WFA reports concerning numbers this week from their recent study in partnership with Ebiquity that indicates that top advertisers who are responsible for more than $44bn in ad spend are reporting “intense pressure” from finance because of the worrying economic situation.
Highlighted in the study is that 29% of the 43 major multinational advertisers participating in the report, plan to decrease spend in 2023. The report goes on to show that the same proportion of advertising budgets are slated to remain flat but are undergoing some serious scrutiny.
Similar to the earlier days of the Covid crisis, we have seen some hesitancy from advertisers in recent years. Digital advertising continues to provide flexibility and the ability to make quick decisions and will most likely remain in a better position on the budget sheet than more rigid media channels that require longer term commitment.
The challenge facing our industry is twofold. Firstly, there is a persistent gap in utilizing data to show that various media investments are acting as revenue centers as opposed to being classified unjustly as cost centers. While IAB Canada and its members note some improvement in the industry’s ability to analyze data, there appears to be a long way to go when it comes to calculating incrementality.
Further, and closely related to the data issue, marketing budgets are often handled as discretionary expenditures on a balance sheet. Organizations that fodder greater communication between CFOs and CMOs tend to preserve their marketing budgets more effectively according to our stakeholder conversations. Opening lines of communication between finance and marketing is critical – not only in times of crisis but as an always on practice.
As we head into Q4, IAB Canada continues to have meaningful discussions with members about the economic uncertainties we are facing. It is our goal to provide the industry not only with an accurate barometer of the state of our industry, but also with some opportunities and practical take-aways from our thought leadership community. Stay tuned for more in the coming weeks.
The study can be accessed here.