UK Marketing Budgets Still Show Caution

UK marketing budgets were revised down again in Q1 2011 in response to public sector spending cuts and rapidly rising cost pressures, according to the latest Bellwether survey published by ad association the IPA.

Results are based on a survey of marketing execs in nearly 300 UK-based companies representing 'a broad variety of advertisers'.

The IPA and sponsoring accountancy firm BDO released the results today. BDO's Head of Media Andy Viner says the reduction, for the second successive quarter after a brief show of confidence in Q3 2010, 'supports anecdotal evidence that companies are taking a cautious approach to marketing expenditure against a backdrop of continuing economic uncertainty, subdued business confidence, cash flow pressures and mixed fiscal indicators in recent weeks', but adds that 'The outlook for 2011 looks a lot more positive' with planned increases in budget to help firms grow as they emerge from the downturn.

In all, 25% of companies reported a downward revision against 20% reporting an increase, for a net balance of -5.1%. However, budgets were downgraded by less in Q1 than they were throughout 2009 and much of 2008, and budgets for the new accounting year have also been set higher than the level spent in 2010.

While respondents' confidence in their own industries also hit a two-year low, they are slightly more optimistic about their own firms' financial prospects (net +12.8%, up from 10.8% in Q4 2010).

Main media budgets, driven by Internet spending, were revised upwards, with companies mostly planning to increase their media spend versus 2010 levels. The greatest reduction is in the 'All other' category which is heavily influenced by PR and events budgets, 'tho it also includes market research. Direct marketing spend was also revised down - the first time this has happened in eighteen months.

Steve Williams, IPA Media Futures Group Chairman and Chief Executive, says the findings back the idea of 'cautious optimism in the media markets, and comments: 'This quarter's report shows marginal growth for 'Media', but growth nonetheless which, in the context of an unsettled economy, is a positive sign. In association with 'Internet' and 'Search' showing strong growth signs, advertisers appear to be committed to spending in marketing channels that will drive a positive and identifiable return on their investment.'

Web site: www.ipa.co.uk .

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