Q4 2012 Bellwether Report reveals rise in marketing spend

The latest IPA Bellwether survey published today (Thursday 17th January 2013) reveals that marketing budgets were revised up with the highest reading since Q3 2011.

The latest IPA Bellwether survey published today (Thursday 17th January 2013) reveals that marketing budgets were revised up, albeit slightly, with the highest reading since Q3 2011. With 17% of companies reporting a rise compared to 16% reporting cuts, the resultant net balance* was +1.1%, up from the -5.5% low seen in Q3. Moreover marketing executives are planning to raise 2013 budgets relative to 2012 levels indicative of cautious optimism.

And companies having grown more positive about their own performance compared to three months ago and to the best seen in three quarters (with a net balance of +6.8% up from -3% in Q3).

* net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.

However the planned rise in 2013 budgets is at the second lowest in the history of the survey, and the degree of optimism historically muted. When asked about the financial prospects for their wider industry marketing executives were the most pessimistic for a year (net balance of -16.9% compared to -16.5% in Q3).

 This is due to the ongoing difficult economic environment and matches a broad stagnation of GDP in 2012 amid weak trends in investment and consumer spending.

Looking to the longer term a new predictive model created for the Bellwether Report, using the key components of economic growth, business investment and consumer spending, points to a mere 1% increase in adspend this year. However over the next five years this model forecasts growth in adspend to steadily accelerate, reaching a 4.6% increase in 2017.

By sector, the ‘all other’ category is now broken down into four categories. Of these market research was revised up slightly, while events, PR and ‘other’ reported declines. Direct marketing and media performed better than the previous quarter with a much smaller fall in the rate of budget trimming for DM and a flat outcome for main media.

Internet advertising budgets remained strong and the best performing of all categories in Q4 (net balance +5.6%). However the latest increase was slower than Q3 and weaker than average. Within internet advertising, online search/SEO spend was also revised up (+7.8%) and to the best reading in a year.

Says Nicola Mendelsohn, IPA President, Executive Chairman and Partner, Karmarama: “Marketing budgets have been revised up, albeit marginally, to the highest rate in over a year. Advertisers also have a growing sense of cautious optimism about their own financial prospects and are planning to increase their 2013 budgets higher than 2012 levels. So while we continue to operate amidst a difficult economic backdrop, we should nevertheless take encouragement from these figures, and do all that we can to remain positive in meeting the challenges we face.”
Says Chris Williamson, Chief Economist at Markit and author of the Bellwether: “Companies have grown more positive about their financial prospects, setting marketing budgets higher for the coming year to help beat a challenging business environment. However, the initial increase is one of the smallest seen over the past 12 years, with only 2012 seeing a more downbeat start to the year.

"Companies remain cautious about raising expenditure on marketing activities due to weaker than expected sales and profits last year and ongoing uncertainty about the economic outlook at home and abroad.”

For more on this, please purchase the full report which also has new content demonstrating how surveys such as the Bellwether are reliable economic indicators. New charts include comparing business confidence amongst survey panellists to wider economic output, and depicting how views on financial prospects are a function of the current business environment. Other new charts detail how key wider variables have impacted on current marketing spend.

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 8-page 17th January 2013 edition is available to purchase here 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

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