Advertising Spending Forecasts for the UK
January 30 2002
The 4Q 2001 Bellwether Report, the quarterly survey of client spending intentions recently published by NTC Research on behalf of the IPA, shows a further easing in the rate of economic growth. There were further downward revisions to fourth quarter 2001 budgets and the weakest rise in budget setting in the survey's two-year history. (for US ad spending figures, see yesterday's DRNO).
In the fourth quarter reporting period, the major findings were:
- 1 in 3 companies revised their 4Q marketing budget down in response to pressures on profits from weaker than expected sales.
- 1 in 5 companies revised their 4Q marketing budgets up, but only in the direct marketing category, which saw an increase for the 5th consecutive quarter.
In new budget setting, nearly twice as many companies setting new marketing budgets for 2002 reported an increase in spend on 2001 levels, than reported a decrease.
Trends in both new budget setting and revisions to current budgets were mixed by sector. Retail and consumer oriented sectors (FMCG and durables) reported the strongest growth of budgeted spend for 2002 and the least downward revisions to current budgets. The worst performing sectors were financial services, travel/transport, and entertainment/media sectors.
For 2002, 1 in 3 companies reported a rise in media adspend, an improvement on third quarter reporting. Figures for spend in the sales promotion sector were also revised up, but less than in the third quarter. However, spend on Internet-related marketing activities, which in some companies includes all e-commerce projects, fell on average. 14% of companies reported an upward revision, whereas 15% of companies reported a downward revision in the fourth quarter. This suggests reduced investment in Internet and e-commerce activities over 2002. There was a small rise in spend for 'all other' marketing activities for 2002.
The survey was carried out between 7th December and 3rd January with half the panel reported new budget setting for 2002 in this quarter.
According to IPA President, Bruce Haines, 'These figures continue to show some tactical changes to the media mix brought about by the economy and a possible reflection of end of year revisions. Although media adspend has made a slight recovery from the third quarter, we are still seeing a shift towards direct marketing, and to a lesser extent, sales promotion. The market place is cautious. But, we believe, optimistic. And there are some sectors, such as retail, that are holding up very well, as Christmas sales in the high street testify.'
Chris Williamson of NTC Research and author of the report added, 'There is clearly much uncertainly with regard to business prospects, and advertisers are playing a waiting game. However, the fourth quarter survey suggests very little deterioration in the outlook for marketing spend since the third quarter survey, and the easing in the rate at which media adspend budgets are being trimmed provides promising evidence that we may at the bottom of the cycle.'
All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
