UK marketers continue to cut back

07 April 2009

LONDON: A total of 45% of companies in the UK reduced their marketing budgets in the first quarter of this year, compared with 11% reporting an increase, according to the latest Bellwether Report, produced by Market Economics on behalf of the IPA.

The total net balance of advertisers increasing their budgets compared with those who were decreasing them was –34% in Q1, compared with –42% in the final three months of 2008, when 49% of companies cut back and 7% raised their expenditure.

Main media budgets fell by around 30% in the first quarter, with sales promotion and direct marketing also suffering double-digit declines.

Online also posted a drop off of around 10% from January to March, while even search registered a slight decline, albeit one of safely under 5%.

Over last year as a whole, 48% of firms reduced their spending, while 10% increased their outlay, while a further have 44% set reduced budgets for 2009, and 23% plan for an uplift in expenditure.

In terms of their prospects for the next three months, 44% of participants reported that the trading climate would further deteriorate, compared with 63% saying the same in Q4 last year.

Furthermore, the number of respondents who argued their business outlook had improved increased from 5% to 14% over the same period.

Based on figures from the Advertising Association, it is now projected that UK adspend will decline by 9.1% in 2009 and 0.2% in 2010.

This suggests that the downturn could be "V-shaped", with the recovery almost mirroring the pattern of the slump, although the Bellwether Report warns that "the risks are skewed to the downside."

Data sourced from IPA; additional content by WARC staff