Opinion: Perspective - M&S budget cuts overshadow effectiveness story

With ironic timing, in the week the ad industry celebrated advertising's power to transform businesses, Marks & Spencer announced it's slashing its marketing spend by 20 per cent.

This is IPA effectiveness week (congratulations to the board-sweeper Bartle Bogle Hegarty) and with it comes a whole new clutch of case studies on advertising's role in driving sales and sustaining business growth.

The IPA has been on a real mission to underline the value of advertising and is stepping up its efforts to spread the word. So far, it's been doing a fantastic job. Predictably there was a poor show of clients at the Effectiveness Awards night on Monday, but let's hope marketers can find time to read about the winners and learn from the case studies.

See this week's feature by the convenor of the Effectiveness judges, Neil Dawson (page 22), and read the awards book that comes with this week's issue for all the ammunition. And deploy it immediately.

Anyway, it seems as though the message is getting across, to marketers at least. A thoroughly amateur poll of the clients present at Tuesday's Marketing Group of Great Britain dinner suggests a firm belief in the need to keep spending levels up in a downturn.

But marketers are, for the most part, the converted. It's at board level, where marketing is famously under-represented, that the point needs to be made most forcibly. With the marketing function declining in stature in so many blue-chip companies, the IPA and the ad industry at large needs to focus all its firepower on client boardrooms.

Boards, I suspect, are more likely to notice the news this week that M&S is addressing a sharp decline in profits by cutting its marketing budget. And the fact that M&S knows better than most the impact great advertising can have makes the news even more pointed. M&S was the proud, and deserving, winner of the 2006 Effectiveness Grand Prix. Its advertising by Rainey Kelly Campbell Roalfe/Y&R had sent products "flying off the shelves".

The role played by advertising in the "stunning" M&S turnaround story was nailed. The 2006 paper presented evidence that the "Your M&S" campaign contributed to an extra £6 million-worth of PR for the brand and 18 million more customer visits.

Now M&S's profits are down 44 per cent in the six months to the end of September and the store's plan to cut its £144 million marketing budget led the headlines. "Twiggy faces axe as M&S suffers," a story in the Telegraph said.

The newspaper also carried a considered appraisal of why M&S clothing lines, in particular, are failing to turn on customers. The product itself needs some attention and arguably marketing efforts should be curbed while that is addressed. Except that there seemed to be no obvious strategic logic for cutting marketing budgets other than as a quick financial fix. M&S itself placed immediate focus on how it is cutting marketing in an effort to save cash.

Now, you'd have to believe that M&S's super-shrewd, enormously respected marketing director, Steven Sharp, and RKCR/Y&R can still do great things with a marketing budget of £115 million; most brands and agencies would kill for a swag like that.

And perhaps it is time now to refresh the retailer's advertising approach. Yes, the campaign has worked fantastically for the brand, but the challenge of a reduced budget and tough trading conditions might be just what M&S and its agency needs to rev up the advertising momentum. It's time for a change. Ditching the famous models has been suggested as one way of saving money. Would we miss them? Nah.

So no need to worry about M&S. But big headlines about big companies slashing their marketing spend when times get tough are bad news for the advertising industry. The M&S story undoubtedly casts a shadow over evidence about the long-term benefit of holding your marketing nerve through a recession.