Q3 2008 Bellwether Report: Marketing Budgets Cut Again

The IPA’s latest Bellwether survey has found that in Q3 annual marketing budgets were revised down to the greatest extent ever recorded in the survey’s nine year history.

The cut was the fourth successive quarterly reduction in spend and points to a marked deterioration in business conditions since the summer.

The latest downward revision indicates the increasing impact of the credit squeeze on the economy, revealing that just 8% of companies are more optimistic about prospects for their industry than they were three months ago compared to 60% who are less optimistic.

Hardest hit were budgets for main media advertising and ‘all other’ (including PR, events sponsorship and market research).

All marketing categories saw downward revisions with the exception of the internet, but even this category saw budget expenditure for the year held steady. Internet search was the only category to see an increase yet the rise was only marginal.

Moray MacLennan, IPA president, said: “I doubt these gloomy results will come as a surprise to anyone. In light of current headlines the biggest surprise may well be that 12% of companies’ budgets were revised upwards.

“The industry will be watching the next set of results with great interest hoping that, following four quarters of decline, the downward curve levels off, despite the impending recession.”

Chris Williamson, author of the report and chief economist at Markit, which compiled the report, said: “The slump in the Bellwether marketing budget and financial prospects data indicate a severe worsening of business confidence and the rising impact of the credit crunch on the real economy, as companies rein in spending in the face of poor sales and growing fears over the economy.

“These data are consistent with the economy contracting in Q3 and raise the possibility for the UK falling into recession.”

IPA: 020 7235 7020 www.ipa.co.uk