IPA Budget Bellweather Report

Marketing budgets revised up in all disciplines by latest IPA Bellweather Report


By The Drum, Editorial

October 13, 2011 | 2 min read

Marketing spend has been revised up in the third quarter of 2011, ending a three-quarter period of decline, with marketing expenditure expected to promote new products while brands aim to maintain market share.

Despite a continued fall in business optimism, the lastest IPA Bellwether survey has predicted for the first time since Q2 2007, a rise in budgets for all sectors, with 21% of companies reporting an upward revision, while 17% reported a reduction.

The largest increase has been reported for online, with a net balance of 16.6%, while main media spend has recorded the slowest pace of budget growth, with only a marginal rise, says the survey.

Direct marketing budgets have also been revised up by the greatest degree in a year, with sales promotion and below-the-line activity also recording growth for the first time in 15 and 16 quarters respectively.

Business optimism among marketing executives has falling to a two-and-a-half year low, reaching its second lowest point since Q1 2009.

Nicola Mendelsohn, IPA President, executive chairman and partner, Karmarama, commented: "That we are seeing a further decline in confidence overall continues to reflect the uncertain financial climate that businesses are operating in. Yet it's important that the advertising industry and UK plc at large should do all it can to be as upbeat as possible to meet the challenge that we face. This rise in spend demonstrates that many companies are trying to buck the downward trend. It is a move in the right direction and shows that businesses understand that those that maintain the strongest marketing spend will come out on top."

Added Chris Williamson, chief economist at Markit and author of the Bellwether: "UK companies are tackling the adverse economic climate with increased marketing activity, in an attempt to boost sales in the face of weak demand. Extra money is being targeted at online advertising, direct marketing and sales promotions, but there remains a worrying reluctance to increase spend on traditional main media activities such as broadcast and print advertising.

"The increase in marketing spend in the face of adversity helps to explain why companies became a little more optimistic about their own financial prospects but at the same time were the most pessimistic about prospects for their industries since the early months of 2009."

IPA Budget Bellweather Report

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