Bellwether Q3 2007: Marketing Spend To Record Strongest Ever Growth
Marketing spend is predicted to record its strongest growth ever this year, with online marketing now accounting for 6% of all spending, according to the IPA’s Q3 2007 Bellwether Report.
However, there is a note of caution going forward, with speculation that spend could start to be trimmed due to the turmoil in the financial markets.
Main media advertising – including TV, press, radio, cinema and internet – was up 9.2%, compared to 6.2% last quarter.
According to the report, the increase in online spending has resulted in the direct marketing sector suffering, with budgets cut by 0.5%.
The ‘other marketing’ category – which includes public relations, event sponsorship, conferences, exhibitions and product sampling – was up 9.8% compared to 2.3% in the second quarter of 2007.
The report also showed that 31% of companies revised up their budgets for the internet whilst just 7% saw a decline.
Direct marketing was the only category to see a reduction in budgets, although only marginal at 0.5%, due to the need to cut costs and diversion of spend to the internet.
By sector, increases to budgets were most commonly seen in the services sector (especially IT, computing, travel and entertainment companies), budget trimming was most widely reported in the industrial and autos sectors.
| Revisions To Current Marketing Budgets, By Sector, Q3 2007 | |||||
| Q3 2006 | Q4 2006 | Q1 2007 | Q2 2007 | Q3 2007 | |
| Total marketing | 2.6 | -0.7 | 7.7 | 8.6 | 8.3 |
| Media adspend | -1.1 | -2.9 | 2.5 | 6.2 | 9.2 |
| Sales promotion | 0 | -5 | 0 | 3.9 | 5.3 |
| Direct marketing | 10.1 | 4.1 | 0.6 | 5.9 | -0.5 |
| All other marketing | 2.4 | -2.9 | 2.5 | 2.3 | 9.8 |
| of which internet | 24.1 | 31.5 | 19.3 | 21.8 | 24.7 |
| Source: IPA Bellwether Report, October 2007 | |||||
Sir Martin Sorrell, chief executive, WPP: “Again the Bellwether Report reflects what we see in the UK – with spending improving and direct, interactive and internet spending and below-the-line spending, like public relations, doing especially well.
“However, the UK still lags other regions and it’s too early to call what impact the liquidity crisis has had, or will have, on advertising and marketing services spending.”
Jim Marshall, chairman, Starcom, chairman, IPA Media Futures Group, said: “Overall the report findings looks reasonably positive yet with a note of caution attached, reflecting what the media market is doing at the moment; relatively small growth but growth nonetheless, which tends to be short-term as many advertisers are cautious about longer-term levels of commitment, this is hardly surprising given the prevailing economic factors at present.
“Yet what is encouraging is the fact that while the internet continues to grow strongly it is now being used less as a replacement for traditional media, but rather to support a wider level of activity.”
Recent figures from the Internet Advertising Bureau (IAB) showed that UK internet advertising recorded above-expectation 41.3% year on year growth in the first half of 2007.
ZenithOptimedia forecast that UK TV adspend is set to grow by 0.5% this year, moving towards 2% growth in 2008, and following a 5% year on year decline in 2006.
IPA: 020 7235 7020 www.ipa.co.uk