Q2 2007 Bellwether: Marketing Budgets Revised Up
The latest Bellwether report, for Q2 2007, shows that ad budgets are growing at their fastest rate for seven years.
Marketing budgets were revised up for the second successive quarter, with one in five companies reporting upward revisions.
The internet again saw by far the strongest gain in Q2, now accounting for an estimated 6% of all marketing spend, the highest proportion yet recorded by Bellwether.
In Q2, 24% of companies reported increased total marketing budgets while 15% reported a decrease – net balance of 8.6% – the highest since Q1 2004.
The report said that the strong increase in main media spend (a net balance of 6.2%) reflected new product launches, higher internet spend, robust sales revenues and rising profits.
‘All other’ marketing (‘below-the-line’ activities such as PR, event sponsorship, mobile phone) saw the fastest growth of all categories in 2006.
Upward revisions to direct marketing budgets were reported by 18% of companies while 12% reported budget reductions.
By sector, increases to budgets were most widely reported by service providers (especially IT, computing, travel and entertainment companies), and retailers. Budget trimming was most widely reported in the industrial and utilities sectors.
| Revisions To Current Marketing Budgets, By Sector, Q2 2007 | |||||
| Q2 2006 | Q3 2006 | Q4 2006 | Q1 2007 | Q2 2007 | |
| Total marketing | -1.6 | 2.6 | -0.7 | 7.7 | 8.6 |
| Media adspend | -7.5 | -1.1 | -2.9 | 2.5 | 6.2 |
| Sales promotion | -7.5 | 0 | -5 | 0 | 3.9 |
| Direct marketing | 0.9 | 10.1 | 4.1 | 0.6 | 5.9 |
| All other marketing | -5 | 2.4 | -2.9 | 2.5 | 2.3 |
| of which internet | 24.4 | 24.1 | 31.5 | 19.3 | 21.8 |
| Source: IPA Bellwether Report, July 2007 | |||||
Sir Martin Sorrell, chief executive, WPP, said: “Yet again, the Q2 2007 Bellwether report mirrors our experience in the UK. Our business in the UK has improved in the second quarter across the board. However, internet, direct and public relations remain the fastest growth categories along with media investment management. All very encouraging in a UK context, but not so in comparison to the other geographic markets. The UK remains the laggard, with growth in China, India and Russia leading the way.”
Robert Lerwill, CEO, Aegis group: “The new IPA report points at a growing confidence among businesses in general – which is translating into marketing spend. This draws a parallel with our own experience, not just in the UK, but outside as well. With non-traditional activities gaining ground, it’s interesting to see that below-the-line has been the fastest growing segment in the past quarter.
“Here, we believe that mobile and word-of-mouth are two particularly interesting areas to watch. Online, as expected, is still surging ahead at an impressive rate. However, the strength of main media marketing spend shows that so-called ‘traditional’ media is a long way from becoming obsolete.”
However, Anthony Wreford, president and CEO Europe, DAS, said: “Whilst the rest of the trends are all encouraging, fieldwork would have been conducted before the most recent terrorist scares and the memories of two years ago, when many clients cut budgets after the July 7 attacks, are still fresh. Nevertheless, an encouraging set of results for the industry across all disciplines.”
A recent forecast from GroupM predicted that UK adspend will grow 2.6% this year, totalling £26 billion.
Meanwhile, a report from eMarketer forecast that Britain is set to account for over half of all online ad spending in Western Europe, rising to a 52.6% market share in 2010.
IPA: 020 7235 7020 www.ipa.co.uk