Marketing budgets cut for fifth consecutive quarter but recession could be 'bottoming out'
The Q2 2006 Bellwether Report, the quarterly survey of marketing spend, published today (17th July 2006) reveals that marketing budgets have been revised down for the fifth consecutive quarter. Hardest hit are traditional advertising and sales promotion budgets, while budgets for internet marketing hit a record high.
There are signs that budget cuts may be beginning to ease, as the downward revisions for Q2 2006 are the smallest since budgets began to be trimmed in Q2 2005. This provides an early indication that the rate of decline of advertising spend has bottomed out.
The highlights of the Q2 2006 report are:
2006 is set to see the weakest growth since 2002 following modest budget settings at the beginning of the year that were further revised down in Q1 and Q2
Traditional advertising continues to lose share of total marketing spend as budgets were cut for the seventh quarter; sales promotions budgets were revised down in for the sixth consecutive quarter
The proportion of companies allocating more than 10% of spend to internet marketing rose to a record high of over 17%, while the proportion of companies allocating no spend to internet budgets fell to a record low of 11%
DM budgets were revised up, with 19% reporting an increase against 18% a decrease.
Chris Williamson, Bellwether Report author, NTC Research, said: “Marketing budgets tend to change in line with company finances, and the latest survey therefore indicates a clear turning point in the health of the corporate sector from the slowdown in growth seen late last year. However, strong competition and widespread consumer caution means companies are having to fight for market share by using an increasing variety of marketing tools.”
David Pattison, IPA President and Chief Executive, PHD, said: “Bellwether once again accurately confirms what we are seeing in the UK market, which is still some cautiousness, and supports the recent ZenithOptimedia and AA forecasts for the UK which is modest growth. What we are seeing from this latest report is an early indication that the rate of decline seems to be bottoming out.”
Sir Martin Sorrell, Group Chief Executive, WPP, said: “The Q2 2006 Bellwether Report mirrors what we see, not only in the UK but in the larger markets of Western Europe. Traditional advertising is under pressure, with internet and direct marketing budgets strengthening. We think it is also fair to say that the prospects in Western Europe are improving slightly too, particularly in countries such as Germany. The pressure does seem to be diminishing as a result.”
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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Last updated 29/08/2008