Marketing budgets fall for third successive quarter

Marketing budgets are being cut for the third quarter in a row, according to the latest Bellwether Report. The extent of fall has not been seen since the September 11 terrorist attacks in 2001.

The second quarter survey, which is published by the Institute of Practitioners in Advertising, reveals that cuts have been attributed to rising costs and the growing economic gloom.

The internet is the only sector that has avoided a drop in spend with 18% of companies revising budgets up and 9% revising them down. However, this is the smallest upward revision in budgets since 2002.

Main media budgets saw the sharpest downgrades, particularly TV, press, outdoor radio and cinema, with budgets dropping at the fastest rate since the first quarter of 2006.

Only 15% of companies reported increased total marketing budgets, while 27% reported a decrease during the second quarter. Just 11% of companies reported an upward revision to their media budgets, compared to 24% reporting a decline.

By sector, travel, entertainment, retail, consumer Durables and FMCG all experienced the biggest budget reductions. In contrast government and charities, IT and computing, and financial services reported upward revisions.

Direct marketing budgets have also been revised down to the greatest extent in the survey’s history, reflecting cost savings made from campaigns being put online, rather than sent through the post.

Marketing spend on PR, events and research has also experienced been cut, with growth expected to be weakest for the last five years.

Moray MacLennan (pictured), IPA president and chairman Europe M&C Saatchi, says: “There is a clear implication that the economy will slow further. Agencies cannot affect the short term economic outlook, but they can do at least two things; firstly, focus even more closely on cost control and secondly, strive for even more original and innovative solutions so they can buck the trend.”

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