Q2 2009 Bellwether shows marketing budgets cuts at slower rate
The IPA's latest Bellwether survey published today (13th July 2009) has found that for the second quarter in a row the rate of decline in marketing spend has eased, linked to an improvement in business confidence; with companies surveyed reporting that their financial prospects have improved for the first time since the first quarter of last year. This adds to the hope that the UK recession peaked in Q1.
Although the rate of decline remained severe for Q2, raising the risk of marketing spend falling in 2009 even more than in 2008, one-in-three companies reported that their financial prospects had improved compared to one-in-four reporting a deterioration.
Says Rory Sutherland, IPA President, Vice- Chairman, Ogilvy Group UK:
"To anyone optimistically inclined, the April Bellwether seemed to signal the bottom of the market, and the new report suggests that the worst is over. Budget cutting for all marketing communications categories seems to be slowing and, while the economy is still tough, the balance of executives reporting improved prospects moved into positive territory for the first time since Q1 2008."
Spend was reduced for all categories of marketing in Q2, but at a slower rate of decline. Budgets for main media advertising and ‘all other’ (includes PR, event sponsorship and market research) were again hardest hit amongst those companies surveyed. The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. 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 first report was published on the 17th July 2000. To subscribe to the report, please contact email@example.com Historical data is also available on request to firstname.lastname@example.org
Have your say:
Says Jim Marshall, Chairman, Starcom, Chairman, IPA Media Futures Group: "The media world is still expecting and braced for a very tough six months but the indication that business and financial confidence is at last returning suggests there is certainly an argument for optimism, and that the prospects for 2010 look more positive. Such optimism should be treated with some caution but it is a significant indicator that the worst of the recession is coming to an end."
Says Matt Simpson, Head of OMD Group Digital and Chairman of IPA Digital Media Group: “Internet' and 'Internet search' continue to gain a larger share of advertisers budget, despite overall budget levels decreasing. This is likely to be a reflection of increased confidence in the tracking and accountability of the channel.”
Says Mark Fagan, Digital Media Director, Golley Slater and member of the IPA Search Group: “The Bellwether Report points to a bottoming-out for marketing budget cuts this year. The way in which this has manifested itself within search marketing is really a cooling off from the incredible growth we've seen since the dot-com bust to-date and a maturing of the market. The next year is going to be very exciting as Search is still valued highly, and has become firmly established in the marcoms mix due to its ability to drive both awareness, sales and help build a brands reputation."
Says Mark Runacus, Chief Strategy Officer at HS&P and Vice-Chairman of the IPA’s Direct Marketing Group: "These slowing rates of decline do seem to suggest that the worst is over, and we should all be prepared for a new market to emerge from this recovery. Senior marketers should have courage, and reinvest now, particularly in accountable channels like direct and digital. Those who learn quickly how to capitalise on the new economy will be the ones who win out in the long-term."
Says Ian Crick, Head of Digital, Billetts Marketing Investment Management: "The marketing community view the consistent increases in budgets that we saw over the last 10 years as the natural growth line. In my opinion the declines we are seeing are actually a readjustment to something more realistic based on UK real incomes devoid of excess credit, and therefore the end of the decline may not signal the beginning of growth. The other thing that commentators are overlooking is the inevitable onset of energy price inflation that will filter through to almost all goods and services (oil price inflation was not just a result of market mischief but because there is too much energy demand in relation to supply), therefore decreasing disposable income further. Inflation, aligned to public sector job cuts and tax increases after the next election, combined with further readjustment of the wider economy (i.e. more job losses) does not make for an easy recovery. Finally, in times of ‘upheaval’, businesses have an opportunity for a strategic rethink, and one of the things that will come out of this is western jobs will be replaced by cheaper (but just as qualified) overseas labour/expertise. So yes we might see some signs of ‘green shoots’ in the short term, but I would be very cautious in predicting the good times are on the horizon."
Last updated 16/07/2009