Are Marketing Budget Cuts Here to Stay?

Talking with a number of marketers and business executives over that past several weeks indicates a common theme of continuing marketing budget cuts.  Many marketers are now facing a second or third round of budget cuts after widespread marketing budget reductions late 2008 / early 2009.  The optimistic outlook for many marketers is to hopefully retain current budget levels into 2010.

Research from various sources substantiates this anecdotal information:

• Marketing budgets were cut over 20% on average in 2009 versus pre-recessionary levels in 2007/2008.
• The number of companies that cut marketing budgets in 2009 is 25% higher than predicted in January 2009.
• In one survey less than 20% of companies are expecting marketing budget increases while over 40% are expecting further reductions in 2010.

In spite of these substantial and what now appear to be sustained marketing budget reductions, companies are still expecting marketers to deliver results and performance at levels similar to those prior to the cuts.  Marketers have generally responded positively to this challenge for accomplishing the same or more with less.  The following are some of the common approaches to this challenge:

• Restrictions and reductions for expenses such as travel, agency fees, contractors and other external costs.
• Staff reductions, organizational rationalization and other internal cost reductions.
• Eliminating or delaying new projects and/or campaigns.  While this is a good short-term deferral tactic, it does raise concern whether further delay of these projects/campaigns will eventually impact business performance and results.
• Reducing spend and attention on less effective outbound marketing channels such as print advertising, direct mail, tradeshows, etc.
• Increased focus on more effective and less costly inbound marketing channels such as websites, search engines, blogs, social media, videos, etc.
• In a fortunate confluence of circumstances and timing, inbound marketing is proving to be the primary means for marketers to produce good results with lower budgets.

Although overall marketing budgets are expected to decrease in 2010, the Forrester US Interactive Marketing Forecast predicts that social media, email, search and mobile marketing spend will grow significantly in 2010 and subsequent years while outbound marketing spend will decrease even further.

Marketers have cut expenses and refocused attention in response to budget cuts and mostly achieved performance goals and expectations during 2009.  The question is whether this performance can be sustained in 2010 with flat or further reduced budgets.

What are your marketing plans for 2010?  Do you expect your budget to remain flat, increase or decrease?  Are you going to shift more budget and attention to inbound marketing channels to meet your goals?  Your comments are always welcome.
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