The marketing profession remains broadly optimistic about the future economy, supporting the widely held view that the expected slowdown in 2005 will represent a change of gear rather than a recession, according to the latest survey results from the Chartered Institute of Marketing (CIM).
The study, based on the views of 500 senior marketing professionals across a range of sectors, reveals that growth in marketing spend is expected to be up 4.6% over the coming year. Those surveyed said that sales growth is also expected to be up this year, by 8.9%. The confidence index at 94.8 remains above its historic average but is slightly weaker than in the summer of 2004.
The majority of companies perceive their sales plans to be realistic, though one-third describe their plans as ‘very challenging’.
In response to rising energy and fuel costs and slightly higher labour cost inflation, the survey results indicate that inflation forecasts are edging upwards; on average respondents expect to raise their prices by 2.2%, up from 1.6% in the summer.
The CIM states that this is consistent with evidence that inflationary pressures are building up, although when high inflation has been forecast historically, market place pressures have placed a ceiling on price rises.
Douglas McWilliams, economic adviser to the CIM and chief executive of the centre for economics and business research said: “The survey results support the widely accepted view that the expected slowdown will represent a change of gear rather than recession. An important indicator of the continued confidence that there will not be a recession is the relatively high – by historic standards – forecast for growth in marketing spend.”
McWilliams concludes:”Taking all the signals together, the survey points to steady, rather than booming, economic growth. But on the back of the strong upswing that has continued now since 2003, the fact that even now recession is not expected is encouraging.”
The survey follows last month’s Q4 IPA Bellwether report, which revealed that many companies had set their marketing budgets for the first quarter of 2005 at a higher rate than actual spend in 2004, signaling the net rise for 2005 to be the strongest since the survey began(see Q4 Bellwether: UK Marketing Budgets Continue To Rise).
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