Budget Changes

Thoughts on budget changes:

Time to start thinking about the 2010 budget cycle, yes the 2010.
The old wisdom was that spending on brand and acquisition during recessions resulted in stronger positions at the end of the recession. This will be particularly true for those brands that help consumers through the various mazes.
The Marketing Executive Network Group suggests that marketers will increase the amount of money spent on social media; but it is still experimental. Meanwhile B2B reports that 'superfluous' tactics like social media will the first to be cut. The most likely scenario is that how programs and campaigns are conceived will change and that tight scripts and storylines will be required.
Since budgets are often predicated on a set of assumptions it is those issues and not the numbers that are most important to understand. Budgeting will become exactly like store shelves - there is only a fixed number of facings and if you want to add something, you must take something away.
As a rule of thumb, all media forecasts regarding growth are being lowered - if total spending is flat or even down as some project that does not mean all media tactics will behave the same. Search, in part because of the (too) easy way to measure results is likely to grow. Other directly connected tactics should fare well - well designed and targeted direct mail for instance.
Advertising inventory, across the board is up and aggressive spending is down. What happens when supply outstrips demand? Prices drop. So we have a double-whammy producing less spending.
Brands may shift to direct response style advertising (and hence rates) in order to stretch their budgets. It is possible that that sector, which accounts for ~50% of advertising, will become increasingly competitive and price resilient.
Budgets will focus on what people believe are the essentials - defining that will be a challenge. Expect to see some serious soul searching around acquisition vs. retention strategies. The amount of money spent to acquire 10% more customers, at a time when customer acquisition is likely to be very expensive, may be more effective in either conversion or retention.
The larger struggle will be the national debate between saving and investing on one side and consumer spending on the other. A healthy and robust economy has both. Unfortunately, we managed to finance consumer spending first out of ephemeral capital gains in tech stocks and then in the temporary value of our homes. The result is US personal saving rate averaging less than 2% - not enough. Policy decisions will have to be made on the question: Do we ask people to spend now or spend later? Planning should presume a 1950s mentality when people actually had to save money to buy things. No more easy access through the 'green machine.'