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A quarter of independent agencies have reported budget cuts as the cost-of-living crisis and economic consequences from the war in Ukraine take their toll.
The Alliance of Independent Agencies (AIA), which polled 52 of its members in the creative, media, digital, PR and experiential sectors, found that 12 had observed declines in budgets for campaigns and projects, with a further two reporting delays.
The AIA’s membership includes agencies such as The Barber Shop, BBD Perfect Storm and The Specialist Works, but responses to the poll were anonymous.
One digital agency said it had seen clients’ budgets dropping as early as May.
One agency leader attributed budget cuts to the different categories of clients, adding that their agency’s food and drink clients, as well as FMCG clients, were more likely to reduce budgets.
They said: “The impact of Ukraine, the impact of drought, those have fed through really aggressively into massive hikes in input costs for clients in that space. The immediate knock-on effect of that for many of them is that they are holding back on marketing spend.”
They added that their other clients, including a European transport provider and a financial services company, had been “slightly less affected”.
Another agency leader said the size of clients had affected adspend, with smaller clients being more affected.
They said: “We’ve definitely seen a sizeable decrease in spend from a number of our clients. Unlike bigger brands, there isn’t a separate hived-off marketing budget – it’s all coming from one single budget, which has never been under more pressure, whether that’s down to supply-chain issues, interest rates impacting affordability of finance or because consumers are tightening their belts.
“Everyone understands and appreciates the many very strong arguments that have been made by experts about spending through a recession, but if the money isn’t there, it isn’t there.”
The IPA has continuously advocated for spending throughout a recession. Speaking about the most recent IPA Bellwether Report, IPA director general Paul Bainsfair said: “All the IPA’s analysis on who does best in a downturn, shows that the companies that recover fastest are the ones that either maintain or increase their marketing spend during difficult economic times.”
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