The Bellwether report, issued today by the IPA, has dampened hopes for a recovery with one in four of the UK’s leading companies revising their budgets downwards during the final quarter of 2003.
According to the report, total current marketing budgets were revised down for the second consecutive quarter. However, the drop was not as steep as that reported in the third quarter of 2002 and was also less pronounced than that recorded in the fourth quarter of 2001.
The report also suggests that the industry may be turning a corner, as the number of companies said to be increasing their budgets outnumbered those reporting a reduction by two to one. This improvement in total marketing spend is the strongest since the fourth quarter of 2000.
Commenting on the findings, Bruce Haines, president of the IPA and group chairman of Leo Burnett, said: “Continued economic uncertainty both at home and abroad together with disappointing consumer spending in the fourth quarter has led many to cut their marketing budgets in an effort to reduce costs. This being said, new budget setting for 2003 signals some positive growth with over half of those surveyed increasing their marketing budgets in 2003 on 2003 in real terms.”
Direct marketing and sales promotions were the only two disciplines to increase their share in the fourth quarter. Direct marketing extended its share by 1% from the previous quarter to 27%, while sales promotion was up 1% to 16%.
Media adspend, which still accounts for the largest proportion of marketing budgets, saw its share fall from 35% in 2001 to 33%, while other marketing activities, which includes PR and sponsorship, slipped 1% to 23%.
