Biggest fall in marketing spend for nearly two years
The Q4 2007 Bellwether Report,the quarterly survey of marketing spend, reveals that budgets were revised down for the first time in a year in the final quarter of 2007; the steepest fall in nearly two years. Weaker than expected sales revenues, disappointing profits and concerns about the economic environment meant companies trimmed budgets in order to cut costs and maintain margins.
Although almost half of all companies have set their 2008 budgets higher than their 2007 actual spend, the Q4 downward revision sends a note of caution going forward; 2008 could see similar downward revisions to budgets if revenues fail to pick up.
Main media advertising saw the largest cut to budgets in Q4, with traditional media such as TV and press hit particularly hard. ‘All other’ marketing also saw an above average cut. This is in marked contrast to Q3 when both categories saw the strongest upward revisions in Bellwether’s history. Although internet budgets were again increased up to a greater extent than any other category, and now account for around 9% of total marketing spend, the rise was the weakest since Q3 2003. Sales promotion was the only other category to see budget increases as companies sought to boost flagging sales with greater discounting activities.
Highlights of the Q4 2007 report include:
• In Q4, only 15% of companies reported increased total marketing budgets while 19% reported a decrease, so a net balance of -4.4%.
• Main media spend was revised down in Q4 to the greatest extent since Q2 2006, with a net balance of -6.5%, as was ‘All other’ marketing, with a net balance of -4.7 %.
• 23% of companies revised up their budgets for the internet, while 7% saw a decline. Online search is now being monitored by Bellwether and saw the same pattern of upward revision.
• Total share of spend in 2007 was 29.3% main media, 25% direct marketing, 8.7% internet, 9.5% sales promotion, and 29.3% ‘all other’ marketing. For the first time ‘all other’ has been broken down further; of this 29.3%, 8.5% was allocated to PR, 8.6% to events, 6.2% on market research.
Chris Williamson, Bellwether Report author, NTC Economics:
"The Bellwether survey reveals a marked deterioration in business conditions in the fourth quarter of last year, which companies responded to by trimming their marketing budgets causing 2007 to finish on the weakest note for two years. Some positive news was provided by 2008 marketing budgets being set higher than actual spend in 2007, but we interpret this with caution. Companies will be monitoring the business situation carefully and, if trading conditions and business confidence fail to pick up in the New Year, we can expect these budgets to be revised down as the year proceeds. "
Maurice Lévy, Chairman and CEO, Publicis Groupe, “The latest Bellwether Report confirms what our industry knows too well: Q4 spendings are always adjusted up or down according to final company profit forecasts. The main trends are confirmed: less attraction of traditional media and more digital, interactive. It looks like that despite a gloomy Q4, we can expect a better 2008, probably thanks to the Euro Cup and the Olympic Games. There is undoubtedly some turbulence in our old countries of Europe and, for our industry, we know that we find growth in digital and emerging markets .”
Moray MacLennan, IPA President, Chairman Europe M&C Saatchi: “The fact that budgets were trimmed in Q4 following three quarters of strong growth, will not come as a surprise. It's encouraging to see 2008 budgets looking positive, what will be of most interest is of course the extent to which they are revised in the next report - hopefully nerves will hold.”
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 report please email
or call 01491 418 700.
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