Adspend rate to slow down, IPA report says

Companies are putting the brakes on advertising spending in Britain as the dotcom bubble bursts and the economy faces possible slowdown, research published this week indicates.

Companies are putting the brakes on advertising spending in Britain as the dotcom bubble bursts and the economy faces possible slowdown, research published this week indicates.

But the IPA's Bellwether Report also predicts that overall spending will continue to grow, albeit at a less spectacular rate, with the number of companies raising their marketing budgets for this year outnumbering those cutting their budgets by more than two to one.

Industry leaders claim the findings prove that massive spending by dotcoms was unsustainable and growth levels are merely reverting to more realistic levels.

The report, a quarterly survey of the advertising and marketing activities of almost 300 UK-based companies, estimates total UK marketing spending to be pounds 33 billion and ad spending pounds 11.1 billion.

Internet-related spending represents 1.8 per cent of the total marketing figure, at an estimated pounds 660 million.

However, while researchers predict a robust growth in marketing spending during 2001, the overall increase is expected to be less marked than at the end of last year, suggesting that business confidence is less buoyant.

Nick Phillips, the IPA director-general, said: 'The overall mood is positive, but there is a sense that the pace of the dotcom revolution and levels of spending on telecommunications couldn't last forever.'

He added: 'An unsustainable level of activity in the first half of 2000 has come back to slower rates of growth at the end of 2000 and start of 2001.'

Just under half of the companies surveyed reported that they had raised their 2001 budgets over the past year, suggesting a big rise in total media spending this year.

But more than 18 per cent reported a cut in spending, which the survey attributes to belt-tightening after weaker-than-anticipated revenues in the second half of 2000.

The possible slowdown is reflected in a greater emphasis on direct marketing by advertisers. For 2001, 40 per cent of companies report higher DM budgets than last year, because they consider the medium to be particularly cost-effective.



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