Market Recovery Continuing For UK Advertisers
The Q2 2004 Bellwether Report has revealed continuing buoyancy in the marketing sector with final data for 2003 showing the steepest rise in marketing spend since the survey began, along with improved confidence amongst top marketing executives.
The report, a quarterly survey of marketing budgets, is published today by NTC Research on behalf of the Institute of Practitioners in Advertising. According to the report, media budgets were revised up for the second consecutive quarter, with 19% of companies reporting an increase compared to 17% reporting a decrease.
The results are drawn from a panel of over 250 UK marketing professionals and act as a barometer of the relative health of the industry.
The report is quick to state that, although the net increase in budgets was modest, it represents the largest rise since the survey’s creation in 2000, and can be attributed to strong sales within the FMCG, retail, and IT sectors.
Internet advertising budgets in particular were singled out for praise, increasing for the ninth quarter in a row. The report states that the growth rate of internet-related marketing spend in Q2 was well above that of other marketing activities, with a quarter of all companies reporting upward revisions to budgets. However, the report also found that, despite the consistent upward trend, internet marketing spend accounts for less than 3% of total marketing expenditure.
Direct marketing too saw an increase in spend, climbing for the fourth consecutive quarter. 35% of panel members reported an increase in direct marketing budgets, and although the revision is smaller than that of previous quarters, it can be attributed to a shift in spend back to main media by those who previously shifted to direct marketing.
Commenting on the report Sir Martin Sorrell, chief executive of WPP Group said: “In a way the Bellwether Report findings are not surprising. Growth in corporate profitability, operating margins and liquidity is strong – perhaps the strongest for 20 years. The really encouraging signal is the switch to brand building through media, direct and internet related marketing. Perhaps brands are becoming more important, thankfully.”
He added: “I guess where we differ from the Bellwether Report, at WPP, is that the UK remains a relatively difficult market, along with France and Germany and public relations and public affairs have shown some recent resilience.”
IPA president and chief executive of WCRS, Stephen Woodford, stated that the findings were positive, hinting at sustained growth for the UK market. He said: “The Q2 Bellwether report seems to support the findings of the recent AA survey which suggests that there will be a consistent and sustained recovery period. And so it seems that the real challenge which is facing the advertising business is to increase income and agency fortunes in line with this period of increased confidence.”
The latest Bellwether report adds weight to a consensus of recent forecasts compiled by MediaTel INSIGHT, which suggests that UK advertising expenditure will increase by 3.9% in 2004 and by 4.9% in 2005.
IPA: 020 7235 7020 www.ipa.co.uk
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