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Bellweather Report: Marketing budgets reduced by 5.1%

Marketing spend fell again in the first quarter of 2011 with a quarter of companies decreasing their spend, the latest IPA/BDO Bellweather survey has found.

Published today, the survey reveals that marketing budgets for the first quarter of 2011 were revised down for the second consecutive quarter as a result of public spending cuts and rising costs.

A quarter of companies spent less on marketing, while one fifth spend more, resulting in a net balance of -5.1%, the second lowest amount in the last year following the previous quarter.

The report also found that confidence had dipped as a result of an uncertain economic outlook, despite marketing executives expressing slightly more optimism in terms of their company’s financial prospects.

Budgets were revised up across main media, with stronger growth reflected in online advertising, with companies expected to increase their media spend in comparison to last year’s figures.

However below-the-line, PR and events budgets were cut to the greatest extent, followed by sales promotion, while direct marketing spend was also revised down for the first time in 18 months claims the report.

Nicola Mendelsohn, IPA President, Executive Chairman and Partner , Karmarama, commented: “The latest report reflects the unsettled nature of the economy at present and hence the figures reveal a hesitancy that is not surprising. However we must remind ourselves that this downgrade is still markedly less severe than that seen throughout 2008 and 2009 and that it is encouraging to see companies are still planning to increase their spend versus 2010 levels.”

Andy Viner, head of media, BDO LLP: “The reduction in marketing budgets for the second successive quarter supports our anecdotal evidence that companies are taking a cautious approach to marketing expenditure against a backdrop of continuing economic uncertainty, subdued business confidence, cash flow pressures and mixed fiscal indicators in recent weeks.”

Viner added that the outlook for 2011 looked ‘more positive’ with business planning to raise their marketing spend, and added that while the was caution in the face of consumer spending, a higher proposition were now looking to use marketing to help strengthen their business.

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