PR budgets among the worst hit during first quarter, finds Bellwether Report

The IPA/BDO Bellwether Report for the first quarter in 2011 has found sentiment around its category that includes PR is the worst of any market discipline.

Debbie Klein: uncertain economic recovery
Debbie Klein: uncertain economic recovery

The ‘all other’ category, that includes PR, events and research, saw a negative net balance in budgets of 11.2%. The overall figure for all marketing budgets during the first quarter was a downwards revision of 5.1%.

The Bellwether figures are calculated by subtracting the percentage of respondents reporting a downward revision from the percentage reporting an upward revision.

The survey reveals that overall marketing budgets were revised down for the second consecutive quarter, as public sector cuts hit the sector.

Debbie Klein, CEO of Engine, commented: ‘While we have been affected by the public sector spending cuts and are seeing ongoing uncertainty around the economic recovery, we are seeing growth in other areas, particularly social media where we've had significant business wins for the second quarter running. We expect to see the appetite for digital and social media campaigns to continue throughout this year.’

The survey reported that marketing executives grew increasingly pessimistic about financial prospects for the industries in which they operate, with confidence dipping to the lowest since Q1 2009.

In contrast, respondents grew slightly more optimistic regarding their own companies’ financial prospects, with confidence improving slightly from the one-and-a-half year low recorded in the preceding quarter.

Budgets for the 2011 financial year have meanwhile been set higher than actual spend in 2010 on average, with 39% of respondents planning to increase spend versus 22% that foresee a decline.

Chris Williamson, chief economist at Markit and author of the Bellwether, stated: "It is reassuring to see that companies are planning to raise their marketing spend in 2011, and that marketing executives’ confidence in their own companies’ financial prospects did not deteriorate any further in the first quarter of the year.

‘However, companies remain clearly cautious about committing to non-essential expenditure. Cost cutting remains high on the agenda as firms seek to protect profit margins in the face of strong upward cost pressures and concerns about deficit-busting government spending cuts.’

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