During the financial crisis of 2007-2009, most marketing departments had their budgets slashed by around 30% to cut costs.
With a third less marketing budget, agencies were forced to perform the same work for a third of the cost – but this never recovered, and the effective 30% discount became the new procurement benchmark.
As Darren Woolley, Founder and Global Chief Executive of TrinityP3, predicts: “This is what the advertising industry faces in the coming months. As the financial impact of this pandemic unfolds, marketers will see their marketing budgets cut. Last time their agencies were happy to make up the shortfall, thinking it was short term and that business would go back to normal after the recovery. But can and will the agencies do this again?”
The reality is that an impending recession will likely constrict marketing budgets and make agency costs increasingly impossible to meet.
Marketing teams may need to do more in-house work to make up for the loss in agency involvement. Ensuring your team has the right resources, tools, and skills to do this should be a priority.