Are inventive budgets actually shrinking?
Recently, it’s felt that a chat about the creative industries isn’t complete without at least a passing gripe about shorter timelines, shrinking budgets, or both. But like the familiar refrain of ads just not being as good as they were ‘back in the day,’ it’s largely murky territory as to whether clients’ purse strings really are tightening. After all, inflation’s at a 30-year high, not to mention the effects of Brexit, the pandemic, and broader, more far-reaching changes to how agencies, clients, and consumers operate. So we wanted to find out: are budgets really shrinking?
Ed Palmer, managing director at creative agency St Luke’s London, points out that conversations about budgets have to consider longer-term “structural changes in the industry”. “The standard argument over the last ten years about stretched budgets has been that procurement departments are to blame, and are taking over from marketing,” he explains. “I don’t think that is necessarily the case; I think that argument is perhaps a bit outdated and maybe a bit simplistic.”
Instead, he believes there’s a clear pattern: sectors that have always spent a lot on media — such as retail and automotive — are continuing to do so; while sectors such as tech have seen an increase in media spend. “They’re becoming the biggest global advertisers and have production budgets to match,” says Palmer. According to him, it’s sectors like FMCG where budgets are struggling to keep up with previous levels, with media spends a smaller percentage of brands’ overall spends. Fashion, on the other hand, seems safe (for now). “Because it’s so image-led, there’s a real commitment to quality and production: from the top end brands like Burberry and Gucci through to the likes of Nike and adidas. I think the production budgets remain really strong relative to media spend,” he says.