UK marketing spend stabilising

18 October 2010

LONDON: Marketing expenditure levels have apparently stabilised in the UK, but caution remains widespread concerning the future economic outlook.

These findings emerged from the Bellwether Report, produced by trade body the IPA and accountancy network BDO, based on a survey of 300 major companies.

It revealed the net difference between the proportion of organisations boosting marketing investments and those cutting back stood at just 0.5% in the last quarter.

Overall, 13.3% more firms raised internet spending than took the opposite approach, figures reaching 9.9% considering paid search.

Totals hit 6.8% for direct marketing, the strongest result enjoyed for the medium in approximately four years.

Similarly, the 5.4% positive trend regarding media budgets in their entirety, including online, constituted the best score since Q3 2007, and compared with an average of 0.5% across all the channels assessed.

However, this latter amount still easily bettered the 4.6% decline posted during Q2 2010.

Sales promotion was down 4.2% and the "all other" category recorded a 3.6% drop, although both improved against the second quarter.

Elsewhere, contributors were broadly upbeat about their own company's prospects, as the gap between favourable and unfavourable forecasts came in at 15.8%.

When rating the climate for their sector as whole, sentiment fell to its lowest in 15 months, with a net balance of 1%.

This also follows a 2% jump in Q2 and a 12.4% surge from Q4 2009, according to the IPA/BDO analysis.

"The Bellwether data, coupled with low optimism among marketing executives regarding the financial prospects for the industries in which they operate, suggest that Q2 likely represented a peaking in the rate of economic growth in the current recovery," the study said.

"The stabilisation of marketing spend in Q3 marked an improvement on the cutting seen in Q2, and as initially budget setting for 2010 was set higher we may well see marketing spend rise in 2010."

Rory Sutherland, IPA president and vice-chairman, Ogilvy Group UK, argued the fiscal environment and austerity measures implemented by the Government mean hesitancy is understandable.

"In these times of uncertainty around Government spending and the sustainability of an economic recovery it is not surprising that businesses remain cautious," he said.

"And even though the upward revisions to marketing budgets are only slight, marketing budgets have stabilised nevertheless."

Data sourced from IPA; additional content by Warc staff