Corporate clients are becoming increasingly nervous and hesitant to commit to projects, which combined with budget challenges, is making it difficult for agency leaders to forecast and plan for the second half of 2023.
These were among the current challenges discussed at our recently monthly agency leaders meeting, chaired by Worldspan’s Jennifer Jenkins.
While most agency MDs reported a strong start to 2023, many agreed there is a nervousness among clients to approve budgets, with some expressing concerns about perception and not wanting to be seen to be spending money on events, especially those that are making job cuts.
“We are trying to diversify and get into new sectors but there has been a real slow down in briefs, and we’re finding that the pitching process is being drawn out and delayed,” said one agency head.
Budgets are being scrutinised and squeezed and several agencies shared instances where they were given a lower budget to get it signed off, and then clients were adding to that budget later, which can be frustrating. “If we had the full budget up front, we could have spent differently or more wisely, and added more value. You don’t end up with the event you could have had,” explained one.
Another added: “We are finding that lots of budgets and brand plans have been set in 2022 based on 2022 pricing, so do not reflect supply chain cost for 2023.”
Several agency leaders also shared that some of their clients, in sectors including recruitment and tech, currently have travel bans in place, which is impacting their event programmes.
“We are seeing some travel bans here and there, but these clients have just reverted to virtual,” she said, adding that there has also been a shift in the types of events some clients are investing in. “One of our clients who we did a lot of production for, has shifted its budgets to incentives. Their objectives are focused on pushing sales, so they are spending more money on motivating and rewarding people.”
One agency, which focuses on the pharmaceutical sector, said that while events are not cancelling, they are seeing a very slow approval of budgets from clients. “We are seeing a slowing down in terms of budgets getting approved, especially for Q3 and Q4. We had an incredibly busy Q3 and Q4 last year, and we want to make sure we have the team in place to support that if it happens again this year, but it’s hard to plan when clients are not confirming,” said the agency’s owner.
Another agreed, adding that it feels like many clients are not disclosing their full calendar year of activity ahead, but releasing it more on a quarterly basis, giving less visibility and making it harder to manage resource.
It’s not just financial budgets that are impacting corporate event plans. One agency head said that one of their large global clients now has big CO2 emission reduction targets, so each team has a CO2 budget, and they are being asked to limit tonnes of CO2 spend rather than financial spend.
Despite these challenges, and the lack of visibility, most agency heads were optimistic that the nervousness will pass and the second half of 2023 will pick up.