INSIGHTanalysis: IPA Sees Reduced Pessimism Despite Continued Cuts

As with most previous Bellwether reports, the predominant response from marketers is that they are leaving their budgets unchanged for the current year, with 60.1% planning to hold steady. Just 18.3% are upwardly revising spend, whilst 21.6% have reduced budgets. Under the IPA’s methodology this gives a net balance of -3.2%. In Q2 2003, budgets were down 11.0% on the same basis.

Revisions To Current Marketing Budgets
ÂÂ	ÂÂ	ÂÂ	ÂÂ	ÂÂ	ÂÂ
ÂÂ	ÂÂ	% Up	% Same	% Down	Net Balance (+/- % points)
2002	Q1	22.5	57.6	19.9	2.6
ÂÂ	Q2	23.6	61.2	15.2	8.5
ÂÂ	Q3	14.9	61.7	23.4	-8.5
ÂÂ	Q4	18.3	58.5	23.2	-4.9
2003	Q1	18.2	61.3	20.4	-2.2
	Q2	17.5	54.0	28.5	-11.0
	Q3	18.3	60.1	21.6	-3.2
Source: IPA Bellwether Report, October 2003

Whilst the overall revisions remain negative, expenditure to the internet, direct marketing and sales promotion are all on the up. The proportion of advertisers allocating more than 10% of their budgets to online has risen from 4% to 7%.

“The ongoing growth rate for internet-related marketing is fantastic… The internet now accounts for almost 10% of total media consumption in the UK and there is considered room for further rises,” says the IPA’s ecommerce consultant Nigel Gwilliam.

Revisions To Current Marketing Budgets, By Sector, Q3 2003
	Net Balance Of Responses (%)
ÂÂ	Q1 2003	Q2 2003	Q3 2003
Total marketing	-2.2	-11.0	-3.2
Media adspend	-6.9	-13.4	-3.4
Sales promotion	-1.9	-9.9	2.7
Direct marketing	1.6	-4.0	5.7
All other marketing	-1.7	-8.7	-7.8
of which internet	18.3	5.8	13.5
Source: IPA Bellwether Report, October 2003

Media budgets Media advertising expenditure has been revised down, on average, for the last eleven quarters, according to the Bellwether. However, the net balance for Q3 2003 was just -3.4%, the lowest decline since Q2 2002. This leads to the IPA’s assessment of ‘reduced pessimism’ and concurs with recent market commentary indicating a slow improvement in advertising conditions (see INSIGHTanalysis: Media Healthcheck – September 2003).

“This Q3 report is in line with other cautiously optimistic industry forecasts and suggests that we will see firm signs of a recovery in marketing and advertising expenditures as we move into the new year,” says author Chris Williamson.

The report says that weak sales have led to cuts to total budgets or shifts in allocation of spend to others forms of marketing, notably direct marketing.

Revisions To Current Media Budgets
ÂÂ	ÂÂ	ÂÂ	ÂÂ	ÂÂ	ÂÂ
ÂÂ	ÂÂ	% Up	% Same	% Down	Net Balance (+/- % points)
2002	Q1	17.6	62.0	20.4	-2.8
ÂÂ	Q2	17.0	64.1	19.0	-2.0
ÂÂ	Q3	13.8	62.1	24.1	-10.3
ÂÂ	Q4	11.0	65.2	23.9	-12.9
2003	Q1	12.3	68.5	19.2	-6.9
	Q2	14.4	57.8	27.8	-13.4
	Q3	16.1	64.4	19.5	-3.4
Source: IPA Bellwether Report, October 2003

* The figures in the Q2 2003 Bellwether have been revised slightly since its original publication. This is to incorporate late survey submissions from a number of key companies. The new, updated figures are shown in the tables in this report.