The Q4 2005 Bellwether Report, the quarterly survey of marketing spend, published today (17th January 2005) by NTC Research on behalf of the IPA, showed that:
2006 marketing budgets are set to rise compared to 2005 but at the weakest rate since 2001 indicating that GDP growth is set to be downcast in early 2006.
Q4 2005 marketing budgets were cut for the third consecutive quarter and at the sharpest rate for two-and-a-half years.
Budgets cuts were seen in main media, sales promotion and ‘all other marketing’ (PR, sponsorship, market research and corporate communications). Main media saw the steepest fall in the six years of the survey.
Budget rises were seen in direct marketing and internet related activities. DM saw a modest rise while internet related marketing continued to record strong growth.
To view all the report details and subscribe to the Bellwether report please contact Markit on 01491 418 700, email
Said Bellwether report author Chris Williamson, NTC Research
: “The Q4 Bellwether report confirms that business conditions remained tough towards the end of last year. Slower than expected sales growth over the course of the year led to a trimming of marketing spend compared to that originally budgeted for the year. Companies are clearly entering 2006 in a more cautious mood than in recent years. Early signs are that marketing spend will rise during the year, but growth is likely to remain subdued and we are set to see a further shift away from main media advertising towards direct marketing and the internet.”
Said Sir Martin Sorrell, Group Chief Executive, WPP
: “IPA Bellwether again confirms what we are seeing in the UK - a tough market, even in comparison to western continental Europe. New media activities, however, continue to show stronger growth.”
Said David Pattison, IPA President, Worldwide Chief Executive, PHD
: “The fourth quarter Bellwether Report picks up on the widely reported business sentiment of the High Street in December, and bears out the fact that although we're witnessing some better than expected figures from retailers, there is still pressure to cut costs. What these, and other recently published figures from the British Retail Consortium suggest is that we are witnessing the first signs of change in the retail environment - when more people are purchasing online, rather than on the High Street.”
Said Jim Marshall, Chairman, Starcom MediaVest UK, Chairman, IPA Media Futures Group
: “What this suggests is not a great prospect for advertising revenue, born out of what is likely to be a poor first quarter. However we do think that there will be a recovery in confidence in Q2, in the run up to the World Cup, so the mood is not all doom and despondency.”
Said John Owen, Planning Partner, Dare, Chairman, IPA Digital Marketing Group
: “While the overall trend is disconcerting, internet marketing continues to buck that trend and to go from strength to strength. If advertisers are not already making a significant commitment to online, they are now actively reviewing their approach.”
Said Simon Marshall, CEO, Publicis Dialog, Member, IPA Direct Marketing Futures Group
: “The fact that DM is holding up well is not a surprise - there has been a long established trend for the switch in budgets below the line. These figures also reflect a period when client expectations were for a tough year end, particularly in FMCG and Retail, and budgets are switched into tactical, more transparent ROI - activities, in which DM is proportionally over-represented. I would expect this long-term trend to continue in 2006, both for reasons of increasing accountability, and the growth in direct-selling generally.”
Said Phil Adams, Managing Director, Leith Agency, Chairman, Scottish IPA
: “There are clearly some strong macro-economic factors driving an increased emphasis on cost cutting. However, I believe there's also an ongoing shift in emphasis in terms of how companies are building brands. There is increased attention being paid to the brand that consumers actually experience over the brand as it is espoused in marketing communications. This ground-up focus on brand delivery and engagement is entirely consistent with an increased emphasis on direct and online marketing. Brand advertising still plays an important role for these companies but it comes last in the marketing pecking order rather than first.”
To subscribe to the Bellwether report please contact Markit on 01491 418 700, email
Note to editors:
Bellwether correctly anticipated the downward trend in media adspend in advance of the Advertising Association report in Q3 2005. Quarterly GDP growth slipped from 0.5% to 0.4% between Q2 and Q3, as anticipated by the Bellwether report, with the survey pointing to a further easing in GDP growth in Q4.
The IPA is the industry body and professional institute for UK advertising, media and marketing communications agencies. It was established in 1917 as a servicing body and to negotiate on behalf of its members with media bodies, government departments and unions. Its 246 corporate members represent the major part of the advertising agency business, handling advertising with an estimated value of some £13,000 million per year (over 80 per cent of advertising placed by agencies) on behalf of their client companies and organisations nationwide. (note this figure is based on 2005 Advertising Statistics Yearbook figures and excludes classified and television production costs).
Last updated 19/09/2008