Marketing budgets in the UK were revised down in the fourth quarter of 2010 amid uncertainty around the economic recovery, according to the latest IPA/BDO Bellwether survey, which was published today.
Twenty-two percent of companies reported a downward revision compared with 17pc reporting an increase. The resulting net balance of -5.4pc was a one-year low. This follows a marginal upgrade in Q3 of 0.5pc and, according to the IPA, points to a loss of economic growth momentum in the final quarter of the year.
Business confidence was also down with marketing executives indicating that the financial prospects for their own companies dipped to the lowest in six quarters, and for the industries in which they operate deteriorating for the first time since Q2 2009.
The IPA said, however, that the Q4 downgrade, though the strongest for a year, was significantly less severe than that seen throughout 2009 and much of 2008. Furthermore, according to provisional survey data, budgets for 2011 have been set higher on average than 2010 actual spend.
Budgets were found to be revised down across main media, sales promotion and ‘all other’ (below-the-line such as PR, events), with main media the most pronounced. Internet advertising saw a modest upward revision but at the smallest rate in six quarters. Direct marketing budgets were revised up but at a slower rate than the last quarter.
“That these latest figures reveal a decline in confidence is disappointing, but characteristic of the uncertain climate we find ourselves in,” said Rory Sutherland, IPA president and vice-chairman, Ogilvy Group UK. “At least we can draw comfort from those companies which reported an increase in spending in the last quarter of the year, and from indications that initial budget setting for 2011 is currently higher than actual 2010 spend.”
“The continuing economic uncertainty saw companies revise down their marketing budgets in Q4 at the strongest rate over the whole year in an attempt to preserve profitability and margins,” said Andy Viner, head of media, BDO LLP.
“However the outlook for 2011 has started positively as budget setting for this year looks set to be higher than actual spend for 2010 with particular strengths in internet and direct marketing. We expect corporates to keep their marketing spend both flexible and cautious as they keep a sharp eye on consumer behaviour and wider economic indicators which is unsurprising given the backdrop of continued public spending cuts and the threat of rising interest rates.”