Marketing budgets were hit by growing concerns about the economy in the last quarter of 2007, according to the latest Bellwether report. The report, which is published today (January 14), saw the steepest fall in budgets in two years due to weak sales revenues, disappointing profits and the credit squeeze.
The report, which is published by the Institute of Practitioners in Advertising, shows that the biggest cuts were seen in TV and press advertising spend. One-in-five companies reported that they had reduced their main media. The trend was repeated across “all other marketing” categories, including PR and events, which all saw above average cuts. Only 15% of companies reported increased total marketing and 19% reported a decrease.
The only sectors to see an upward revision of spend were the internet, with 23% of companies revising their internet spend upwards, and sales promotion. The latter is attributed to discounting activities as companies tried to boost flagging sales.
The cuts in marketing spend came despite a boost in marketing spend in quarter three due to strong sales profits, which means that 2007 marketing spend is still expected to have risen strongly despite the shakey end to the year.
The report says a majority of companies have set their budgets higher than in 2007, with just one-in-six reporting a reduction, but marketing spend is expected to continue falling if revenue fails to pick up.
IPA†president Moray MacLennan, who is chairman Europe of M&C†Saatchi, says:†”The fact that budgets were trimmed in quarter four folllowing three quarters of strong growth, will not come as a surprise. It’s encouraging to see 200 budgets looking positive, what will be most of interest is of course the extent to which they are revised in the next report – hopefully nerves will hold.”