Bellwether Reveals Reduced Pessimism For UK Advertisers
The IPA’s quarterly Bellwether report has revealed an improved business sentiment among the UK’s top advertisers, even though marketing budgets were revised down again during the third quarter of this year.
The report, published today, shows that adspend budgets were cut for the eleventh consecutive quarter between July and September this year. However, the reduction was the smallest since the second quarter of 2002, reflecting reduced pessimism with regard to the overall economic outlook.
According to the survey, which is drawn from a panel of over 250 UK marketing professionals, upward trends were recorded for public sector, automobile and industrial categories. The steepest downward revisions were experienced by FMCG, computing and consumer durables.
IPA President Stephen Woodford said: “We are very encouraged by this report especially since the previous two year’s Q3 results seemed to suggest that we should probably expect a severe adjustment downwards as companies prepare their figures for year end.”
Sir Martin Sorrell, Chief Executive WPP, added: “The UK remains our toughest market, although the rate of decline is slowing and prospects for next year look better. Stabilisation and muted recovery in the United States should help.”
Current media advertising budgets were revised down on average for the eleventh consecutive quarter and weak sales continued to prompt either cuts to total budgets, or shifts in allocation of spend to other forms of marketing.
In contrast, sales promotion budgets were revised up on average in the third quarter of 2003 for the first time in over a year. The modest increase contrasted with the downward revision in total marketing budgets, suggesting that sales promotion will receive an increased share of total spend.
Direct marketing budgets also recovered in the three months to September as brands continued to turn to more accountable forms of advertising. Firms in industrial, consumer durable, retail and financial services reported the strongest upward revisions, whilst downward revisions were experienced in the FMCG and travel/entertainment sectors.
Internet related budgets rose at a faster rate than any other category for the sixth consecutive quarter, but the share of total marketing budgets accounted for by online related activities remains modest.
The proportion of all firms not allocating spend to internet related activities has fallen from 29% to 26% over the course of the past year, while the proportion allocating in excess of 10% of their total budget has risen from just 4% to 7% during the same period.
Budgets for all other marketing, which includes activities such as PR, sponsorship, market research and ecommerce, were revised down on average during the third quarter of this year. The downgrade was slightly less steep than in the previous quarter, but was larger than for any other category monitored by the survey.
Declines were recorded across nearly all of the main sectors with the steepest downgrades experienced in the FMCG, retail, consumer durables and information technology/computing categories.
The findings of the latest Bellwether report echo the recent CAF Barometer, which revealed an increase in communications budgets and a generally more optimistic mood among agencies about the future (see Outlook Improves For Communications Agencies).
IPA: 020 7235 7020 www.ipa.co.uk
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