UK Marketers More Confident but Spending No More

UK marketers are about as likely to be raising as lowering their budgets this year, and are still cautious in their own plans for the coming year, but are far more confident about general prospects for their own companies and sectors, according to the latest IPA Bellwether.

Around 22% of companies reported a rise in marketing spend in the quarter while almost the same proportion (21%) said their budgets had been cut. Those who had increased spend cited product launches, expectations of better economic conditions, and higher rates of return on investment as the reasons.

The report highlights the caution shown by companies, who plan to increase their budgets for the new accounting year (2012-13) by the smallest amount in three years.

However, during the quarter, business confidence among marketing executives in relation to their own companies' prospects bounced back to the highest level in two years, with a net balance of 19.1%, up from -12.4% in Q4. For executives' views of the industry in which they operate, the net balance surged from -44.9% in Q4, to a six-quarter high of 1% in Q1; the largest quarterly jump in the history of the report.

The report's author Chris Williamson, who is Chief Economist at Markit, says the flat spending 'perhaps reflects a more pragmatic approach to budget setting, given that initial increases in budgets were steadily revised away in the past two years, as weaker than expected sales caused firms to cut marketing costs.'

Internet advertising budgets saw the greatest upwards revision (net balance of 7.8%) and were the main contributor to the overall upgrade. Sales promotion was unchanged, while media was revised down, as was direct marketing and 'all other' (below-the-line).

On a positive note, Williamson concludes that with events such as the Olympics, Diamond Jubilee and Euro 2012 taking place in the next few months, it is likely that the year will again see an increase in marketing spend.

Web sites: www.ipa.co.uk and www.markit.com .

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