Bellwether Report: Budgets revised down in Q2

The latest IPA Bellwether Report, for Q2 2010, shows that budgets for nearly all main categories were revised down in the second quarter, with online and direct marketing the exceptions.

Almost 20% of of those surveyed reported a decrease in spend, with 15% reporting an increase.

According to the report, total marketing spend was down 4.6% in Q2 compared with a 4.5% increase in the first quarter.

Business confidence has also dipped, the report found, with positive sentiment the lowest for a year. However the rate of budget trimming was much slower than at the height of the economic downturn.

Chris Williamson, chief economist at Markit and author of the Bellwether, said: “The downward revision to marketing budgets in the second quarter is disappointing as it fails to build on the return to growth seen earlier in the year and highlights the fragility of the UK economic recovery. Companies are exercising increased caution in their expenditure in the face of likely slower economic growth in the second half of the year.

“However, it is encouraging to see that marketing spend is still set to increase for the year as a whole compared to 2009, albeit to a lesser extent than signalled in the first quarter.

“Furthermore, that fact that the main area of downward revision to spend in Q2 was seen for sales promotions suggests that companies feel less need to offer price discounts. Main media advertising, in contrast, was revised down only very modestly.”