Major British Advertisers Increase 2002 Marketing Budgets

22 January 2002

Of the UK companies that set their new marketing budgets in the last quarter of 2001, nearly twice as many plan to increase rather than decrease spend in 2002, reports the quarterly Advertising Bellwether Survey released today (Tuesday) by Britain’s Institute of Practitioners in Advertising.

But although the data indicates further growth in marketing spend in real terms for 2002, the report cautions that the rise is likely to be the weakest in the survey’s two year history.

Direct marketing and sales promotion are poised to gain most from the surge in spending, with both disciplines forecast to cut an increased slice of the 2002 marketing cake as clients continue to move away from media advertising. DM, especially, is expected to enjoy above-average growth in marketing spend, attributed by survey respondents to the desire for cheaper, more accountable and measurable forms of marketing.

But current-fiscal budgets were on average revised downward in Q4, the fall being the largest yet in the survey’s history. Almost one in three respondents trimmed their current budgets during the quarter while less than one in five reported an increase.

Direct marketing budgets, however, bucked the downward trend among extant budgets, unlike the ‘all other marketing’ category (conferences, exhibitions, etc) which reflected the largest cutbacks of all, trailed by media adspend. Web marketing spend was revised down for the first time since Bellwether’s inception in 1999, a marked contrast to the strong upward revisions seen in 2000 and early 2001.

Continuing uncertainty over the economy in general is reflected by the slower growth of budgeted spend for 2002 compared to that recorded for 2001. Likewise, the net downward revision to current budgets points to pressure on profit margins from weaker than expected sales and the resulting need to cut costs.

“Wait and see” appears to be the policy adopted by many companies, although trends varied markedly by sector. Retail and consumer oriented sectors (FMCG and durable) in particular reported the strongest growth in budgeted spend over the next twelve months and the least downward revisions to current budgets. The worst performing sectors were financial services and travel/entertainment/media.

[The quarterly IPA Bellwether Survey is available on annual subscription from NTC Research: hard copy version £249 / $356; or electronic version inclusive of all historical data series and hard copy reports £399 / $569.]

News sources: Institute of Practitioners in Advertising; NTC Research