Although 2004 is turning out to be the best year for the advertising market since the dot-com boom years, according to the author of the Bellwether report, growth in advertising expenditure is likely to slip in the second half of this year.
According to Christopher Williamson, economist at NTC Research and author of IPA’s latest Bellwether Report, marketing budgets at the start of 2004 were set higher than 2003, however such an initial increase had been seen in each of the previous year, only to be whittled away as budgets were steadily revised down as each year progressed.
Penning this week’s MediaTel Newsline column, Williamson said: “So far, 2004 appears to be different. The initial buoyant budget setting at the start of the year has been revised up, not down as in the previous three years. Furthermore, in Q3, the magnitude of the revision was even slightly greater than that seen in Q2.
He added: “Even media adspend budgets were revised up for the third successive quarter in Q3, pointing to the longest period of improved confidence among advertisers since the survey began at the start of 2002.”
The acceleration in adspend growth is currently being driven by buoyant corporate profits, which have a close historical link with marketing spend, however with company profitability expected to slip during quarter four 2004 and in to 2005, advertising spending will follow.
Setting these factors aside, however, 2005 would still struggle to match the high of 2004 given the tough comparisons that’s been set as a result of this year’s presidential elections and the Olympic Games.
As signs of weakening consumer confidence takes hold, which could suggest a slow down in economic activity, the Advertising Association revised downwards its 2005 forecast from 4.9% to 4.4%.
| Revision To Current Marketing Budget |
| Bellwether Report – By Sector, Quarter 3 2004 |
| |
|
|
|
| Expenditure |
Q1 2004 |
Q2 2004 |
Q3 2004 |
| Total Marketing |
9.7 |
5.5 |
6.3 |
| Media Advertising |
0.5 |
2.0 |
1.1 |
| Sales Promotion |
11.1 |
3.1 |
4.0 |
| Direct Marketing |
15.7 |
2.2 |
5.5 |
| Other |
3.1 |
-3.4 |
-3.4 |
| – Internet |
29.8 |
16.8 |
18.1 |
| Source: IPA Bellwether Report, October 2004 |
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