LONDON: The Bellwether Report, a quarterly survey of UK marketing spend, published today (Monday) by ad agency body the Institute of Practitioners in Advertising, makes sombre reading.

During January-March 2008 marketing budgets were revised downward for the second successive quarter, implying that business confidence continues to fall.

Marketers also reported that initial budget-setting for the rest of 2008 had been downgraded. Weaker than expected sales, subdued consumer spending, and ongoing concerns about the health of the UK economy drove this cost-cutting. 

Budgets for the 'Main Media' category – boosted by the first-time inclusion of the still burgeoning internet sector – were unchanged in Q1, and are set to see the fastest growth in 2008.

However, the boost of online revenues suggests that that ‘traditional' media (print, TV, outdoor, cinema and radio) were revised downward. Within the internet, spend on search rose at a slightly faster rate than total internet.    

Although total marketing expenditure is still expected to increase in 2008, (almost half of all respondents have set their 2008 budgets higher than actual spend in 2007), the actual growth of spend for the year is currently well below that signalled by initial budget setting at the start of 2008, and considerably below that seen at the begining of 2007. 

Key data arising from the latest report include:

  • Nineteen per cent of companies reported increased total marketing budgets while 21% reported a decrease, resulting in a net balance of minus 2.1%.
  • Having suffered the largest downward revision for a year-and-a-half in Q4, main media spend in Q1 remained unchanged.
  • Only 9% of companies reported an increase to budgets for All Other* marketing, while 16% reported a decline, with a net balance of minus 7.8 %.
  • One-in-five companies reported a downward revision to direct marketing budgets, while just 13% signalled upward revisions.
  • Having slowed in Q4 to the weakest since mid-2003, growth of internet marketing budgets recovered in Q1. 27% of companies revised their budgets upward, while just 5% saw a decline. For search, 29% of companies revised budgets up and 6% revised down.
  • Sales promotions are set to see the weakest growth for eight years in 2008.
  • By sector, reductions to budgets were most commonly seen in the FMCG, public, industrial/utilities, and media sectors.

    [* ‘All Other' which includes ‘below-the-line' activities such as events, PR and market research, has seen the sharpest cut to budgets, the steepest for two years. Direct marketing has seen the largest fall in eight years, and sales promotion the biggest decline for two years.]

Despite the dowbeat data Aegis Group ceo Robert Lerwill remains relatively bullish: "Let's not lose sight of the fact that - as today's report points out - marketing spend is still set to increase in 2008, with budgets ahead of 2007 levels," he said.

"Bellwether also shows that media spend, led by the internet, will likely see the strongest acceleration in the year. Both those facts are fully consistent with what we see in our own business - in the UK and elsewhere."

Bellwether, produced for the IPA by NTC Economics, is based on a questionnaire survey of around 250 UK-based firms  selected from the nation's top 1000 companies. Respondents are primarily marketing directors or similar.

Data sourced from IPA (UK); additional content by WARC staff