Agency bosses positive despite downbeat Bellwether Report

Agency bosses were taken aback by findings in the latest IPA/BDO Bellwether Report, which suggested the PR industry could be falling into a double-dip downturn.

Drop of 7.9 per cent in Q2: 'all other' category
Drop of 7.9 per cent in Q2: 'all other' category

The survey, released on Monday, showed that the 'all other' category, which includes PR and events, fell 7.9 per cent in Q2 compared with a drop of 3.5 per cent in Q1.

Budgets for nearly all main Bellwether categories were revised downwards in Q2, with direct marketing and internet the exceptions.

The budget cuts follow a modest upgrade in spend in the previous quarter. Nearly 20 per cent of the survey panel reported a downward adjustment to spend, while 15 per cent noted a rise.

However, PR chiefs from agencies including Weber Shandwick, Ketchum Pleon, Edelman, Burson-Marsteller, GolinHarris and Mandate insisted they had seen growth in the first half of 2010.

Weber Shandwick CEO, UK & Europe, Colin Byrne said its Q2 business was up 22 per cent in London and 13 per cent across the UK. Mandate chief executive Sacha Deshmukh said the agency's revenue had grown 20 per cent year on year in Q2, with healthcare, technology and FMCG in particular seeing strong growth.

Ketchum Pleon president, Europe, David Gallagher said: 'Our pipeline shows no significant fall-off and while some clients have cut back, others have increased their spending. Our portfolio is somewhat hedged with a large percentage of work based outside the UK, but I've noticed no discernible drop from domestic clients.'

Bosses did concede there was uncertainty in the market following announcements concerning public sector cuts and the future VAT rise, which could affect consumer spend.

PRCA chief executive Francis Ingham added: 'The market is somewhat jumpy right now. The emergency Budget has made clear how significant the country's fiscal problem truly is and how deep the public sector cuts are going to be. Against that backdrop, it's understandable that spending decisions are being delayed and that confidence continues to be fragile.'

Overall, the Bellwether Report found marketing executives remained upbeat. Forty-one per cent were confident about financial prospects in Q2, which was broadly in line with that seen in Q1. However, the percentage reporting negative sentiment was up from 20 per cent to 35 per cent.

HOW I SEE IT

Lord Chadlington, Chief executive, Huntsworth

There is worry about how public sector cuts and a rise in VAT will affect consumers. I do not feel there will be the same level of downturn. It is much more competitive and there is lots of pressure on fees, but there is business out there.

Lord Bell, Chairman, Chime Communications

I have no idea whether there will be a double dip and nor does anyone else, but it cannot be ruled out. Why the gloom? The election, uncertainty, the debt crisis, cuts in public expenditure caution and good housekeeping are all playing their part. Not to mention constant contradictory economic news.

15% of the survey panel reported an upward adjustment to spend in Q2

41% of marketing executives were confident about financial prospects

-7.9% downward revision to 'all other' marketing budgets in Q2 2010

34% of Bellwether respondents reported that actual spend fell in 2009

SOURCE: BELLWETHER REPORT Q2 2010

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