Budget cuts slow in Q1 as ‘confidence picks up'

UK-- Marketing budgets in the UK were down again in the first quarter of 2009, but the rate of decline has eased, according to the latest Bellwether Report.

The quarterly study of UK marketing budgets showed that 45% of companies revised budgets down in Q1, while 11% reported an increase. This was the second steepest decline in the survey's nine-year history – but not as bad as the previous quarter, suggesting that Q4 last year may have seen a peak in the rate at which companies cut back spending.

The ‘all other' marketing category, which includes research alongside below-the-line marketing activities, was one of the hardest hit, with 39% of firms reporting a downward revision and just 8% reporting an increase. However, this represented a slight easing from Q4, while in some other areas such as sales promotion and internet advertising, the rate of decline quickened.

IPA president Moray MacLennan said: “This data supports the view that the bottom of the market has been reached. It will be a long road to full recovery, but this may be the turning point. It's good to see a graph going in the right direction for a change.”

Business confidence also appeared to be recovering, with the percentage of companies saying their prospects had deteriorated falling to 44%, from 63% in Q4. The report said: “The financial pressure to cut marketing spend was reflected in continued pessimism among companies about their financial prospects, although the degree of pessimism moderated markedly compared to the survey low seen in Q4.”

The Bellwether Report is published by Markit Economics on behalf of the Institute of Practitioners in Advertising.

Author: Robert Bain

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