Marketing spend down but confidence returning, says Bellwether

Marketing spend fell for the eighth consecutive quarter but nearly half of companies surveyed are seeing improved prospects, says the latest IPA/BDO Bellwether report.

The Bellwether report says that while budgets dropped once more in Quarter 3 it was the smallest reduction in more than a year. The proportion of respondents reporting a decline in budgets eased to 28% while the number reporting a rise moved up to 13%.

The report finds that business confidence is on the rise with respondents saying that the degree of optimism in regard to financial prospects for their own companies was at its strongest since the final quarter of 2006, with 47% seeing improved prospects.

As excepted, among companies surveyed, only internet advertising was the only category to see an increase in spend with marketing budgets rising for the first time since Q2, 2008. The steepest cut in spend came for the “all other” category, which embraces PR, events and sponsorship.

Cuts in main media advertising were the smallest for six consecutive quarters.

Spend was also cut for direct marketing and sales promotion, though both saw only modest falls.

The sectors showing upward revisions to spend include Retail and Travel & Entertainment. However, steep falls continued to be seen in spend from the Financial, IT& Computing and Industrial sectors.

Rory Sutherland (pictured), president of the Institute of Practitioners in Advertising and vice chairman of Ogilvy Group, says: “Although marketing spend is still falling this latest Bellwether is an encouraging sign that budget cutting is slowing.

“Whilst companies are still understandably wary the report reveals a strong rise in business confidence and the suggestion that GDP may well have risen in Q3.”

Jim Houghton, head of marketing services, BDO LLP, says: “After two years of dramatic decline, the industry also needs to reflect on what recovery will mean when it finally does arrive. The recession will no doubt have a long-term impact on marketing agencies but with intense competition and continued constrained budgets, companies will have to drive both brand and sales. Well targeted marketing spend will be the key to achieving this objective.”

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