After strong year for marketing in 2004, Q1 2005 Bellwether Report signals slower growth period ahead
The Q1 2005 Bellwether Report, the quarterly survey of marketing budgets, published today (19th April 2005) by NTC Research on behalf of the IPA, showed that current marketing budgets were revised up for the sixth consecutive quarter but that growth was not as strong as seen in previous quarters.
Similarly figures for budget setting were less buoyant than recorded in previous surveys and is the weakest for three years for this quarter. The less buoyant outlook is due to growth of budgets being scaled back in line with a squeeze on profit margins caused by sluggish sales and high costs. This slower growth was also attributed to the persistence of high oil prices putting pressure on industrial and travel sectors in particular.
As has been the case in previous quarters, direct marketing and internet show the strongest signs of growth for the coming year. Current budgets for direct marketing and internet were revised up in Q1, whereas current budgets for main media advertising, sales promotion and ‘all other’ were revised down. In particular, those companies setting new budgets in Q1 reported that media advertising and sales promotion spend were set lower than actual spend in 2004.
The Bellwether report contains detailed analysis of the UK’s marketing economy, based on a survey of 250 companies, representing all key business sectors.
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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).
Said Bellwether Report author Chris Williamson of NTC research:
“The Q1 Bellwether suggests a moderation in the rate of growth of marketing spend for the year ahead compared to the particularly buoyant picture seen late last year, though total spend for 2005 remains set to exceed that of 2004. However, we may yet see companies revise down their marketing spend for the year, particularly for higher-cost media activities, if oil prices remain high and economic growth in key markets such as the euro area remains lacklustre.”
Said Stephen Woodford, IPA President and CEO, WCRS:
“Media budgets are the most sensitive barometer of marketing people’s views on consumer confidence. Uncertainty about consumer spending, higher interest rates and the housing market slow-down may be causing some companies and sectors to be more cautious about the coming year, until they can see the lie of the land. The slight dip we are seeing in this quarter’s report should therefore be viewed as a minor course correction or a pause for breath in what is essentially a period of sustained growth for the industry.”
Said Sir Martin Sorrell, Chief Executive, WPP:
“Again, the IPA Bellwether Report shows continued growth in advertising and marketing services spending in the UK, although at a slightly slower rate. In addition, the report clearly shows that marketing services, such as direct and internet, are growing faster than traditional media. Clearly, clients are looking for new media and technology alternatives.”
Rupert Howell, Chairman, McCann Erickson:
“Consumer confidence is fragile, as is most of the High Street, with the notable exception of Tesco. It is not therefore surprising to see some caution reflected in these findings. Once the election is over, we'll get a clearer picture of how the year will pan out - but we remain optimistic.”
Jim Marshall, Chairman IPA Media Futures Group and Chairman, Starcom UK Group said
: “The underlying trend is still largely positive but there is a clear slowing down in the rate of growth and the market is still subject to short-term fluctuations. What this also reflects is the importance of achieving and demonstrating payback on advertising investment, which would suggest why direct marketing and internet continue to be more buoyant.”
Said John Owen, Chairman IPA Digital Marketing Group and Planning Partner, Dare:
“These figures support the recently released IAB Price Waterhouse audit that puts online’s share of ad spend at around 4%. It's not so long ago that 2% was our goal. This is yet another important watershed in the ongoing success story that is online marketing.”
Said David Payne, IPA Head of Direct Marketing:
“There seems to be some caution in total budget setting this period and therefore I think that we are seeing the continuing trend towards greater short-term accountability of expenditure. The consistent buoyancy in the direct marketing sector is testament to the importance which clients are now putting on the discipline (23% of all marketing spend).”
Last updated 19/09/2008