IPA Bellwether Report predicts cautious year

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

2002.



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."



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