Bellwether Q3 delivers mixed messages

The latest IPA/BDO Bellwether survey raises as many questions as it answers. The headline is one of marketing budgets revised marginally upwards in Q3 after a similar small downgrade in Q2.

This would appear on the face of it to be at odds with ad revenue forecasts released in the last few days which point to a greater resurgence led by TV and Internet, but with national print also bouncing back impressively. However the Bellwether report also includes below-the-line – PR, events, sales promotion – and all of these are revised down in the latest survey. On would assume there may also be some discrepancy between budgets set internally and budgets initially revealed to agencies on which their forecasts are based.

Looking from afar it would appear agency forecasters started very gloomy and everything has trended upwards as the year has gone on; marketing executives may have started a little more positive – but cautious – and retained those sentiments in terms of actual spend. It should mean a profitable 2010 for agencies as we suggested in our Newsline Bulletin recently. Yesterday Havas reported positive Q3 organic revenue growth of 5.3% (up from 2% in Q2). Havas was up 7.5% on Q2 in the UK, but down 5.5% in the rest of Europe according to figures from Merrill Lynch.

Of most concern with regard to 2011 is that the Bellwether reports, “companies have grown less optimistic about the financial prospects for their industries, with sentiment dipping to the lowest in five quarters.” However as Rory Sutherland, IPA President, Vice-Chairman, Ogilvy Group UK comments this is hardly an unexpected state of affairs:

“Though these latest figures suggest hesitancy they don’t indicate absolute pessimism. In these times of uncertainty around Government spending and the sustainability of an economic recovery it is not surprising that businesses remain cautious. And even though the upward revisions to marketing budgets are only slight, marketing budgets have stabilised nevertheless.”

At media level, internet advertising had easily the fastest growth rate, and direct marketing enjoyed its fastest rate of budget growth within the survey in the last four years.