Confidence rises as brakes applied to budget cuts

Marketing spend enters its ninth consecutive quarter of decline, but gloom lifts as figures point to signs of recovery.

Marketing budgets are still in decline but optimism and confidence is growing according to the latest IPA/BDO Bellwether report.

The report shows the ninth consecutive quarter of declining marketing spend but the rate of decline is slowing. Spend is down only 7% compared to 15% in the previous quarter.

The report found that marketing budgets for 2010 have been set higher than 2009 and that companies are the most optimistic they have been in the past five years with 35% of businesses surveyed seeing improved prospects.

Online advertising budgets, including search marketing, were revised upwards for the second quarter running while direct marketing budgets have been increased by 2.2%, the first rise since 2007.

Marketing spend was cut across all other sectors including sales promotion, down 4.1%, and below-the-line activity such as PR and events, down 4%, but at a slower rate than the previous quarter.

Main media saw the sharpest reduction but it was the least marked for seven quarters.

Chris Williamson, author of the report and chief economist at Markit, says the report suggests that the UK emerged from the recession during the final quarter of 2009.

He adds that while budgets are being set higher and confidence is returning, it remains less buoyant than before the financial crisis.

Rory Sutherland, IPA president and vice-chairman of the Ogilvy Group UK, says: “These findings are welcome in that they show the picture painted by the last Bellwether Report was not a false dawn. This latest report also seems to bring particularly good news for direct and digital marketing activities, which seem to be leading the recovery.”

Andy Viner, head of media at accountancy network BDO, adds that the report indicates confidence is returning.

“Companies are rethinking their marketing allocation, which means that areas such as online advertising are expected to grow significantly,” he says.

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