Marketing spend rises after ten consecutive quarters of falls

Marketing budgets have been revised upwards for the first time since 2007, according to the latest IPA/BDO Bellwether survey published today (19 April).

chart 1

The report, which is widely considered the benchmark for the advertising industry, reveals that for the first time in ten consecutive quarters, around 21% of companies reported a rise in their budgets, while only 16% noted reductions.

Over a third of the 300 UK-based companies surveyed have set 2010 budgets higher than 2009 spend. This meant that the net balance for total marketing budgets rose from -7.2 to +4.5, the first signs of positivity since the third quarter of 2007 (see chart 1). 

The survey also found that companies remain upbeat about financial prospects, expecting the ongoing economic recovery to gain momentum and plan to raise their spending for 2010.

chart 2

Internet budgets were adjusted up for the third consecutive quarter while sales promotion and direct marketing budgets were unchanged.

Media such as PR and experiential are seeing reductions in spending, as budgets move back towards above the line and digital marketing (see chart 3).

The Bellwether survey also reveals that approximately 42% of marketing executives surveyed were more optimistic about the financial prospects for their company than they were three months previously, and 31% were more optimistic abut the industry (see chart 2). 

chart 3

Chris Williamson, chief economist at Markit and author of the Bellwether, says: “This is very encouraging news for the UK economy as it suggests that companies are at last beginning to increase their spending and move away from the aggressive cost control measures which characterised the recession. This is a necessary ingredient of a more sustainable recovery and bodes well for economic growth in coming quarters.”

Rory Sutherland, IPA president and vice-chairman of Ogilvy Group UK, adds: “It’s good to see that businesses are now increasing their investment in marketing as a route to growth – a welcome change in sentiment compared to this time last year. While online activities are leading the turnaround this year, the findings show that conventional advertising has now also turned the corner.”

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