Q2 2008 Bellwether: Largest Marketing Budgets Cuts Since 2001
The Q2 2008 Bellwether Report was released today, with the third consecutive quarter of cuts and to the greatest extent since 2001.
Disappointing sales, rising costs and growing economic gloom were cited as reasons for companies cutting marketing budgets and it expects further cuts later in the year.
All sectors within marketing have seen cuts, with the exception of the internet. However, even this market was not immune to the downturn with budgets only increased by 6%, the smallest upward revision since 2002.
Direct marketing saw the greatest downward revision in the survey’s history, down by 9.1%. It has now seen the longest period of sustained budget trimming of all categories, with cost savings gained from moving from post to email.
| Revisions To Current Marketing Budgets, By Sector, Q2 2008 | |||||
| Q2 2007 | Q3 2007 | Q4 2007 | Q1 2008 | Q2 2008 | |
| Total marketing | 8.6 | 8.3 | -4.4 | -2.1 | -12.4 |
| Media adspend | 6.2 | 9.2 | -6.5 | 0.0 | -12.8 |
| Sales promotion | 3.9 | 5.3 | 2.1 | -6.0 | -7.3 |
| Direct marketing | 5.9 | -0.5 | -1.3 | -6.3 | -9.1 |
| All other marketing | 2.3 | 9.8 | -4.7 | -7.8 | -11.3 |
| of which internet | 21.8 | 24.7 | 15.8 | 21.2 | 6.2 |
| Source: IPA Bellwether Report, July 2008 | |||||
Author of the report and chief economist at Markit, Chris Williamson, comments: “Rising costs and weaker-than-expected sales put pressure on companies to cut marketing budgets in the second quarter to protect profit margins.
“This raises the possibility that marketing spend could fall this year for the first time since the survey began in 2000. Even internet marketing was not immune, seeing the smallest increase in spend for five years.”
Anthony Wreford, deputy chairman of Omnicom Europe, added: “This is a ‘no surprises’ report, at least to anyone who regularly reads the business press and follows stock markets. The performance of agencies will vary considerably according to their own client base.
“Agencies with, for example, a high percentage of client spend from retail and FMCG, will undoubtedly be having a harder time than say an agency with more institutional work such as government, technology or top quality financial services.
“Internet spending will continue to grow as more clients see the importance of this form of communication and the ability to use this medium, like PR, in a tactical context.”
IPA: 020 7235 7020 www.ipa.co.uk