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Q2 2003 Bellwether Report shows continuing uncertainty in marketing budgets due to stodgy economic conditions

The Q2 2003 Bellwether Report, the quarterly survey of marketing budgets, published today (15th July 2003) by NTC Research on behalf of the IPA, shows marketing budgets were revised down on average for the fourth quarter running.


The Q2 2003 Bellwether Report, the quarterly survey of marketing budgets, published today (15th July 2003) by NTC Research on behalf of the IPA, shows marketing budgets were revised down on average for the fourth quarter running. This cut in budgets is the largest since Q4 2001 and is attributed to disappointing sales and revenue growth as well as weaker than expected business conditions. The increased rate of decline reverses the easing seen over the previous two quarters.

The quarterly report, reveals that all types of marketing activity covered by the survey were reported to have been revised down on average in Q2 with the sole exception of internet-related spend.

In particular:

For total marketing expenditure, only 18% of companies reported an upward revision to budgets versus 29% that reported a decrease.

Current media advertising budgets were revised down on average for the tenth consecutive quarter. The number of companies cutting budgets outnumbered those reporting a rise by two to one, thereby generating the largest downward revision since Q3 2001.

Average current sales promotion budgets were revised down for the fourth consecutive quarter, with the Q2 figures representing the biggest decline in the survey’s history. Pressure on profit margins was the most commonly cited cause of cut- backs in this sector.

Current direct marketing budgets were revised down on average for the first time since Q3 2001. The decline was generally attributed to revenue targets not being met due to weaker than expected sales.

Current budgets for ‘all other’ marketing activities were revised down on average for the fourth quarter running. Activities such as sponsorship and market research were widely reported as being cut. (‘All other’ includes PR, sponsorship, market research and e-commerce).

Internet related marketing was the only category to see an upward revision and has outperformed all other categories for five consecutive quarters. However, it should be noted that the scale of the revision was weaker than in the previous two quarters, reflecting growing concerns over sales levels and the need to cut costs. (Internet spend includes e-commerce activities such as B2B and B2C websites in addition to marketing activities such as email and online brochures.)

New budget setting is not covered by the Q2 report.

Said IPA President Stephen Woodford: “The signals around adspend recovery are mixed at best with the AA** and ZenithOptimedia* showing overall declines in real terms and Nielsen*** showing a sustained spending surge. We’ve also read that analysts are cautiously predicting better times for the economy with media shares showing significant improvements and a 24% rebound in the FTSE 100 index since March. So there’s no doubt we are experiencing volatile times. While this latest data is disappointing, it is worth highlighting the over half of all clients are expecting to keep ad spend the same this quarter, and around 20% are increasing budgets, while a third are looking at cuts. This is against a background of higher budget setting for 2003 over 2002, so budgets are at a higher base level.”

Chris Williamson, of NTC and author of the report, comments: “Marketing managers are treading cautiously. While previous reports had shown that budgets for 2003 had generally been set higher than 2002, the failure of sales and revenue growth to pick up sharply in the wake of the Iraq war has meant that this budgeted spend has already been adjusted down somewhat. Also evident from the latest survey is a continued shift in the allocation of spend away from media advertising towards activities such as direct marketing, which are cited as offering more flexibility and accountability.

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 Bellwether report please contact Markit on 01491 418 700, email .

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).


The Q3 IPA Bellwether Report will be published on 21st October 2003

Note to editors:

*Zenith Optimedia (4 July 2003) predicts a decline adspend of 2.6% in real terms.

**AA figures (June 2003) show advertising expenditure in the UK totalled £3,448 million in the first quarter of 2003. This represents a nominal increase of 1.5% compared to the same period a year earlier, but a fall of 1.5% in real terms.

***Nielsen Media Research (June 2003) reported that adspend increased by 3.8% across all media over the twelve months to April, with television leading with a rise of 8.2%.

The breakdown of marketing spend for 2002 is: media advertising 33%, direct marketing 27%, sales promotion 17% and all other 23%.

The Bellwether Report is produced for the Institute of Practitioners in Advertising (IPA) by NTC Research and published its first findings for Q1 2000. It is based on a questionnaire survey of 200 plus UK-based companies that have agreed to provide regular quarterly information on trends in their advertising and marketing activities. The survey panel, recruited from the UK's top 1000 corporations, was selected to ensure that the survey data provide an accurate indication of actual spending trends in marketing communications in the economy as a whole.

The IPA is the industry body and professional institute for UK advertising, media and marketing communications agencies and was established in 1917 as a servicing body and to negotiate on behalf of its members with media bodies, government departments and unions. The IPA’s 232 corporate members represent the major part of the advertising agency business, handling advertising with an estimated value of some £7,000 million per year (over 80 per cent of advertising placed by agencies) on behalf of many tens of thousands of their client companies and organisations nationwide. The IPA is also a founder member of CAF (Communications Agencies Federation) set up in December 2002 by the three UK agency trade bodies, the IPA (Institute of Practitioners in Advertising), the MCCA (Marketing Communication Consultants Association) and the PRCA (Public Relations Consultants Association) to provide a forum in which trade associations representing communications agencies exchange views, co-ordinate their work and manage joint projects.

For further information:

Stephen Woodford, CEO WCRS and IPA President  tel: 020 7806 5006

Chris Williamson, NTC-Research and author of the report tel: 01392 202361
 mobile 07909 915686

Issued by: IPA Press Office tel: 020 7201 8240

Last updated 19/09/2008

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