Marketing budgets drop 5.4% ahead of uncertain 2011

Marketing budgets were revised down in the fourth quarter of 2010 amid uncertainty surrounding the economic recovery in 2011, according to the IPA / BDO Bellwether survey published today.

Marketing budgets drop 5.4% ahead of uncertain 2011

The survey of approximately 300 leading company marketers provides depressing reading for those wanting to start the year on a high. The last quarter generated drops of 5.4%, the worst budget cuts for a year.

Some 22% of companies reported a downward revision against 17% that reported an increase.
It follows the marginal upgrade of 0.5% in quarter three and points to a loss of economic growth momentum in the final quarter of the year.

In general, marketing budgets in 2010 have reflected the cautious recovery experienced elsewhere in UK plc. Marketing spend increased for the first time in two-and-a-half years in the first quarter, up 4.5%, but then slumped in the second quarter by 4.6%.

However, the Q4 downgrade is less severe than that seen throughout 2009 and much of 2008. Furthermore, budgets for 2011 have been set higher on average than 2010 actual spend.

Rory Sutherland, president of IPA and vice-chairman of Ogilvy Group UK, said: "That these latest figures reveal a decline in confidence is disappointing, but characteristic of the uncertain climate we find ourselves in.

"At least we can draw comfort from those companies which reported an increase in spending in the last quarter of the year, and from indications that initial budget setting for 2011 is currently higher than actual 2010 spend."

Also in the Bellwether results today (17 January), business confidence has been dampened, with marketing executives signalling that the financial prospects for their own companies dipped to the lowest in six quarters, and for the industries in which they operate deteriorating for the first time since Q2 2009.
By sector, budgets were revised down across main media, sales promotion and ‘all other’ (below-the-line such as PR, events) with main media the most pronounced.  

Internet advertising saw a modest upward revision but at the smallest rate in six quarters. Direct marketing budgets were revised up but at a slower rate than the last quarter.
Debbie Klein, chief executive of Engine UK, said she was "not surprised" by the findings. "The final quarter of 2010 was much quieter than the previous two quarters, with caution around budgets as clients awaited the impact that the coalition Government’s Spending Review would have both on the public and private sector," she said.

"That said, there were signs of recovery. We saw growth in digital, data analytics and, in particular, social media, where we won a significant amount of business including Sky.  We expect to see this trend continue into 2011, with digital and social media outperforming other disciplines.

"There are already signs of an upturn in activity for 2011 and we’re significantly busier than January 2010, which was one of the quietist on record. We are cautiously optimistic, as we are getting a lot of enquiries, specifically integrated communication briefs."

Percentage revisions to marketing budgets (IPA/BDO Bellwether Report)

Marketing budgets surveyed in IPA/BDO Bellwether Report

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