Q4 2007 Bellwether: Biggest Fall In Marketing Spend In Nearly Two Years

Advertising spend took bigger cuts in the last quarter of 2007 than at any time in nearly two years, according to the latest Bellwether Report.

The quarterly survey of marketing spend, published by the IPA, found that budgets were revised down for the first time in a year in Q4.

The report said that weaker than expected sales revenues, disappointing profits and concerns about the economic environment meant companies trimmed budgets in order to cut costs and maintain margins.

Main media advertising saw the largest cut to budgets in Q4, with traditional media such as TV and press hit particularly hard. ‘All other’ marketing also saw an above-average cut.

Although internet budgets were again increased up to a greater extent than any other category, and now account for around 9% of total marketing spend, the rise was the weakest since Q3 2003.

Main media spend was revised down in Q4 to the greatest extent since Q2 2006, with a net balance of -6.5%.

In Q4, only 15% of companies reported increased total marketing budgets while 19% reported a decrease, so a net balance of -4.4%.

23% of companies revised up their budgets for the internet, while 7% saw a decline. Online search is now being monitored by Bellwether and saw the same pattern of upward revision.

A recent forecast from eMarketer predicted that UK online ad spending would pass £3 billion in 2008, and show healthy growth despite financial and political uncertainties in Britain.

The Bellwether Report also found that total share of spend in 2007 was 29.3% main media, 25% direct marketing, 8.7% internet, 9.5% sales promotion, and 29.3% ‘all other’ marketing.

For the first time ‘all other’ has been broken down further; of this 29.3%, 8.5% was allocated to PR, 8.6% to events, 6.2% on market research.

Maurice Lévy, chairman and CEO, Publicis Groupe, said: “The latest Bellwether Report confirms what our industry knows too well: Q4 spendings are always adjusted up or down according to final company profit forecasts. The main trends are confirmed: less attraction of traditional media and more digital, interactive.

“It looks like that despite a gloomy Q4, we can expect a better 2008, probably thanks to the Euro Cup and the Olympic Games. There is undoubtedly some turbulence in our old countries of Europe and, for our industry, we know that we find growth in digital and emerging markets.”

In December, GroupM forecast that worldwide spending will rise 7% to $479 billion in 2008 following an anticipated 6% increase in 2007.

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