Bellwether Q4 2010 “sets the scene for a difficult year ahead”
Marketing budgets fell in the fourth quarter of 2010 as confidence for the 2011 outlook dropped, according to the latest IPA / BDO Bellwether Report.
Markit, which conducted the survey, found that 22% of companies cut budgets in the last three months of 2010, compared with 17% reporting a rise – which represents the biggest downgrade for a year.
Business confidence among marketing executives is said to have dipped to the lowest levels for 18 months, with 32% of companies saying financial prospects for the marketing industry have deteriorated.
Budgets were revised across all main media, including TV, press and radio advertising. Even online ad spend, which is expected to lead the advertising recovery, saw its smallest upward revision for a year and a half.
More positively, initial marketing budgets for 2011 indicate that companies will spend more than they did in 2010, with growth provisionally the strongest it has been in three years.
However, the rate is “relatively lacklustre by the historical standards of the Bellwether survey,” according to Rory Sutherland, president of the IPA. “That these latest figures reveal a decline in confidence is disappointing, but characteristic of the uncertain climate we find ourselves in.”
Chris Williamson, chief economist at Markit and author of the report, added: “The Bellwether highlights the bumpy road of recovery that the UK economy is travelling along, and sets the scene for a difficult year ahead. However, it is reassuring to see that budgets have been set higher for 2011 compared to 2010, led by main media advertising.”
The Bellwether Report comes as Merrill Lynch says media will continue to outperform in 2011 – “We expect European ad growth to remain robust, with [businesses] using strong balance sheets and margins to invest in advertising to support growth”.
Merrill Lynch forecasts a 4.7% increase in advertising across Europe this year, rising to 5.8% in 2012.
Last month, GroupM predicted that global ad spend would surpass $500 billion for the first time in 2011.