Marketing budgets at UK companies were cut for the ninth quarter running at the end of 2009, but the rate of decline was the slowest for two years as marketers switched their budgets to the web, according to a new report.
The latest Bellwether Report, released by the Institute of Practitioners in Advertising (IPA) and accountancy group BDO, also found that companies were at their most optimistic for five years. The report said 25 per cent of companies reported a fall in total spending, while 18 per cent reported an increase. The balance of -7 is a marked improvement from the -15 the previous quarter and was “the highest since the first quarter of 2008, and well above the record lows seen in late 2008 and early 2009”.
The survey further suggests that the UK emerged from the recession in the final quarter of last year.
In terms of internet advertising trends, budgets were revised up for the second quarter running. Direct marketing budgets were revised up for the first time since Q2 2007.
This was driven by companies increasing their budgets for internet advertising, which were revised up for the second consecutive quarter.
The balance of companies upping their internet-search advertising budgets was up 11.5 per cent, with other internet advertising up 10.4 per cent. Direct-marketing budgets were also up for the first time since the second quarter of 2007.
Marketing spend was revised down across sales promotion, ‘all other’ (below-the-line such as PR, events), and main media but at a slower rate than the previous quarter. Although main media saw the sharpest reduction it was the least marked for seven quarters.
The survey found sentiment was also improving as companies were the most upbeat about the financial outlook for their industries “since the question was first asked in the second quarter of 2005”. Of those polled, 35 per cent were more optimistic, compared with 22 per cent that were less upbeat.
Rory Sutherland, IPA President, Vice-Chairman, Ogilvy Group UK, said: “These findings are welcome, in that they show that the picture painted by the last Bellwether Report was not a false dawn. This latest report also seems to bring particularly good news for direct and digital marketing activities, which seem to be leading the recovery.”
Andy Viner, head of media at BDO, added: “Confidence is returning, with companies being upbeat about their own sectors and their corporate performance. Marketing budgets in 2010 are now set to grow, with companies re-thinking their budget allocation. For example, the spend in areas such as online advertising are due to increase significantly.”
Chris Williamson, chief economist at Markit and author of the report, said: “With budgets being set higher for next year as confidence among marketing executives about financial prospects continued to improve, the Bellwether adds further confirmation that the UK economy has pulled out of recession.”
He added: “Companies clearly remain cautious about increasing spending in an uncertain economic environment, however, as the setting of marketing budgets remains far less buoyant than prior to the financial crisis.”