UK Marketing Spend Strongest in Four Years: Bellwether

20 July 2004

The quarterly Bellwether Report for Q2 2004, published by Britain's Institute of Practitioners in Advertising , records the steepest rise in marketing spend for the past four years.

The report, carried out by NTC Research, reflects continuing buoyancy in the marketing sector with final data for 2003 showing the steepest rise in marketing spend since the survey began; also improved confidence among top marketing executives.

One of the most significant reported trends is the redirection of marketing spend back toward mainstream media. Although media budgets were revised upward by only a modest amount, the swing is the largest seen since the survey began and suggests that media advertising is gaining favour as companies perceive a rosier economic outlook.

Direct marketing also showed continuing (if decelerating) growth, recording its smallest upward revision since Q2 2003. The trend favouring sales promotion and 'all other' marketing activity went into reverse, however, with budgets revised downward for the first time since the second and third quarters of 2003.

Conversely, internet-related marketing continues to show the strongest rate of growth, albeit from a far lower base -- the sector still accounts for under 3% of total marketing spend.

Percentage variances in spend for the various marketing sectors were …

Nineteen per cent of responding companies reported an increase compared with 17% reporting a decrease

Direct marketing
35% of panel members reported an increase, although this revision was somewhat smaller than previous quarters.

'All other' marketing
Current budgets were revised down, contrasting with upward revisions in the previous two quarters. However these cuts were modest, with 20% reporting an increase in spend compared to 22% reporting a decline.

The breakdown of total marketing expenditure for 2003 was: media advertising 35%, 'all other' 28%, direct marketing 23% and sales promotion 14%.

Opined WPP Group ceo Sir Martin Sorrell of the latest data: "In a way the Bellwether Report findings are not surprising. Growth in corporate profitability, operating margins and liquidity is strong -- perhaps the strongest for twenty years.

"The really encouraging signal is the switch to brand building through media, direct and internet related marketing. Perhaps brands are becoming more important, thankfully. The report also clearly indicates the growing importance of quantifiable methods of marketing – like direct and internet.

"Also encouraging was the recovery in information technology and computing spending. Maybe clients are also developing a little more pricing flexibility and this may explain the fall in promotional spending.

"I guess where we at WPP differ from the Bellwether Report, is that the UK remains a relatively difficult market, along with France and Germany and public relations and public affairs have shown some recent resilience."

For further information on Bellwether Q2 2004 click here.

Data sourced from: NTC Research; additional content by WARC staff