Bellwether Report suggests marketing spend up while confidence dips further

The third quarter IPA Bellwether Report shows marketing budgets have been revised upwards, ending a three-quarter period of decline.

Bellwether Report: confidence in industry low
Bellwether Report: confidence in industry low

The ‘all other’ category of the Bellwether report, which includes PR, recorded growth for the first time in 16 quarters, taking it to +1.5%.

Despite this, business optimism has hit a two-and-a-half year low. Marketing executives’ confidence in their industries has dropped to -23.3%, down from -10.9% in Q2.

The rise in budgets is thought to be a result of companies increasing expenditure to promote new products and maintain market share amid competitive pressure. This is the first time since Q2 2007 that budgets for all sectors have been revised up.

Nicola Mendelsohn, IPA president, executive chairman and partner, Karmarama, said: ‘That we are seeing a further decline in confidence overall continues to reflect the uncertain financial climate that businesses are operating in.

'Yet it's important that the advertising industry and UK plc at large should do all it can to be as upbeat as possible to meet the challenge that we face. This rise in spend demonstrates that many companies are trying to buck the downward trend. It is a move in the right direction and shows that businesses understand that those that maintain the strongest marketing spend will come out on top.’

Chris Williamson, chief economist at Markit and author of the Bellwether, added: ‘UK companies are tackling the adverse economic climate with increased marketing activity, in an attempt to boost sales in the face of weak demand. Extra money is being targeted at online advertising, direct marketing and sales promotions, but there remains a worrying reluctance to increase spend on traditional main media activities such as broadcast and print advertising.
 
‘The increase in marketing spend in the face of adversity helps to explain why companies became a little more optimistic about their own financial prospects but at the same time were the most pessimistic about prospects for their industries since the early months of 2009.’

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