Bellwether report shows decline in marketing spend slowing

The rate of decline in marketing spend is slowing, but PR is still one of the worst hit areas, says the latest IPA/BDO Bellwether survey.

Ogilvy Group UK's Rory Sutherland
Ogilvy Group UK's Rory Sutherland

The latest update, published today, reveals that marketing spend has fallen for the eighth quarter in a row. But this quarter saw the smallest reduction in budgets in over a year.

This has been interpreted as a signal for optimism. ‘This suggests there is the prospect both of cautious optimism and of a slightly more stable and stabilising media market,' said Jim Marshall, Starcom consultant and IPA Media Futures Group chairman.

But below-the-line marketing including PR, events and sponsorship is still seeing the steepest cuts in budgets, followed by main media advertising.

Internet advertising, however, is now seeing an increase in spend.

The retail, travel and entertainment sectors are also beginning to pick up, whereas the steepest cuts are in financial services, non-governmental services, IT and computing and industrial sectors.

More than 47 per cent of companies surveyed said they were seeing improved prospects, consistent with the economy returning to growth.

‘Although marketing spend is still falling this latest Bellwether is an encouraging sign that budget cutting is slowing,' said Rory Sutherland, IPA president and vice-chairman of Ogilvy Group UK.

‘While companies are still understandably wary the report reveals a strong rise in business confidence and the suggestion that GDP may well have risen in Q3.  It will be interesting to see whether the rise in internet spend will presage an upturn in other categories,' he said.

'It will come as a great relief to the industry that the economic pressures seem to be easing,' said Jim Houghton, head of marketing services, BDO LLP.

‘Evidently this relief won't be uniform, with online and sales focused marketing disciplines the strongest. After two years of dramatic decline, the industry also needs to reflect on what recovery will mean when it does finally arrive. The recession will no doubt have a long-term impact on marketing agencies but with intense competition and continued constrained budgets, companies will have to drive both brand and sales. Well targeted marketing spend will be key to achieving this objective,' he said.

 The Bellwether report provides a key indicator of the health of the economy, and surveys around 300 UK marketing professionals.

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