Downward Revision to Marketing Budgets in UK
October 17 2002
The Q3 2002 Bellwether Report, the quarterly survey of marketing budgets in the UK, published this week by NTC Research on behalf of the Institute of Practitioners in Advertising (IPA), shows that clients have revised their marketing expenditure downwards, although not as severely as in the third quarter of 2001.
The Q3 report that focuses on revisions to current budgets reveals that:
- The IPA Bellwether Report has seen substantial downward revisions to budgets every third quarter since it began three years ago.
- Total marketing budgets were revised down in Q3, although, the extent of the downward revisions were less than seen at the same time last year. The cuts in budgeted spend were blamed on falling sales, deteriorating profits and an increased uncertainly with regard to the economic climate both at home and abroad.
- Media advertising budgets were revised down on average in Q3 although the scale of the revision was less than same time a year ago. Weak sales and economic uncertainty were both cited as key factors restraining adspend growth.
- Direct marketing and Internet-related marketing spend were revised up in Q3, although only marginally.
- Internet related marketing spend, although revised up, fell as a proportion of total marketing spend with those companies allocating no marketing spend to Internet-related activities rising to a six quarter survey high of 29% in Q3. Also a simultaneous survey low was seen in the proportion of companies allocating in excess of 20% to Internet related activities, which dipped to just 0.5%.
- Sales promotion budgets were revised down again in Q3 after having been revised up for the first time in six quarters in Q2 2002. The decrease reflects a cut in overall budgets rather than a shift to other marketing media.
- All 'other marketing' budgets (that include PR, conferences, sponsorship, corporate hospitality, entertainment, and e-commerce) were revised down in Q3 after having been revised up for the first time in 2 years during Q2 2002. In the majority of cases the downward revision reflects cost cutting in the face of weak sales.
According to Bruce Haines, Group Chairman of Leo Burnett and IPA President: 'These figures do suggest that the industry still has a way to go; however we have seen from previous Bellwether Reports that Q3 is traditionally a time when many marketers revise their budgets down. Still, uncertainty both at home and abroad are key factors for the current business sentiment expressed in this report. The evolving situation with Iraq and the state of some euro-zone markets will play largely into the business decisions of many UK marketers both this quarter and next. Good news however, is that television has seen growth for a consecutive 5 months and BACC figures show that on last year we are up 24% in the number of television commercials created, which has certainly got to be a positive sign for the industry.'
Chris Williamson of NTC Research and author of the report added 'The Q3 Bellwether report shows that the worse is not necessarily over for the UK adverting industry. The downward revision to Q3 budgets contrasts with upward revisions during the first half of the year. However, some comfort can be taken from the fact that Q3 appears to be a popular time to adjust budgets and the latest cuts were less steep than seen in the third quarters of previous two years.'
All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
