Marketing Recovery Sluggish, Says Bellwether

The latest IPA/BDO Bellwether survey, published today, gives very little cheer. UK marketing budgets were revised down in the fourth quarter and there is uncertainty about an end to the recession. Mind you, we're not sure it tells us much about the prospects for market research.

Researched and published by Markit Economics on behalf of the IPA and sponsored by accountants BDO LLP, the report is based on responses from a panel of around 300 UK marketing professionals.

After a marginal rise in the index of 0.5% in quarter three, 22% of companies reported a downward revision in Q4 and only 17% an increase - as a result the net balance fell to -5.4%.

Respondent also gave generally negative views of the financial prospects of both their own companies and their sectors: confidence in the former dipped to the lowest in six quarters and the latter deteriorated for the first time since Q2 2009.

On the bright side although the Q4 figures were the worst in 2010, they were still better than those for most of 2008 and 2009. Furthermore, provisional survey data seems to indicate that 2011 budgets have been set higher than 2010 spend. Internet advertising - generally the most resilient sector - saw a modest upward revision but at the smallest rate in six quarters. Direct marketing budgets were revised up but at a slower rate than the last quarter. Sectors where budgets fell were main media, sales promotion and 'all other' (below-the-line such as PR, events and including market research) with main media propping up the table.

Rory Sutherland, IPA President and Vice-Chairman of Ogilvy Group UK says: 'That these latest figures reveal a decline in confidence is disappointing, but characteristic of the uncertain climate we find ourselves in. At least we can draw comfort from those companies which reported an increase in spending in the last quarter of the year, and from indications that initial budget setting for 2011 is currently higher than actual 2010 spend.'

Says Andy Viner, Head of Media, BDO LLP: 'The continuing economic uncertainty saw companies revise down their marketing budgets in Q4 at the strongest rate over the whole year in an attempt to preserve profitability and margins. However the outlook for 2011 has started positively as budget setting for this year looks set to be higher than actual spend for 2010 with particular strengths in Internet and direct marketing. We expect corporates to keep their marketing spend both flexible and cautious as they keep a sharp eye on consumer behaviour and wider economic indicators... unsurprising given the backdrop of continued public spending cuts and the threat of rising interest rates.'

Web site: www.ipa.co.uk .

Editor's note: It's difficult to gauge the state of the market research sector, specifically, from a survey which lumps it in with an 'other' category - and there are some signs that MR is showing its old resilience after the initial shocks of 2009. Research recruitment activity has started the year with a bang, with more than a hundred jobs posted on MrWeb on Friday - one of the half dozen busiest days ever - see www.mrweb.com/jobs .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.