Bellwether: Marketing Spend Drops

In the UK, total marketing spend has declined for the third successive quarter, according to the latest Institute of Practitioners in Advertising's (IPA) Bellwether Report.

During the period, around 22% of the 300 firms interviewed reported a drop in total budget from three months ago, compared with the 20% who said their budgets had increased.

At the start of the year, 2011 budgets were set higher (compared to 2010 actual spend on average) than those in the past three years. However, given the recent downward quarterly revisions in spend; the report suggests that the year's forecast will not be met if companies continue to trim their budgets in the second half of the year.

Nicola Mendelsohn (pictured), IPA President, comments: 'The decline in confidence doesn't augur well, but is not surprising amidst a continuing climate of concern surrounding the financial and political outlook both at home and internationally.'

When it came to having confidence in their own companies, a third (31%) of respondents said they felt more optimistic, compared with the 28% who reported a weakening of confidence. While optimists exceeded pessimists for the ninth quarter running, the degree of optimism was the lowest in that sequence.

In addition, some 33% of Bellwether companies reported that the financial prospects facing their industries had deteriorated compared to three months ago, compared with 22% who grew more optimistic during Q2.

Chris Williamson, Chief Economist at Markit and author of the Bellwether, said that the Q2 Bellwether paints a 'disappointing picture'.

He added: 'Marketing budgets were trimmed for a third quarter running as companies sought to cut costs in the face of weak demand and lower than anticipated sales revenues. Given the close relationship between marketing spend and the country's overall health, the latest Bellwether findings suggest that economic growth remained subdued in the second quarter.'

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