Clients will increase spend on direct marketing and sales promotion
instead of above-the-line advertising, causing further slowdown for ad
agencies, according to the Institute of Practitioners in Advertising's
quarterly Bellwether Report.
Most companies are adopting a "wait and see" policy for marketing spend,
with uncertainty exacerbated by the economic slowdown in the US, the
report also stated.
One in three companies said they would increase their ad spend in
However, this only outstripped the number of advertisers planning to
decrease by 4.9 per cent.
The survey said only one in five companies revised their fourth-quarter
marketing budgets up at the end of last year, but only in the direct
marketing sector. The direct market saw an increase for the fifth
consecutive quarter as companies sought cheaper, more accountable and
measurable forms of marketing.
The raised marketing budgets for 2002 may have been set higher than in
2001, but the rise was the weakest in the survey's two-year history.
Forty per cent raised their budgets, but this was countered by 22 per
cent who lowered them. Internet-related marketing budgets were revised
down for the first time and the proportion of companies spending more
than 10 per cent of their total marketing spend on internet activities
fell to 5 per cent.
Trends in new budget setting were mixed by sector.
Retail and consumer sectors such as FMCG and consumer durables reported
the strongest growth of budgeted spend for 2002 and the least downward
spend projections. Financial services, travel, entertainment and the
media were the worst sectors.
The IPA's president, Bruce Haines, said: "Although media adspend has
made a slight recovery from the third quarter, we are still seeing a
shift toward direct marketing and, to a lesser extent, sales promotion.
The marketplace is cautious but, we believe, optimistic. There are some
sectors, such as retail, which are holding up well."