The Q1 2008 Bellwether Report, the quarterly survey of marketing spend, published today (14th April 2008), reveals that current budgets have again been revised down for the second consecutive quarter; suggesting business confidence has fallen further. Initial budget setting for the rest of 2008 has also been downgraded. Weaker than expected sales, subdued consumer spending, and ongoing concerns about the health of the UK economy have driven this cost-cutting.
‘All other’ which includes ‘below-the-line’ activities like events, PR and market research, has seen the sharpest cut to budgets, the steepest for two years. Direct marketing has seen the largest fall in eight years, and sales promotion the biggest decline for two years.
Main media budgets were unchanged in Q1, and are set to see the fastest growth in 2008, yet this has been due to the inclusion of the internet in this category which continues to rise heavily, suggesting that ‘traditional’ media (print, TV, outdoor, cinema, radio) were revised down. Within the internet, spend on search rose at a slightly faster rate than total internet.
Although total marketing expenditure is still set to rise in 2008, (almost half of all companies have set their 2008 budgets higher than their 2007 actual spend), the actual growth of spend for the year is currently well below the buoyant growth signalled by initial budget setting at the start of this year, and considerably below that seen at the start of 2007.
Chris Williamson, Bellwether Report author, NTC Economics: "The latest Bellwether highlights the dilemma that faces the Bank of England, pointing to a combination of slowing growth but rising inflationary pressures. Pressure on profit margins led to a further trimming of marketing budgets in Q1, with planned expenditure for 2008 now set to grow less than had been indicated by the survey at the end of last year. However, sales promotions are set to see the weakest growth for at least eight years, reflecting the need to withdraw discounts and offers as companies battle with rising costs."
Moray MacLennan, IPA President, Chairman Europe M&C Saatchi: “We should not be surprised perhaps, that budgets are being revised downwards in the current climate. It is however, a good moment to remind advertisers that those that maintain the strongest marketing spend will come out on top.”
The Bellwether Report contains detailed analysis of the UK’s marketing economy, based on a survey of 250 companies, representing all key business sectors. To subscribe to the report please email
bellwether@ntceconomics.com or call 01491 411 000.
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).