Bellwether sounds gloomy note as budgets are slashed

Marketers are continuing to slash advertising spend and even greater cuts are expected in 2009, according to the Institute of Practitioners in Advertising’s Bellwether Report. It says companies are setting budgets below the previous year’s level for the first time in the report’s nine year history.

The IPA’s latest survey, published today (January 12) found that marketers have trimmed advertising budgets for the fifth successive quarter, and cuts in fourth quarter of 2008 were revised down to the greatest extent ever-recorded by the report. During the quarter, 49% of companies reported a decrease in marketing spend.

The survey has also found that concerns about the economy and falling sales have led to a drop in confidence, with 75% of companies believing the financial prospects facing their industries have deteriorated when compared with three months ago.

For the year ahead, a decrease in marketing budgets is reported by 45% of companies, with only 20% reporting an increase.

Chris Williamson, author of the report and chief economist at Markit, which compiled it, says: “The Bellwether shows an alarming rate of corporate retrenchment as the recession deepens. Disappointing sales in all sectors have also led companies to cut budgets for the year ahead suggesting there will be no quick return to growth for advertising spend.”

Budgets for all main marketing activities were reduced in last quarter but “main media” was the hardest hit together with Bellwether’s “all other” category, which includes PR, market research and event sponsorship. Even online advertising suffered a record reduction during the quarter. The survey also reports a move towards sales promotion as companies offer discounts to stimulate demand.

IPA president and chairman of Europe M&C Saatchi, Moray MacLennan (pictured), says: “This Bellwether Report suggests that adland in 2009 will be no place for the faint hearted. Confidence has plummeted and the data suggests a steep decline in GDP for Q1.”

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