Fewer brands cutting ad spend amid the economic downturn

Despite declines in consumer spending and the sting of inflation, some advertisers are not cutting back their spending. And some have even benefited from challenging marketing conditions, according to a report by Advertiser Perceptions, a research firm focusing on the advertising industry. Advertiser Perceptions found that the percentage of marketers who say they have reduced or paused ad budgets fell to 41% in October 2022 down from 49% in August 2022. The report surveyed 300 marketers and agencies who are involved in media mix decisions for brands with over $1 million in ad budgets. The survey was fielded in late July and early August, and again in early October. Ad Age Next: CMO Get your tickets for the Dec. 7 event in New York Register here Inflation and interest rates are also top of mind for advertisers, but they are actually helping business in some cases. The report speculates that some advertisers may have succeeded in winning market share from struggling competitors, and points to earnings reports from advertisers who were able to increase profit by passing price hikes on to consumers. Advertiser Perceptions declined to share specific brands. About half of advertisers say that high inflation rates are having a slightly negative impact, while 20% say that they’ve had a slight or major positive impact. “When we look at the data over the summer, things were worse,” said Eric Haggstrom, director of business intelligence at Advertiser Perceptions. “The economy had deteriorated and advertisers were reducing budgets and headcount. Now we’re seeing the economy improve a little bit, and advertisers are starting to see the light at the end of the tunnel.” Many advertisers are also continuing to experiment with their media mix in search of the best return on ad spend. Half have increased the number of social platforms they are working with this year, and a third are working with a greater number of connected TV partners. “When it comes to CTV, this is a trend we are seeing across our research,” Haggstrom said. “Advertisers are spreading out between the streaming services, and not just the major players. They have other options with Peacock, Paramount+, or Tubi, for example.” The biggest budget cuts came in traditional media, including out-of-home, print, linear TV and radio. But spend on digital channels stayed strong, with just 15% of advertisers saying they had reduced those channels. The report also found that 58% of marketers increased or reallocated ad budgets to social media platforms, and 38% said they had done the same with general search. For advertisers that did reduce budgets, the majority cited lack of measurement or effectiveness as a top reason when it came to linear TV (29%), connected TV (47%), and social media (30%). Budgets for linear TV were reduced the most in dollar terms, followed by out-of-home, and social media. Most advertisers who reduced budgets did so by less than 20%. “Going into next year, marketing budgets will be under scrutiny across the board,” Haggstrom said. “But advertisers seem to be resilient. They’ll need to look at each line item and ask if it's a need or a ‘nice to have’ and justify its value.”

Fewer brands cutting ad spend amid the economic downturn

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