Some Australian advertisers are cutting budgets but most are holding or increasing ad spend despite economic headwinds and low consumer confidence.
When the Australian Association of National Advertisers (AANA) asked its members if they are cutting marketing budgets this year, one-third said yes.
And two-thirds said they were holding or increasing budgets.
Josh Faulks, AANA CEO, told AdNews: "This is really encouraging.
"What I'm hearing from our members is that their brands are facing enormous cost pressures.
"They're telling us very healthy sales performance is being overwhelmed by unprecedented increases in supply chain costs - that's a pretty big dilemma.
"That means brands are trying to cut costs where they can."
This is not new ground for marketers. Faulks likens the cost-cutting to that during peak COVID.
Faulks: "Smart CMOs know that brands which maintain or increase marketing spend during a recession or downturn clearly outperform their competitors and are much better positioned to take advantage of the recovery."
Advertising spend, as measured by media agency bookings, fell 10% to $542.6 million in January as government money withdrew from the market. However, the total was still the second highest January ad spend in SMI (Standard Media Index) history.
The month came up against last year year’s strong growth including an Australian Open broadcast fuelled by the success of Ash Barty.
Peter Horgan, CEO of Omnicom Media Group ANZ, AANA board member and MFA chair, told AdNews that he has seen no indications that marketing budgets are being cut by one-third.
Horgan: "I think the vast majority of people will see tougher times ahead, but the real challenge is that narrative becomes self-fulfilling and we will talk ourselves into a recession.
"While we are seeing month-on-month declines - there's a reason for that because we're coming off the back of the biggest advertising market in history.
"However, marketing is holding up in the face of low consumer confidence.
"What tends to happen as we head into uncertainty is that the market gets a lot shorter - but we'll know a lot more in August and September."
Another insight AANA got from its survey was that 71% of respondents said market effectiveness and ROI is the biggest priority for 2023.
Followed by sustainability at 43%, then diversity and inclusion of 37% and and media measurement at just under 30%.
Faulks sees this as a good sign that marketers are focusing on the "right balance" of marketing input and business outcomes during signs of corporate recession.
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