to comment. It's not immediately clear whether the move
was related to sequestration.
Amtrak would not comment on its marketing budget or agency
relationships but did indicate in a statement that it's prepping
for cuts. "We have been controlling our costs and managing our
budget in anticipation of a possible reduction in federal funding,"
Amtrak said. It noted that "the continued lack of predictable
federal appropriations makes proper budgeting and future planning
For marketing agencies, sequestration isn't simply about cuts.
It turns what was once one of the most-predictable client sectors
into a category rife with uncertainty.
Mr. Mathias said that while the government is still a great
client to have, "it is a wider-eyed decision to pursue [government