The news: In response to rising inflation, one in five marketers have cut their spending, per new Advertiser Perceptions data. Budgets decreased by an average of 16%.
While inflation is an issue across sectors, the study suggests the pinch from it differs by category. Although 90% of consumer-goods and retail marketers have been affected by rising prices, just 42% have shifted their messaging strategy, compared with 70% of fashion and apparel marketers and 56% of marketers in the finance sector.
Zoom out: The study polled 300 marketers at the end of April. Since the research was conducted, macroeconomic conditions have gotten worse, and it’s a safe bet that the patterns taking shape have intensified.
In recent months:
Funnel foibles: Many marketers are cutting back on expensive upper-funnel operations that are crucial to creating brands. That dampening has affected CTV and digital television, which had previously benefited from the pandemic-driven trend toward streaming and social media.
There’s often a “flight to retention” as budgets get cut, and a corresponding focus on profitability of specific customers, explains principal analyst Dave Frankland. In the short term, it makes sense; in the longer term, it can hurt.
“You’ll also find some marketers that will zig while everyone else zags and double down on acquisition when everyone else is pulling out of top-of-funnel activity,” said Frankland. For companies that can sustain the investment, it’s a great time to grow—albeit likely unprofitably.”
What’s next: Three in 10 respondents in the study indicated they would turn their CTV ads back on if inflationary pressures waned. Given June’s inflation data, though, that doesn’t seem likely to happen soon.