Insight Analysis: Latest Bellwether Report Indicates Mixed Feelings

Budget revisions When asked if pre-set budgets for the coming financial year have been increased, reduced or left the same in the last three months, a slight majority of marketers said that they had been increased. However, the margin is very slim – just 2.6% points – with the 22.5% increasing budgets almost offset by the 19.9% decreasing spend. The remaining majority of 57.6% said that they would be kept the same.

Revisions to current budgets
		% up	% same	% down	Net balance (+/- % points)
2001	Q1	19.1	57.9	23.0	-3.8
	Q2	18.0	62.1	19.9	-1.9
	Q3	17.9	53.8	28.3	-10.4
	Q4	19.0	48.5	32.5	-13.5
2002	Q1	22.5	57.6	19.9	2.6
Source: IPA Bellwether Report, April 2002

These figures suggest that any upturn is at best cautious and certainly not unequivocal. These current budget revisions (above) follow a year of flat growth during the 2001 calendar year, which saw 32.6% increase and 32.6% decrease budgets, with the remainder staying the same.

Softly, softly… The main shift shown by the Bellwether survey seems to be a movement from decreasing budgets to leaving them the same, rather than increasing spend. This again suggests a cautious approach to the gradually improving advertising and economic conditions.

In Q4 2001 32.5% of respondents were planning decreases in spend, whilst 48.5% were leaving it the same. In the Q1 2002 report, these figures had shifted to 19.9% and 57.6% respectively.

Comparison of budget revision plans, Q4 2001 – Q1 2002
	% up	% same	% down
Q4 2001	19.0	48.5	32.5
Q1 2002	22.5	57.6	19.9
Net balance (+/- % points)	3.5	9.1	-12.6
Source: IPA Bellwether Report, April 2002

2002 budget setting appears not too optimistic Of those companies which set budgets for 2002 in Q1 2002, 41.9% showed increases in spend over 2001, whilst 32.3% stayed the same and 25.6% took spend down. Whilst this shows a positive balance of 16.1% points towards increases, it is a lower balance in that direction than the previous three Bellwether Reports have found. This is because the Q1 2002 figures also show the greatest proportion of decreasing budgets yet measured by the IPA’s survey (at 25.6%).

New budget setting
		% up	% same	% down	Net balance (+/- % points)
2001	Q1	41.2	38.2	20.6	20.6
	Q2	question not asked			–
	Q3	42.3	34.6	23.1	19.2
	Q4	40.8	36.9	22.3	18.5
2002	Q1	41.9	32.3	25.6	16.1
Source: IPA Bellwether Report, April 2002

Again, this suggests that any recovery is far from deep-rooted and solid: Whilst in Q1 2002 more companies planned to increase their budgets for the year than did in Q4 2001, an even larger proportion choose to decrease them.

The IPA says that “evidence of stronger sales growth and improved forecasts of economic growth” were the principal driving forces behind the increases in budgets, although this does not really acknowledge the fact that there was a lower proportion of these increases in this survey than the preceding three.

Media budgets Figures for media spend show a higher proportion increasing budgets than decreasing them for 2002, but again the balance towards increases has narrowed when compared to previous surveys as shown.

Media budget setting
		% up	% same	% down	Net balance (+/- % points)
2001	Q1	34.9	38.1	27.0	7.9
	Q2	question not asked			–
	Q3	35.3	35.3	29.4	5.9
	Q4	33.3	38.2	28.5	4.9
2002	Q1	27.6	48.3	24.1	3.4
Source: IPA Bellwether Report, April 2002

(Media spend in this definition does not include sales promotion, direct marketing, ‘other’ marketing and internet marketing, the spend for which is included in the total marketing budget figures shown in the first section of this analysis).

The report also reveals that total UK marketing spend last year was £33.5 billion. Of this 35% went on media advertising, 26% direct marketing, 24% to all other marketing (including PR, event marketing and internet) and 15% to sales promotion. This shows a swing away from media advertising towards sales promotion, but it is thought that a move back to media will occur in the future.

An analysis of the Q4 2001 Bellwether Report can be found More Of The Same, Says The Latest IPA Bellwether Report.