LONDON: The latest Bellwether Report, the quarterly survey of national marketing spend commissioned by the UK's Institute of Practitioners in Advertising, reveals that budgets have been revised upward for the third successive quarter.

However, there is speculation that spend could start to be trimmed due to the current financial turmoil.

Nonetheless, the overall outlook of the report is that marketing spend will remain healthy, with 2007 still predicted to see the strongest growth yet recorded.

Mainstream media spend and 'all other marketing' (below-the-line activities such as PR, events sponsorship, sales promotion et al) both posted record rises in Q3, driven by strong sales revenues and business expansion.

The internet again saw sustained above-average growth, with the web now accounting for over 6% of all marketing spend. More than 40% of companies now allocate at least 5% of their total marketing spend to the internet.

Highlights of the report include:

  • In Q3, just under 24% of respondents reported increased total marketing budgets, while only 15% reported a decrease, so a net balance of 8.3%.

  • Main media spend was revised up to the greatest extent in the survey's history, resulting in a net balance of +9.2%.

  • Likewise, 'All other' marketing saw record gains, with a net balance of 9.8%, compared to 2.3% in Q2.

  • In addition, 31% of companies revised up their budgets for the internet, while just 7% saw a decline.

  • Direct marketing was the only category to see a reduction in budgets, albeit it marginal at minus 0.5%, due to cost-cutting and diversion of spend to the internet.

  • Increases to budgets were most commonly seen in the services sector (especially IT, computing, travel and entertainment), whilst budget-trimming was most widely reported in the industrial and auto sectors.
Says report author Chris Williamson of NTC Economics: "Marketing budgets tend to be cut quickly in response to changing business conditions, so the strength of the Q3 survey suggests that marketing spend held up well in the face of the current financial turmoil and that the real economy remains so far largely unaffected.

"However, it will no doubt take some time for the full effects of the banking crisis to be felt, so it is likely that these strong Q3 numbers represent a peak in the current cycle."

WPP Group ceo Sir Martin Sorrell, declares: "Again the Bellwether Report reflects what we see in the UK - with spending improving and direct, interactive and internet spending and below-the-line spending, like public relations, doing especially well.

"However, the UK still lags other regions and it's too early to call what impact the liquidity crisis has had, or will have, on advertising and marketing services spending."

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