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IPA Budget

Marketing spend revised up again by IPA Bellwether report despite slump in confidence


By The Drum Team, Editorial

January 19, 2012 | 2 min read

Marketing spend is on the rise again with the latest IPA Bellwether report having revised up marketing budgets in the fourth quarter of last year, for the second successive quarter.

The report claims that budgets were increased by companies seeking marketing share protection from competitiors, with a fifth increasing their budgets, although 19% also reportedly reduced them too.

Despite this, the report also found that business optimism was continuing to fall due to economic uncertainty, while a downward revision of traditional media spend has been registered as budgets are cut in favour of online, price discounting and direct marketing.

Nicola Mendelsohn, IPA president and executive chairman and partner at Karmarama, commented: "This rise in spend for a second successive quarter shows that many companies remain committed to invest in marketing at present. A further decline in confidence is hardly surprising due to the overriding mood of uncertainty for the year ahead. Yet despite this it’s encouraging that firms are still planning to increase their budgets in 2012. Moreover the impact of key sporting events such as the London 2012 Games and the Euro football championships will likely lead to increased buoyancy in the marketplace with a corresponding boost in marketing expenditure.”

Added Chris Williamson, chief economist at Markit and author of the Bellwether: “Companies held their marketing budget broadly unchanged in the final quarter of last year, a flat picture which probably reflects a similar stagnation of the overall economy. Looking deeper into the data there are signs that companies have become increasingly reluctant to invest in traditional media campaigns, instead diverting money towards the internet and direct marketing. This reluctance reflects lower than expected sales and profits in recent months, as well as growing unease about the economic outlook."

He continued: "However, it is encouraging to see that companies are planning to raise their marketing spend in 2012 despite seeing their financial prospects for the next three months falling to the worst since the height of the financial crisis in early 2009. It seems that many companies are looking to fight the prospects of a challenging year ahead with increased promotional activity."

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