NEWS18 October 2010

Bellwether points to budgets stability amid mounting pessimism

Financials UK

UK— Stability in marketing budgets is the most positive takeaway from the latest Bellwether Report from the Institute of Practitioners in Advertising (IPA) and accountancy firm BDO.


The third quarter saw a “marginal” increase in budgets after a “modest” down grade in Q2 – but report author and economist Chris Williamson isn’t declaring a return to recovery just yet.

In fact, he says, “Q2 likely represented a peaking in the rate of economic growth in the current recovery, and indicates that a slowdown is probably under way in the second half of the year.”

Though Q3 was an improvement on Q2, Williamson says this improvement “needs to be treated with caution, as companies have grown less optimistic about financial prospects for the industries in which they operate”.

“This suggests that many firms appear to be boosting marketing spend in the hope of riding out a wider economic storm,” he said.

Fears remain that the UK economy could experience a double-dip recession, perhaps triggered by the huge public spending cuts the government is set to announce this week.

IPA president Rory Sutherland said: “In these times of uncertainty around government spending and the sustainability of an economic recovery it is not surprising that businesses remain cautious. And even though the upward revisions to marketing budgets are only slight, marketing budgets have stabilised nevertheless.”

Internet, search, direct marketing and media budgets were all revised upwards while sales promotion and the ‘all other’ category of marketing spend – which encompasses research, PR and events – saw net downward revisions, though less severe than in the previous quarter.