The latest IPA/BDO Bellwether survey published today (12th July 2010) reveals that marketing budgets were revised down in Q2 amid uncertainty regarding the economic outlook, with around 20% of companies reporting a downward revision against 15% that reported an increase. Business confidence has also dipped with positive sentiment the lowest for a year. However the rate of budget trimming was much slower than at the height of the downturn
Whilst marketing spend is still set to increase for 2010, it is unlikely to rise at the pace expected at the start of the year, and the latest findings suggest the UK economy is now entering a phase of slower growth.
By sector main media budgets were revised down in Q2 contrasting with a modest upgrade seen in Q1. Current year ‘all other’ (below-the-line such as PR, events) and sales promotion budgets were also revised down with the latter the fastest in over 12 months. The only two categories to see upward adjustments were direct marketing and the internet, (yet the rate of growth for internet-related budgets was the slowest for three quarters, and within this paid search rose at a slower rate than Q1).
Q2 marks the tenth anniversary of the Bellwether Report, for more on this, including accessing a special supplement by leading industry contributors click here.
Says Rory Sutherland, IPA President, Vice-Chairman, Ogilvy Group UK: “That we are seeing a more cautious approach to marketing spend compared to Q1 is not surprising due to the uncertain nature of our economy at the moment, and in the wake of the recent budget. However though this indicates a less optimistic picture than previously thought for this year, marketing spend is still set to increase.”
Says Andy Viner, Head of Media, BDO LLP: “The second quarter BDO/IPA Bellwether Report reveals a cautious and uncertain picture. After a strong rebound in Q1, optimism and confidence appear to be waning, resulting in a slight downward revision to the rate of growth in marketing budgets compared to the start of the year. It is clear that there are increasing signs that uncertainty over economic prospects continue and that corporates remain focussed on cost control against a backdrop of the risk of a double dip. On a more positive note, certain areas of marketing spend such as internet advertising continue to grow, driven largely by technological factors such as the expansion in social media together with the desire of advertisers for increased measurability and accountability, and a lower cost of investment.”
The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. First published on the 17th July 2000, it features original data drawn from a panel of around 300 UK marketing professionals and provides a key indicator of the health of the economy. The 16-page 12th July 2010 tenth anniversary edition is available to purchase here and now for £99+VAT (IPA Members) and £140+VAT (non Members) as an immediately downloadable PDF. To sign up for an annual subscription, please contact dan.evans@markit.com . Historical data is available on request to economics@markit.com
BDO LLP is a sponsor of the report. A UK member firm of BDO International, it is the world’s fifth largest accountancy network, with 1,138 offices in 115 countries.
What do you think of the latest findings? Have your say by emailing danielle@ipa.co.uk
Says Steve Williams, IPA Media Futures Group Chairman and Chief Executive, OMD Group: “Whilst this Q2 report suggests a slight downward revision to ‘Media’ spend, it must be viewed in tandem with a very positive ‘Internet’ spending assessment. Marketing budgets are deployed holistically — online and offline — and the complete picture continues to look strong year-on-year. All signs point to very positive marketing spend growth in 2010, vs 2009.”
Says Pete Robins, Managing Partner, Agenda 21 and member of the IPA Digital Media Group: “Against a backdrop of caution in marketing expenditure, it’s still not that unsurprising to see internet related investment looking comparatively better than some of the other channels. The ability to control financial risk, particularly in paid search, the ongoing improvement in the ability to see quite detailed performance across the various digital media channels, and the growing interest in social media potential are probably the main reasons driving this.”
Says Mark Fagan, IPA Search Chairman, Digital Media Director, Golley Slater: "The latest results from BDO/IPA Bellwether show growth for Search was slower in Q2, which is no surprise when looking at the overall marketing picture and in light of the election, the recent budget and some uncertainty over the economy. Its still very positive for the Search sector, which is on course to gain market share for 2010, illustrating the hunger for an ever-diversifying discipline that continues to deliver results for advertisers."
Says Chris Whitson, IPA DM Group Chairman and Planning Partner at Stephens Francis Whitson:“Whilst it is disappointing to see the overall figures showing a downward revision, it is understandable given sentiment around business confidence. It is a great acknowledgement of the perceived strength of direct marketing to deliver return when times are tough. Although the figures are only marginal it certainly demonstrates that direct marketing is a key part of the marketing director’s armoury and will continue to be so. Many commentators have suggested that now more than ever is the time to focus on the customer and the real power of direct marketing to build and strengthen those key relationships should, hopefully, see it escape any downward revisions over the next few quarters.”