Improvement for 2003 Seen by Bellwether
January 22 2003
The Q4 2002 Bellwether Report, the quarterly survey of marketing budgets in the UK, published this week by NTC Research on behalf of the IPA, shows marketing budgets were revised down in Q4 2002 for the second consecutive quarter. However the extent of the downward revision was less than seen in the same period a year ago.
The survey also forecasts stronger growth for the 2003 calendar year with twice as many companies reporting an increase in budgeted spend than reporting a decrease.
The quarterly report, which looks at advertisers' new budget setting, current budget revisions and actual marketing spend, reveals that:
- Total current marketing budgets were revised down on average in Q4 2002 for the second consecutive quarter, however, this revision was less steep than the one reported in Q3 and also less steep than the decline record in the same period one year ago.
- Of those setting new budgets for 2003 in Q4, twice as many companies set budgets higher than reported a decrease. This improvement in total marketing spend signalled was the strongest since Q4 2000.
The Q4 2002 report which also features a break down of marketing spend in 2002 shows direct marketing and sales promotion were the only two disciplines to increase their share in Q4. DM is up from 26% to 27% and sales promotion 15% to 16%. Media adspend which still accounts for the largest share, 33%, fell from 35% in 2001 and 'all other' marketing activities (which includes PR, sponsorship and other similar activities) lost share from 24% to 23%.
Current media advertising budgets were revised down on average in Q4 2002 with 1 in 4 advertisers revising their budgets down and just 1 in 10 reporting upward revisions. Just 1 in 3 companies increased their media adspend budgets for 2003 compared with actual spend in 2002. Companies reported a drop in media advertising spend on average in 2001 compared to spend in 2000.
Just 14% of companies reported upward revisions to current sales promotion budgets while 15% reported downwards revisions. Sales promotion budgets for 2003 were set higher than spend in 2002 by slightly more companies than reported a reduction.
Current direct marketing budgets were revised up on average for the fifth quarter running in Q4, with the increase markedly higher than that signalled in Q3. Budgeted DM spend for 2003 is to increase on 2002 spend with three times as many companies reporting an increase as reporting a cut.
Current budgets for 'all other' marketing activities which includes disciplines such as: conferences, sponsorship, PR, corporate hospitality, entertainment and e-commerce, were revised down on average for the second successive quarter during Q4 2002. The survey shows net increases in budgets for 2003 compared with actual spend in 2002 with just over 1 in 3 firms reporting an increase in spend while just over 1 in 5 reported a decrease. The resulting net increase was the largest recorded since Q4 2000.
The proportion of all companies allocating no marketing spend to Internet-related activities fell from the six-quarter survey high of 29% in Q3 to 27% in Q4. The proportion of companies allocating less than 1% to Internet related marketing also fell, down from 69% in Q3 to 62%. Meanwhile the proportion of all companies surveyed that allocated over 5% of their total budget to Internet activities rose from 10% in Q3 to 15%. The overall implication of a shift in spend towards Internet marketing activities was supported by an upward revision to current Internet budgets.
According to Bruce Haines, Group CEO Leo Burnett and IPA President: 'Continued economic uncertainty both at home and abroad together with disappointing consumer spending in Q4 has led many to cut their marketing budgets in an effort to reduce costs. This being said, new budget setting for 2003 signals some positive growth with over half of those surveyed increasing their marketing budgets in 2003 on 2003 in real terms.'
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
