The macroeconomic outlook for the coming year is doubtful globally and this climate is reflected in the results of the latest study by the World Federation of Advertisers (WFA) and media planning analysis firm Ebiquity. The study, which includes the intentions of 43 companies, including five of the top 10 companies that spend the most money on advertising each year, shows that 29% will reduce their marketing spend, compared to 31% who will increase their marketing spend. Forty per cent will maintain what they are spending this year.
Companies surveyed by the World Federation of Advertisers (WFA) and Ebiquity are largely increasing their investment in digital to focus on short-term return.
A breakdown of this data by both region and media shows clearer trends: On the one hand, one third of participating companies in EMEA (Europe, Middle East and Africa) are contemplating a cut in advertising spend and one third plan to increase it, while in Asia Pacific the former is down to 15% and 35% of them anticipate an increase in spend; and on the other 42% of respondents indicate that they will slightly or significantly increase their commitment to digital, with around half of them also planning to reduce what they spend on analogue media, especially print.
However, as many as three-quarters of the companies in the sample agree that budgets in 2023 are under severe scrutiny and marketing managers will have to clearly justify what they are spending on. As a result, the study’s authors point out that generating short-term results and flexibility in investment are gaining in importance for planners as key factors. The combination of both tactics is closely linked to digital operations and paints a cautious scenario in the face of potentially worsening economic conditions.
This shift towards immediate effectiveness would come at the expense of brand advertising, although WFA also identifies companies that have learned from previous crises that “those that continue to invest or increase their ad spend emerge stronger from periods of economic uncertainty”, according to CEO Stephan Loerke. In the same vein, Nick Waters, CEO of Ebiquity Group, reminds us that “it is more expensive to re-build brand credentials once they have disappeared” but considers it reasonable for companies to review their marketing cost structure and eliminate those that are not generating positive effects.