Marketing spend expected to fall according to latest IPA/BDO Bellweather survey
Marketing budgets have been revised down for the third consecutive quarter amidst company’s looking to protect profit margins and concerns around the economic outlook, according to the latest IPA/BDO Bellweather survey.
The survey reports that 22% of companies have reported a downward revision in marketing spend, as opposed to the 20% that reported an increase, leaving a net balance of -2.2%, although the level of budget cuts was at its lowest in recent quarters, having increased from -5.1% and -5.4% in Q4 of last year and Q1 of 2011, respectively.
The confidence of marketing executives for their own companies has apparently dropped to the lowest rate for over two years, falling from 12.8% in Q1 to just 3.3% in this quarter.
Direct marketing budgets however have been revised up, as have internet advertising budgets, although sales promotion budgets have declined by the largest amount, with cuts also witnedded by below the lines and other main media budgets, in some part due to the rise in online advertising spend.
Nicola Mendelsohn, IPA President, executive chairman and partner , Karmarama, commented: “The economy is going sideways and this seems to be the way it is going in the advertising marketplace too. The decline in confidence doesn't augur well, but is not surprising amidst a continuing climate of concern surrounding the financial and political outlook both at home and internationally. But we should take some comfort from the fact that the rate of budget trimming is at its lowest in three quarters, and that there are advertisers maintaining spend nevertheless."
Andy Viner, head of media for BDO LLP, added: “Marketing spend has proven to be a good barometer of the economy in recent years. The latest IPA/BDO Bellwether report signifies renewed caution from marketing executives as corporates continue to monitor discretionary expenditure to protect profit margins and strengthen balance sheets. Marketing budgets have now been revised downwards for the third consecutive quarter albeit at a slower rate, providing further evidence that the outlook will be tougher and more subdued for the remainder of the year, even when compared to previous forecasts only a few months ago.
Confidence within the marketing service sector has also dropped, according to the survey, as a result of above target price inflation, little pay growth and an uncertain economy.
2012 is expected to see lift in marketing spend however, as a result of the 2012 Olympic Games being held in London.