IPA expects growth in client spend for 2003

Adspends are still being slashed as UK companies struggle to cut costs in the face of weak sales and poor profits, according to the IPA's latest Bellwether report.

But the research offers a glimmer of hope for beleaguered agencies, forecasting that the number of companies boosting their ad budgets in 2003 will outnumber those reducing them by two to one.

If the predictions prove correct, this would reverse the steady erosion of marketing budgets seen during the second half of last year, when one in four advertisers revised their budgets down and only one in ten increased them.

The only consolation researchers were able to draw from the decline is that it was less steep at the end of 2002 than during the corresponding period the previous year.

Bruce Haines, the IPA president, cited "continued economic uncertainty both at home and abroad, together with disappointing consumer spending" as the reason for the continuing cuts.

But he added that the overall increase in 2003 adspend suggested by the survey - the highest for two years - "signals some positive growth".

The quarterly report, based on information supplied by more than 200 UK-based companies, forecasts that the biggest increases in spend are likely to be by FMCGs, consumer durables, travel and entertainment companies.

However, the ad budgets of financial services and IT companies are likely to remain depressed.

At the same time, the report indicates that companies are continuing to shift emphasis away from media advertising towards direct marketing and internet activity.

Direct marketing and sales promotion both boosted their share of total marketing spend by 1 per cent - to 26 per cent and 16 per cent respectively during the third quarter of last year.

Both increases were at the expense of media spend, which saw its share drop to 33 per cent at the end of last year, 2 per cent less than in 2001.

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