UK marketing spend to rise

According to the study, marketing budgets were revised up, albeit slightly, with the highest reading since Q3 2011. With 17% of companies reporting a rise compared to 16% reporting cuts, the resultant net balance was +1.1%, up from the -5.5% low seen in Q3. Moreover, marketing executives are planning to raise 2013 budgets relative to 2012 levels indicative of cautious optimism.

And companies having grown more positive about their own performance compared to three months ago and to the best seen in three quarters (with a net balance of +6.8% up from -3% in Q3).

However, the planned rise in 2013 budgets is at the second lowest in the history of the survey, and the degree of optimism historically muted. When asked about the financial prospects for their wider industry, marketing executives were the most pessimistic for a year (net balance of -16.9% compared to -16.5% in Q3).

This is due to the ongoing difficult economic environment and matches a broad stagnation of GDP in 2012 amid weak trends in investment and consumer spending.

“Looking to the longer term, a new predictive model created for the Bellwether Report, using the key components of economic growth, business investment and consumer spending, points to a mere 1% increase in adspend this year. However, over the next five years this model forecasts growth in adspend to steadily accelerate, reaching a 4.6% increase in 2017,” according to the study.

“By sector, the ’all other’ category is now broken down into four categories. Of these market research was revised up slightly, while events, PR and ’other’ reported declines. Direct marketing and media performed better than the previous quarter with a much smaller fall in the rate of budget trimming for DM and a flat outcome for main media.”

Internet advertising budgets were found to have remained strong and the best performing of all categories in Q4 (net balance +5.6%). However the latest increase was slower than Q3 and weaker than average. Within internet advertising, online search/SEO spend was also revised up (+7.8%) and to the best reading in a year.

Nicola Mendelsohn, IPA president, executive chairman and partner, Karmarama, said: “Marketing budgets have been revised up, albeit marginally, to the highest rate in over a year. Advertisers also have a growing sense of cautious optimism about their own financial prospects and are planning to increase their 2013 budgets higher than 2012 levels. So while we continue to operate amid a difficult economic backdrop, we should nevertheless take encouragement from these figures, and do all that we can to remain positive in meeting the challenges we face.”

Chris Williamson, chief economist at Markit and author of the Bellwether, added: “Companies have grown more positive about their financial prospects, setting marketing budgets higher for the coming year to help beat a challenging business environment. However, the initial increase is one of the smallest seen over the past 12 years, with only 2012 seeing a more downbeat start to the year.

“Companies remain cautious about raising expenditure on marketing activities due to weaker than expected sales and profits last year and ongoing uncertainty about the economic outlook at home and abroad.”

Image by TraderGroup Signal, CC Flickr.com
This entry was posted in cat-news. Bookmark the permalink.

Comments are closed.