Budgets holding up—for now

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Last December in this space, I wrote: “The last economic downturn, the dot-com bust, spurred a welcome change throughout the marketing profession, which was driven to become more analytical, systematic and metrics-driven. This time around, I think marketing departments will be much better positioned and able to quantify their contribution to the business and, I hope, work as full partners with their corporate counterparts.”

Back then, of course, no one was forecasting the unprecedented global financial meltdown we've witnessed in the past few months. (If someone knew what was coming, they really ought to have sent an e-mail to someone at the Federal Reserve, which would have appreciated the heads-up, I bet.)

BtoB will focus on the effects of the slowing economy on b-to-b marketing budgets, tactics and strategies in its annual “Marketing Priorities and Plans” survey. The results of the survey, fielded last week, will be presented in the December issue of BtoB.

Meanwhile, other studies suggest that despite dreadful economic numbers, marketing budgets are surprisingly strong.

Take these recent numbers from the Association of National Advertisers, which held its annual conference in Orlando, Fla., last month and conducted a quick poll of more than 1,200 advertisers and agency executives in attendance. (Note: ANA includes both b-to-b and b-to-c members.)

“While 33% of respondents said they were cutting their marketing and media budgets in response to the financial downturn and 33% said they were reallocating marketing dollars, 27% said they were increasing their budgets in response to the downturn. The remainder said they were making no changes,” writes Senior Reporter Kate Maddox on this and other research in our lead story on marketing budgets (“Marketing budgets showing resilience,” page 1).

Coming as no surprise, interactive marketing spending is still growing, albeit less impressively than a few years ago. According to the IAB Internet Advertising Revenue Report from the Interactive Advertising Bureau and PricewaterhouseCoopers, during the first six months of this year, Internet advertising revenue in the U.S. reached $11.5 billion, a 15.2% increase over the first half of 2007.

The Direct Marketing Association, likewise, sees relative strength within Internet budgets. In October, the DMA projected that Internet marketing (including search but excluding e-mail) would grow 19.7% this year.

At our NetMarketing Breakfast in Atlanta last week, Heather Foster, VP-marketing at ControlScan Inc., a provider of Web site security products for smaller e-commerce businesses, said fully half her company's marketing budget is devoted to online at this point. Another speaker, Ann Lally, digital strategist at Netherlands-based employment services provider Randstad, said she hoped to allocate a significant amount—perhaps 30%—of her online budget against pay-per-click and search engine optimization in the spring to support the company's relaunched Web site and a recent acquisition.

“You've got to look at current internal departments and agency relationships,” Lally said, adding that this exercise at Randstad wasn't driven by recent economic realities. “It's really about getting the job done more efficiently,” she said.

Our story “Shakeout ahead for Web 2.0?” (page 3) reports spending on online ad networks dropped 21% in the third quarter compared with the previous three months, according to a report by ad optimization company PubMatic. Senior Reporter Christopher Hosford's story also underscores the lack of consensus about how the downturn will affect experimental mar keting tactics, notably the use of social media as a marketing channel.

Meanwhile, agencies are cutting digital marketing jobs left and right. Is this an early warning sign of reductions to come on the client side? I think so.

The ClickZ Network has created an interesting, if distressing, application called Layoff Tracker for Digital Marketing Jobs. As of last Thursday, its estimate of industry layoffs to date was 3,874.

A final thought: If staff reductions are in the immediate future for many marketing departments, it is imperative to conduct talent assessments and decide which functions can be outsourced.

Ellis Booker is editor of BtoB and BtoB's Media Business, and can be reached at [email protected].

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