PR industry budgets revised down in Q2, according to latest Bellwether Survey

The PR industry has failed to buck a downward revision trend for budgets in Q2, according to the latest IPA/BDO Bellwether Survey.

Bellwether: Revisions to total marketing budgets
Bellwether: Revisions to total marketing budgets

The ‘all other’ category, which includes PR and events, recorded a -7.9% downward revision in the second quarter of 2010. This revision was a significant drop from -3.5% in Q1.

Budgets for nearly all main Bellwether categories were revised down in Q2, with direct marketing and internet the exceptions. The findings suggest that the UK economy is now entering a phase of slower growth.

The downward revisions follow a modest upgrade in the previous quarter. However, the rate of budget trimming was much slower than that seen at the height of the downturn.

Downward revisions


Almost 20% of the survey panel reported a downward adjustment to spend, versus 15% that noted an increase.

On average, marketing executives remained upbeat about the financial prospects for their companies in Q2. Around 41% were confident about financial prospects, which was broadly in line with that seen in Q1. However, a greater proportion of execs were pessimistic in Q2 compared to Q1, with the percentage reporting negative sentiment up to 35% from 20%.

Disappointing downturn

Report author Chris Williamson, chief economist at Markit, said: ‘The downward revision to marketing budgets in the second quarter is disappointing as it fails to build on the return to growth seen earlier in the year and highlights the fragility of the UK economic recovery.

‘Companies are exercising increased caution in their expenditure in the face of likely slower economic growth in the second half of the year. However, it is encouraging to see that marketing spend is still set to increase for the year as a whole compared to 2009, albeit to a lesser extent than signalled in the first quarter.’

Advising caution

PRCA chief executive Francis Ingham said PR professionals should retain a sense of perspective when looking at the latest results because the PR sector is not looked at in depth.

However, he added: 'What is certainly true is that 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.

'We also need to recognise though that even within a generally jumpy market, there are still sectors that are powering ahead - and still individual agencies that are experiencing brilliant years. Our own quarterly tracking will be out within the next ten days, and should add more PR-centric market intelligence. Before then, it's much too soon to be talking about a PR double dip.'

To promote the 10thh anniversary of the IPA BDO Bellwether Report, a one-off supplement has been compiled including an essay by WPP chief executive Sir Martin Sorrell.

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