The Q4 2003 Bellwether Report, the quarterly survey of marketing budgets, published today (20th January 2004) by NTC Research on behalf of the IPA, shows the most optimistic outlook for advertising expenditure since the survey began in 2000.
The report’s findings build on improved third quarter figures and are attributed to a better than expected sales environment. The sharpest rises in actual spend in 2003 were recorded for direct marketing and sales promotion. Media adspend in contrast was unchanged on 2002 in real terms although it continues to account for the lion’s share of total marketing expenditure, representing 35% of spend. ‘All other’ (which includes, amongst other activities, PR and market research) is estimated to have accounted for 28% of spend, direct marketing 23% of spend and sales promotion 14% of 2003 total marketing expenditure.
Over half the 250 companies that comprise the Bellwether panel set new annual budgets in Q3 and Q4, and over half these companies reported that 2004 budgets have been set higher than actual spend in 2003. In contrast, lower budgets were reported by only one-in-five companies.
Meanwhile, upward revisions to current budgets were widely reported across all the main sectors, although only modest gains were recorded in FMCG, media and travel sectors.
Looking at the various marketing activities covered by the Bellwether:
Media advertising budgets were largely unchanged in 2003 in real terms, according to companies closing their financial years in Q3 and Q4. Meanwhile, current media budgets were left largely unchanged in Q4, representing a welcome contrast to the downward revisions to budgets that have been recorded throughout the past three years.
Looking at 2004, of those companies setting new budgets in Q3 and Q4, some 40% reported that media adspend has been set higher than actual spend in 2003, almost twice the number that reported a decline. This increase is the largest since late 2000 and reflects improved optimism in relation to sales revenues expected over the coming months as well as activity expected on new product launches and rebranding activities.
Sales promotion expenditure
Actual sales promotion spend rose on average in 2003 as companies sought to boost sales volumes through discounting and offers in the face of economic uncertainty. However a modest rise in new budget setting for 2004 is the weakest of all categories of marketing monitored by the Bellwether survey. Industrial, media & entertainment and financial services companies reported reduced spend. (The Q4 report shows a breakdown of the sales promotion sector for the first time).
The survey reports that actual direct marketing spend has risen significantly in real terms during the last four years with companies citing the cost effectiveness of such activities for its appeal. Current budgets were increased, showing the steepest upward revision since Q2 2002. Firms in the consumer durables, industrial, retail, computing, autos and financial services sectors all reported strong upward revisions in current budgets for Q4. Looking forward, further growth is indicated for Q4. Some 43% of companies reported an increase in spend for 2004 compared with actual spend in 2003. Just 17% reported a decline.
Other marketing expenditure
On average actual spend for the ‘all other’ category (which includes public relations and market research) was unchanged in real terms in 2003 compared with 2002. While budgets for 2003 had originally been set higher, downward revisions for the year led to zero growth. Further growth of spend was signalled in new budget setting for 2004, while current budgets were revised up for the first time since Q2 2002.
Internet marketing expenditure
Internet related marketing spend was revised up on average in Q4, its best quarter since Q2 2000. In terms of revisions to budgets, Internet marketing has now outperformed all other categories of marketing spend monitored by the Bellwether survey for seven consecutive quarters.
Said IPA President and Chief Executive of WCRS Stephen Woodford: “The Bellwether Report is an accurate forecaster of actual marketing spends, so the strongly positive trends we are seeing will mean a real recovery for 2004.”
Said Bellwether’s author Chris Williamson of NTC Research: “Marketing and advertising executives are entering 2004 in the most optimistic mood since the height of the dotcom boom. It is particularly encouraging that budget increases are being driven primarily by the reality of rising profits, growth of which recently hit a four-year high, rather than just by improved business confidence. In the fourth quarter report we are seeing the first signs of a move away from sales promotion and discounting to the main media with a number of companies saying they are looking at brand building as a reason to increase their media adspend during 2004.”
Said Sir Martin Sorrell, Chief Executive of WPP about the report’s findings: “These UK trends are not surprising given that US Q4 2003 corporate earnings look as though they will be up by 25 per cent.
Corporate profitability is improving, but up to now mainly as a result of cost reductions. Perhaps now the focus is switching to top line growth and advertising and marketing services spending is rising as a result.
Where the UK seems to be different is that most, if not all, of the current growth is coming from non-media areas such as direct, internet and interactive the functions that are more easily measurable and quantifiable.”
Said John Owen, IPA Digital Marketing Group Chairman and Planning Director of Dare Digital: “Internet marketing's steady and consistent growth continues unabated. Clients from all sectors now consider it a staple part of their marketing mix and many continue to revise their online budgets upwards as they see further proof of the medium's effectiveness.”
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).
Last updated 19/09/2008