DM budgets to rise and Net spend to fall, says IPA survey

Companies are set to increase their direct marketing budgets this year while spending on Internet advertising will continue to fall, according to the Bellwether Report, a quarterly survey of marketing expenditure commissioned by the Institute of Practitioners in Advertising (IPA).

Almost half of the 300 UK-based companies questioned in the last quarter of 2000, are planning to spend more on marketing in 2001 than last year, with only 17.5 per cent planning to cut their total marketing budgets.

However, the overall rise in spend was less marked in the last three months of 2000 than in the previous quarter, signalling a return to a slower rate of growth and a slight downturn in business confidence.

While all main marketing activities will be allocated more spend for 2001 than the previous year, direct marketing spend is set to rise to a greater extent than sales promotion or media ad spend, says the report.

About 40 per cent of companies report that their budgets for direct marketing in 2001 will be higher than estimated outcomes for 2000, while only 13 per cent report a decline.

Advertisers say the increase is due both to strong sales and the perceived cost-effectiveness of direct marketing.

In contrast, Internet-related spend represented 1.8 per cent of total marketing budgets in the last quarter, compared with 2.5 per cent in the previous quarter.

The proportion of companies set to increase their Internet budgets has fallen from 53 per cent to just 20 per cent over the past year.

IPA director-general Nick Phillips says: “Our members are seeing continuing growth, but at a lower rate.

“The overall mood is positive, although there is a sense that the pace of the dot-com revolution couldn’t go on forever.”

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