Budget Research
The tale of the 2002 vintage has been one of a ‘corked’ year rather than a corker, with just about everyone associated with marketing searching frantically for the nearest spittoon. The industry that supports the other industries has been left with very little support of its own, as marketing budgets have been continuously pared, whilst expectations are exponentially raised.
As The Marketeer was going to press, analysts were expecting an overall fall in the combined UK advertising spend of around 0.9 per cent for 2002, the second consecutive contraction of expenditure following a decade of sustained growth. Looking into the crystal ball for 2003, the picture is hazy at best, but peer through that fog of conjecture and there appear to be some tangible glimmers of hope.
Exclusive research commissioned by The Marketeer, and carried out by Market Research UK, has intimated that whilst some of the North’s 200 top marketing directors are understandably cautious about what lies ahead, most are at least cautiously optimistic. When quizzed over their budgets for the next year, the agencies they employ and the likelihood of tasking new projects to new firms, respondents gave surprisingly promising feedback. As the featured charts will show.
Take this (not so bitter) pill in conjunction with the recent prognoses of industry experts such as the Advertising Association and Zenith Optimedia, and perhaps we can expect our ailing industry to start making a long overdue recovery in 2003.
Of course, nothing is certain, and variables such as the looming conflict in the Middle East may chuck an almighty spanner in the global economic works, but such optimism can be infectious. Have a look at MRUK’s findings and see if you think the results replenish your mental glass to above the half-full mark.
Results
To start the ball rolling, our esteemed phone interviewees were quizzed over their use of Northern agencies – and most scored remarkably highly. A pleasing 63 per cent of respondents disclosed that they relied on Northern firms for their marketing services requirements and, what’s more, only 10 per cent had no preference regarding the location of those agencies. A discovery that seems to imply, in this survey at least, that the promise of localised care and attention still has the legs to kick cyberservice, bi-annual visits and the occasional telephone call comprehensively into touch.
Nevertheless, a bias towards regional partners isn’t much good if you haven’t got the budget to bed them in and let them get creative. Thankfully for those agencies employed here, most should have their hands full satisfying client demands in 2003.
Almost half of the respondent companies expected their marketing budgets to increase over the course of the next year, with a quarter expecting them to stay the same. Figures that concur with Zenith’s recent report (published last month) predicting a gradual return to expenditure growth next year, albeit with a modest 2.1 per cent overall increase.
The slightly surprising aspect of MRUK’s findings was that, although half of the respondents also stated that their budgets had increased from 2001 to 2002, only half of those were included in the group who expected the rise in 2003. A result that appears to suggest that marketing budgets are presently prone to a degree of fluctuation. Something that most readers will appreciate, particularly after the (downward spiralling) economic rollercoaster ride of the past 16 months or so. A ride for which quite a few marketeers weren’t strapped in.
Fluctuation and change are a part of any industry that evolves, and therefore a constant feature of the rapidly morphing marketing landscape. So, as you may expect, with the vacillation in budgets comes a subsequent re-appraisal of creative strategy. Of our interviewees, just under half anticipated a change in their creative approach, with most of this group being those that expected an augmented budget to bandy about. The reasons given for the change were various, but the most popular included “developing new business sectors”, “moving to a more direct approach”, “targeting a broader market” and “an impending agency review or change” (demonstrating that the clients inherently expect that a change of agency will result in a change of creative strategy).
The final stages of the MRUK research answered the question that every rapacious agency new business head sniffs hungrily around, that crucial $64,000-plus question – “Are you planning to look for a new agency?”
And yes ... about a quarter of clients are.
When respondents were asked, “Are you planning to commission your current agency to create ideas surrounding any new product launch, new services, projects or your own corporate literature?” 63 per cent said yes and 26 per cent responded that a new agency would be sourced. Product development ranked as the chief impetus for commissioning projects, although, interestingly, a quarter of those who had already decided to seek new agencies hadn’t decided what for as yet.
The final question that appeared to verify the impending mini exodus of client from agency was “Will you be considering changing your marketing services agencies in the next twelve months?” As expected from the previous answer, 26 per cent said yes, 67 per cent no, and 7 per cent were left on the fence ruminating over the uncertainties of the days numbered in their new desk top calendars.
Depending on which side they eventually fall onto, that’s a potential 33 per cent, one-third of responding clients, who may be looking to peruse the creative product swaying in pastures new. Meaning now’s surely the time for agencies to show off the successes of past harvests.
So, does it look like a New Year and a new start for the marketing industry in the North? Well, for many readers it does, with 50 per cent experiencing increased marketing budgets and only a quarter feeling the purse strings tighten further. Most of those with more cash at their disposal are looking for new creative strategies and, often, new agencies to dispose it on – so expect many consultancies to look considerably friskier this year than last. It’s still early to talk in terms of recovery (and the AA’s prediction of a 45 per cent increase in ad expenditure over the next decade still looks like a bit of a dream involving pipes), but maybe in this most pessimistic of industries it’s time to start looking to the positive. There is money out there, that money is fluid, and, in the North at least, we appear open to change and confident of what the future holds.
Who knows, maybe 2003 will be a vintage year for the North’s Premier (marketing) Cru.