The Account Executive and Strategies for Surviving an Advertising Budget Cut

All account executives learn to face advertising budget cuts. The client's marketing manager begins the year with a seemingly ideal marketing plan and then realizes, six months later, that things are not as they should be. The marketer knows that canceling advertising budgets does not have short-term repercussions but canceling trade or consumer promotions means even lesser sales. Unless the manager handling advertising budgets is a long-term strategist and visionary, the common reaction to a drop in sales and profits is to spend less money on advertising to balance the shortfall in sales.

By making cuts to advertising budgets, the client's marketing manager saves his or her job, but advertising, brand equity, and the client's long-term goals take a beating. The advertising account executive feels the pinch of a mid-term advertising budget cut more strongly than others, but saving the situation also lies in his or her hands. There are two basic survival strategies for preventing and surviving advertising budget cuts. The first is to work with the client and educate him or her about the true role and value of advertising, and the second is to ensure that the effects of budget cuts work more like cosmetic surgery than amputation for advertising.

The Account Executive and the Client

Professionals involved in allocation of marketing budgets have different accountabilities: marketers like to visualize long-term goals but have to meet quarterly profit expectations, while salespeople depend upon volumes sold. Though research during the last decades has proved that sales spikes resulting from consumer and trade promotions actually hurt marketing, whose key objectives are brand equity and consumer value, advertising budgets continue to face the axe. The fact is that sales promotion outcomes are more easily measured than advertising outcomes, so sales promotions face budget cuts less often than advertising.

It is easier to make numbers speak than to convey concepts, and advertising allocations will continue to suffer unless the management:

Is ready to tolerate the risks of spending on advertising
Allocates funds with long-term visions
Uses professionals with experience and knowledge who can properly analyze market data in order to produce successful solutions
Remains focused on brand equity and its enhancement

The advertising account executive's duty is to change the client's attitude towards advertising and the client's own business.

What the Account Executive Needs to do While Working with the Client

A study conducted by George S. Low and Jakki J. Mohr, published in 1999 in the Journal of Advertising Research, deals with the subject of allocation of advertising budgets and suggests that "account executives could work closely with clients to:

Focus on building stronger brand equity, adopting a more holistic view of clients' organizations and marketing strategies.
Center the advertising planning process on goals for the coming year (versus inertia or historical precedent) such as specific awareness or sales increases.
Be aware of the influence of sales, and channel members on the allocation decision.
Adopt a more strategic point of view in helping clients determine the amount to spend on advertising and sales promotion programs. More advertising may not always be the solution, depending on the brand's positioning strategy."

The study states further that, "While some of these issues are outside of an ad agency's responsibility, advertising executives can help clients to be aware of the potential influence of such factors. By making clients aware of these hurdles to effective decision making, behavior can be changed."

How to Survive an Axing of the Advertising Budget

Rather than going into a standoff and risking elimination of the entire advertising budget, an advertising account executive should try to work more efficiently and find ways to keep the advertising running while still accepting a budget cut. Belt-tightening strategies for an advertising budget cut include:

Using reduced exposure of advertising to cut down on costs: compromising frequency of exposure for quality of ads
Optimizing your hold on target markets while trading off with frequency of advertisements' exposures to media
Finding out the optimal period up to which advertising can take a break from the media without seriously affecting brand franchise
Optimizing ad executions to the minimal number feasible and putting all of your media weight behind those optimal few
Using more of your advertisements to retain the brand's share of the market and using advertisements less for acquisition of new markets
Using combinations of ads with different media costs to minimize costs while maintaining ad awareness as much as possible

The account executive needs to convince the client that the effects of advertising must not be measured only in terms of increasing sales. Advertising also serves as the defense for market territory already gained and the provider of reinforcement of purchase decisions for consumers. Continuing advertising campaigns provide people with the means to rationalize their brand preferences and prevent or lessen buyer's remorse by reinforcing purchase decisions. The account executive should make the client realize that while it may not be possible to measure the outcomes of advertising on the client's business, it is quite possible to measure the outcomes of ceasing advertisements in the long run—provided the client still has a business.

References:

Low, George S. and Jakki J. Mohr, "Setting Advertising and Promotion Budgets in Multi-Brand Companies," Journal of Advertising Research 39:1 (1999).

Sutherland, Max and Alice K. Sylvester, Advertising and the Mind of the Consumer: What Works, What Doesn't, and Why What Works, What Doesn't, and Why. 2nd ed. New York: St. Leonards, 2000.

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The Account Executive and Strategies for Surviving an Advertising Budget Cut