Advertising market returns to growth in UK

19 April 2010

LONDON: The number of advertisers in the UK which increased their marketing budgets rose for the first time since 2007 at the start of this year, according to a new study.

The latest Bellwether Report, produced by the IPA, the industry body, and BDO, the business services firm, found that 21% of brand owners had boosted their adspend in the first quarter of 2010.

By contrast, approximately 16% had reduced their outlay over the same period, resulting in a net positive balance of over 4.5%, compared with the net decline of 7.2% recorded in the previous quarter.

Looking forward, 36% of senior executives from the 300 featured corporations intended to increase their overall expenditure this year, while 24% will continue to trim their budgets.

Some 42% of respondents had also grown more optimistic when assessing the financial outlook for their own company in Q1 2010 when compared with the final three months of last year.

"These results are a clear sign that renewed business confidence is translating into real budget increases and tangible economic recovery," Andy Viner, head of media at BDO, said.

"The last three quarters saw an increase in optimism without an increase in spending, but the survey shows that marketing budgets have been revised up for the first time in two-and-a-half years so that they have finally caught up with business confidence."

With regard to the media sector, 31% of participants predicted that trading conditions would now start to improve, while 24% expected revenues to remain in decline.

More positively, the internet will see demand levels jump for the fourth successive quarter, while traditional media is similarly set to see sales rise for the first time for the first time in ten quarters.

"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," said Rory Sutherland, president of the IPA and vice-chairman of Ogilvy Group UK.

"While online activities are leading the turnaround this year, the findings show that conventional advertising has now also turned the corner."

Data sourced from Financial Times/Marketing Week; additional content by Warc staff