Q2 Bellwether reveals marketing budgets cut at fastest rate since 9/11
The Q2 2008 Bellwether Report, the quarterly survey of marketing spend, published today (14th July 2008), reveals that current budgets have been revised down for the third consecutive quarter and to the greatest extent since the 9/11 terrorist attacks in late 2001 caused business confidence to plummet.
The report cites disappointing sales, rising costs and growing economic gloom as the reason for companies cutting marketing budgets. It also forecasts the likelihood of further cuts later in the year brought on by the low levels of corporate profitability compared to a year ago.
All sectors of marketing saw budget cuts with the exception of the internet. However this saw the smallest upward revision since 2003. Main media budgets saw the sharpest downgrades, particularly in traditional media (TV, press, outdoor, radio, cinema) with budgets dropping at the fastest rate since Q1 2006. This was followed by ‘all other’ marketing (for example PR, events, research), with downward budget revisions indicating that growth will be the weakest here for at least five years.
Direct marketing budgets were revised down to the greatest extent in survey history, and have now seen the longest period of sustained budget trimming of all categories, reflecting cost savings by converting campaigns from post to email. Although sales promotion again saw the biggest decline for two years it was the smallest of all categories suggesting the need to sustain price discounts as a way to drive sales growth.
Chris Williamson, Bellwether Report author, Chief Economist, Markit:
"Rising costs and weaker-than-expected sales put pressure on companies to cut marketing budgets in the second quarter to protect profit margins. This raises the possibility that marketing spend could fall this year for the first time since the survey began in 2000. Even internet marketing was not immune, seeing the smallest increase in spend for five years."
Moray MacLennan, IPA President, Chairman Europe M&C Saatchi: “The report certainly reflects the increasing gloom of the past few weeks. There is a clear implication that the economy will slow further. Agencies cannot affect the short term economic outlook, but they can do at least two things; firstly, focus even more closely on cost control and secondly, strive for even more original and innovative solutions so they can buck the trend."
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 firstname.lastname@example.org
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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).