Third quarter growth within the UK advertising industry was the best since 2004, according to the Bellwether quarterly survey of marketing budgets published Tuesday by the Institute of Practitioners in Advertising.
The survey, produced by NTC Research, reports further improvements to marketing spend with total marketing budgets revised up for the fourth consecutive quarter and the first positive figures seen in the third quarter in the history of the survey.
All categories of marketing spend saw growth, with the exception of the 'all other' sector (which includes activities such as PR, market research, sponsorship and conferences). This shrinkage reflects the need to cut costs in some companies, but also the diversion of funds to other marketing activities.
This switch to other disciplines and media formats is underscored by continuing growth for internet related marketing activities – which returned even greater growth than that indicated by the previous quarter's report. In addition, direct marketing and sales promotion also saw upward revisions.
Bellwether also charts the trends across all marketing expenditure sectors …
Although only modest, the upward revision to media adspend was noteworthy as the third consecutive quarterly increase.
These upward revisions have been applied to media budgets that were on average initially set higher than actual spend in 2003 (new adspend budget setting at the start of 2004 had been the most buoyant since 2000).
In contrast to previous years, increases to media adspend budgets at the start of 2004 have not been steadily revised down as the year has progressed.
Instead, rising profits and robust business sentiment has encouraged advertisers to further boost their expenditure in each of the first three quarters of 2004.
Sales promotion budgets were on average revised up in Q3, and contributed to a reversal of the downward trend seen in Q2.
This upward growth can be seen to be as a result of new product launches and intense competition in the market which required companies to offer incentives to consumers.
Direct marketing budgets were revised up for the fifth successive quarter and rose by a larger margin than in Q2. The increase indicated by the report suggests a move of spend away from main media towards direct marketing, albeit only modest.
Current budgets for 'all other' marketing were revised down on average in Q3 and dropped to a similar extent as in Q2.
In real terms the decrease indicated by the survey was only modest with 20% of companies reporting an increase compared to 22% reporting a decline.
One in four companies reported an upward revision to internet marketing budgets and 6% reported a decline, this indicates a rate of growth well above those of all other marketing activities monitored by Bellwether.
This suggests that internet related marketing continues to gain share relative to other activities.
Also of note in this quarter's Bellwether is that although one in four companies do not use the internet for marketing, the number allocating over 10% of their marketing spend to the activity rose to a new survey high of 10% in Q3.
Comments WPP Group ceo Sir Martin Sorrell: "Bellwether once again, confirms our experience. The UK is showing a marked recovery, recouping the levels achieved in 2000. Investment in media advertising is expanding, with areas such as direct, interactive and internet expanding even faster as clients seek more effective cpms and more quantifiable communications services."
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Data sourced from NTC Research; additional content by WARC staff