Bellwether report: Ad forecast positive but caution urged

The quarterly marketing budget forecast shows a 0.5% net balance increase in Q3, up from a downward trend in the second quarter of 4.6%.

Marketers’ confidence about their own company’s prospects was flat, with a net balance of 15.8% compare with 15.7% in the second quarter. However, confidence in the industries they operate in dipped to 1%, down from 2% in the previous quarter and 12.4% in the final quarter of 2009.

In line with Nielsen figures, internet advertising ad spend saw the biggest growth with a 13.3% upward spend, with search rising to 9.9%.

Direct marketing budgets have also been revised up for Q3 to experiencing the fastest growth in four years, with a 6.8% upward trend.

Sales promotion and ’all other’ marketing was down by 4.2% and 3.6% respectively.

The results also underlines the increased spend in social media and pre and post-roll video advertising, reflected in the IAB’s figures early this month.

The impact of the growth in online has led media to be revised up to 5.3%, the largest increase since the third quarter of 2007.

Chris Williamson, chief economist at Markit and author of the Bellwether, says that while the figures show an upturn, he urged caution ahead of public sector cuts and the VAT increase expected in January.

Williamson says: “This suggests that many firms appear to be boosting marketing spend in the hope of riding out a wider economic storm.”

The results will be a boost to the industry, supported by Zenith Optimedia today upgrading its forecast for global ad growth from 3.5% to 4.8% for 2010.

Andy Viner, head of media, BDO LLP says: “The upwards revision to marketing budgets, albeit marginal, is a welcome sign of optimism and we expect to see marketing expenditure as a whole rise in 2010.”

He adds: “Though the overall outlook is one of caution with companies having to respond operationally to the changing commercial landscape.”

Bellwether’s forecast follows recent Nielsen and AA/Warc reports which showed growth in ad spend both globally in the UK across the first half of 2010.

Matt Simpson, IPA digital media group chairman and head of OMD Group Digital, says: “2010 has been a year of very fast paced change in the online space seeing a proliferation of data, better targeting, the growth of video and exchanges as well as a better understanding of attribution among online opportunities.

“All of these factors have enabled online to continue being one of the most dynamic and effective places for advertisers to invest their marketing spends,” Simpson adds.

To read last quarter’s Bellwether click here.