16/07/2007Marketing growth accelerates in Q2 as strong budget setting continues

The internet again saw by far the strongest gain in Q2, now accounting for an estimated 6% of all marketing spend, the highest proportion yet recorded by Bellwether.  Over one-in-five companies now allocate at least 10% of their total marketing spend to the internet.

Direct marketing budgets saw the largest upward revision for almost a year in Q2, being exceeded only by main media advertising and within this the internet.

Highlights of the Q2 2007 report include:
• In Q2, 24% of companies reported increased total marketing budgets while 15% reported a decrease, so a net balance of 8.6%; the highest since Q1 2004.
• The strong increase in main media spend (a net balance of 6.2%) reflected new product launches, higher internet spend, robust sales revenues and rising prof-its. 
• Internet marketing budgets out performed all other sectors, with a net balance of 21.8% of companies reporting an increase. 

Chris Williamson, Bellwether Report author, NTC Economics: " Marketing spend is clearly rising sharply, with growth in the second quarter boosted by a buoyant economy and strong profits growth, particularly in the service sector, where profitability is currently rising at the highest rate on record. There are certainly no signs from this survey that recent Bank of England base rate hikes have had an impact on business confidence. Importantly, increasing numbers of companies are investing in main media advertising to build brands and develop new products, which was reflected in the strongest upward revision to main media advertising budgets for seven years." 

Sir Martin Sorrell, Chief Executive, WPP: “'Yet again, the Q2 2007 Bellwether report mirrors our experience in the UK.  Our business in the UK has improved in the second quarter across the board.  However, internet, direct and public relations remain the fastest growth categories along with media investment management.  All very encouraging in a UK context, but not so in comparison to the other geographic markets.  The UK remains the laggard, with growth in China, India and Russia leading the way.”

Moray MacLennan, IPA President, Chairman Europe M&C Saatchi: "The second quarter Bellwether Report is certainly encouraging. All sectors are seeing a further strengthening of marketing spend, with growth at its highest in three years. Despite the recent rise in interest rates and widespread concerns of the effect this may have on business confidence, the report is predicting a healthy second half of 2007."

Bellwether costs £500 per annum (£375 for IPA members) for the report, £650 per annum for the data (£487 for IPA members) and £1000 per annum for both the report and data (£750 for IPA members).