Bellwether Report sees marketing budgets cut due to fragile UK economy

The second quarter IPA/BDO Bellwether Report has seen overall marketing budgets revised downwards again, with the ‘all other’ that includes PR among the hardest hit.

Bellwether Report: marketing budgets cut
Bellwether Report: marketing budgets cut


Total marketing spend was revised down for the third successive quarter in Q2 2011, although the pace of budget trimming was the lowest during this period. Around 22% of Bellwether companies reported a decline in total spend from the situation three months ago, versus 20% that signalled an increase.

The net balance of positive and negative sentiment in the ‘all other’ category, which includes PR events and research, was minus 7.1%. This marks an improvement on the first quarter when the balance was -11.2%.

The report said that anecdotal evidence provided by respondents suggested that companies were looking to reduce spend in order to shore up profit margins.

Debbie Klein, CEO of Engine, said: ‘The market continued to be fragile throughout Q2 and organisations remain cautious, which is reflective of the UK economy as a whole.’

Chris Williamson, chief economist at Markit and author of the Bellwether commented: ‘The Q2 Bellwether helps to further clarify the current state of health of the UK economy and paints a disappointing picture. Marketing budgets were trimmed for a third quarter running as companies sought to cut costs in the face of weak demand and lower than anticipated sales revenues.

‘Given the close relationship between marketing spend and the country’s overall health, the latest Bellwether findings therefore suggest that economic growth remained subdued in the second quarter.’

Andy Viner, head of media, BDO added: ‘Fortunately, the outlook for 2012 is looking more positive. There is certain to be an uplift in marketing expenditure connected with the 2012 London Olympics which will provide a welcome fillip to the marketing services industry after a challenging couple of years.’

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