Bellwether report: Marketing budgets down as confidence hit

The quarterly IPA/BDO study found that 22% of companies revised their marketing budget down in the fourth quarter. Only 17% reported a rise, leaving a net balance of -5.4 compared to +0.5 in the third quarter (see chart 1 in the links below).

Confidence dipped to the lowest point in 18 months as marketers grew pessimistic about the financial outlook for their companies and industries. The net balance dipped to +10.8 from +15.8 in the third quarter of the year, however budgets have been set higher for the coming year (see chart 3 in the links below).

Direct marketing, internet advertising and paid search were once again the only disciplines to see a rise in spend during the period, albeit at a slower rate, as marketers looked for channels with more “predictable return” on investment.

Budgets across sales promotion, main media and all other marketing, including PR, were revised down during the period (see chart 2 in the links below).

Commenting on the Bellwether report, Rory Sutherland, IPA president and vice-chairman of the Ogilvy Group UK, says: “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.”

Andy Viner, head of media at BDO LLP, adds: “We expect corporates to keep their marketing spend both flexible and cautious as they keep a sharp eye on consumer behaviour and wider economic indicators which is unsurprising given the backdrop of continued public spending cuts and the threat of rising interest rates.”