IPA Bellwether Report shows steady growth

Britain's ad industry continues to haul itself out of the downturn as clients boost spending on the back of improving profits, the latest IPA Bellwether Report suggests.

Returning confidence is reflected in marketing budgets being revised upwards for the fourth consecutive quarter.

The latest improvement marks the longest period of continual growth since the economic downturn began four years ago and represents the first positive figures seen in the third quarter since the Bellwether survey began.

Marketing spend across the board is growing, with internet-related activity showing significant expansion.

The only reductions occurred in sectors such as PR, market research, sponsorship and conferences. Researchers said this was partly because of the need by some companies to cut costs but also because spends are being diverted into other marketing activities.

Sir Martin Sorrell, the WPP Group chief executive and the most influential of the communication industry forecasters, said the Bellwether findings confirmed a marked recovery, with UK agencies recouping the levels they achieved in 2000. However, Stephen Woodford, the IPA president, warned that higher interest rates could affect profitability.

Media adspend symbolised the new feelgood factor by bucking the previous trend when budgets have been set at the beginning of each year only to be revised downwards.

This year, however, has been different, with rising profits and what the survey called "robust business sentiment", which has encouraged advertisers to boost their expenditure in each of the first three quarters of 2004.

Sales promotion has also reversed a downward slide as a result of new product launches and intense competition in a market that requires companies to offer incentives to consumers.

Direct marketing has seen budgets revised upwards for the fifth successive quarter, indicating a continued spending shift, albeit only a modest one, away from traditional media, the survey declared.

All sectors are being affected by the growth of online marketing. The survey shows that record numbers of advertisers are now allocating 10 per cent or more of their ad budget to the internet.