INSIGHTanalysis: IPA Report Shows Few Signs Of Marketing Improvement

Looking at media advertising alone, the picture is even more negative with a balance of -14.5% on the same basis. The media budget cuts are the largest since Q3 2001, according to the report.

The IPA says that two key factors were cited as the causes of reduced media adspend. Firstly, revenues and profits were often reported to have come in below expectations in recent months, leading to widespread cost cutting. Secondly, many advertisers reported a further shift in allocation of spend away from main media adspend towards activities such as direct marketing, where smaller and more accountable campaigns can be operated with greater flexibility.

Despite this shift away from the main media, budgets for direct marketing and sales promotion were also being cut in the second quarter of the year. The net downward revision to direct marketing budgets was the first since Q3 2001 and the fall in sales promotion spend was the steepest since the survey began three years ago.

The only category to buck the trend in Q2 was internet-related marketing. Whilst the majority (71%) were leaving internet budgets unchanged, 19.1% were raising them and only 9.8% were reducing them; this leaves a positive balance of 9.3%, lower than Q1’s 18.3%.

Commenting on the latest data, the IPA’s president Stephen Woodford said: “The signals around adspend recovery are mixed at best with the AA [see INSIGHTanalysis: 2002 UK Advertising Revenue Figures] and ZenithOptimedia [see Worldwide Advertising Forecasts From ZenithOptimedia] showing overall declines in real terms and Nielsen showing a sustained spending surge [see INSIGHTanalysis: UK Media And Advertising Outlook].

“We’ve also read that analysts are cautiously predicting better times for the economy with media shares showing significant improvements and a 24% rebound in the FTSE 100 index since March. So there’s no doubt we are experiencing volatile times.

“While this latest data is disappointing, it is worth highlighting that over half of all clients are expecting to keep ad spend the same this quarter, and around 20% are increasing budgets, while a third are looking at cuts. This is against a background of higher budget setting for 2003 over 2002, so budgets are at a higher base level.”

Marketing budgets The responses for marketing budget revisions are shown below.

Media budgets The responses for media budget revisions are shown below.