Recession: Brand owners optimism of media budget rebound

It is a known fact that during recession, the first segment of a company that suffers the first major casualty is the marketing segment.

This is so because,owners of brands do this by using attrition to cut off contracts, which will at the end result into different allocation.

For example, during the 2009 economic slowdown, Nike, one of the world’s biggest sports’ marketers, sent shock waves into the industry by cutting its marketing budget, as part of a push to reduce expenses.

Nike, known globally through its endorsement deals with athletes like Tiger Woods and Kobe Bryant and European soccer clubs, including Manchester United and Arsenal, disclosed as at then that it was in a cost-cutting mode by saying that it has eliminated as many as one thousand four hundred jobs in an attempt to survive the economic crisis.

On the other hand, Unilever, in April this year, said a third of its three-year $7 billion cost-cutting plan would come from marketing and overhead. In the first half, however, nearly a third of the cutbacks came just from marketing and half from marketing and overhead combined. Overhead cuts included, a 13% reduction in middle and senior managers, which meant fewer people to greenlight new ads.

However, there seems to be a sense of hope for marketers when Unilever disclosed recently that despite all those agencies’ and production cuts, marketing spending – at least on media – will rebound in the second half, which will get around 60% of Unilever’s new-product launches for the year.

Global CEO, Unilever, Paul Polman, in a statement made available recently to journalists in Lagos said, “ Unilever with global footprints across the world and in Nigeria has disclosed that it 3% organic sales growth was slightly below analyst projections for the second quarter, but the company handily beat expectations on earnings and margin.”

According to him, Unilever’s first-half operating margin fell 1.8 percentage points, better than analysts’ expectations, thanks to a 1.3-point reduction in marketing. That comes after a 0.5-point margin improvement last year was fueled by 0.4 points from marketing.

Polman said an investor call that marketing cuts aren’t to blame for sluggish volume growth, which he blamed primarily on hiking prices in emerging markets to compensate for currency devaluations.

But, speaking to Daily Times on this issue, the president of the Outdoor Advertising Association of Nigeria (OAAN) Mr. Tunde Adedoyin, said; “Recession is not only affecting advertising, it cuts across all industries across the economy.

But, it is very important to note that in terms of recession there is still need to advertise. Unfortunately, most marketing directors or companies when they have issues like this, the area they first of all look at is media and advertising.

That is why in the last two years, it has been very severe on advertising and media placement and buying. As we speak, we cannot say that we are totally out of it.”

According to him, “We thank God that there is a little bit of progress, we are still in recession, clients are not spending money, some are cutting budget, even the huge spending ones.

In our own industry, they use to do media placement for twelve months, but these days, they have come up with all forms of tactics, one month, three months in order to save money.

“That has been the style in the last three years. But we are very hopeful that things will get better; it is all about managing our economy. But in a nutshell, the economy is improving.

Stories by Godwin Anyebe