Marketers have cut advertising budgets more in the third quarter of this year than at any other time in the nine-year history of the quarterly Institute of Practitioners in Advertising Bellwether Report.
The findings for the third quarter of the year show just 8% of companies are optimistic about prospects for their industry than they were three months ago, compared with 60% who were less optimistic. In regard to optimism for their own companies’ financial outlook, 13% said they were more optimistic but 54% said they were less.
The companies questioned said they were cutting budgets due to lower-than-anticipated sales and profits and that this reflected weaker consumer and corporate demand.
Chris Williamson, author of the report and chief economist at Markit, which compiled the report, says: “The slump in the Bellwether marketing budget and financial prospects data indicate a severe worsening of business confidence and the rising impact of the credit crunch on the real economy, as companies rein in spending in the face of poor sales and growing fears over the economy. These data are consistent with the economy contracting in Q3 and raise the possibility for the UK falling into recession.”
IPA president and chairman of Europe M&C Saatchi, Moray MacLennan (pictured), says: “I doubt these gloomy results will come as a surprise to anyone. In light of current headlines, the biggest surprise may well be that 12% of companies’ budgets were revised upwards.
“The industry will be watching the next set of results with great interest hoping that, following four quarters of decline, the downward curve levels off, despite the impending recession.”