Marketing budgets held steady in Q3

The latest IPA/BDO Bellwether survey published today (18th October 2010) reveals that marketing budgets for the current financial year were revised up in Q3, but only marginally, following a modest downgrade in the previous quarter. The proportion of companies reporting an increase was similar to those signalling a decline, resulting in a net balance of 0.5%.  

Yet companies have grown less optimistic about the financial prospects for their industries, with positive sentiment dipping to the lowest in five quarters. Bellwether data coupled with this low optimism suggests that the second quarter surge in GDP marked the peak of the recovery cycle.

 However the stabilisation of marketing spend in Q3 marked an improvement, and marketing spend for 2010 as a whole may still rise.

By sector internet advertising recorded the fastest rate of budget growth by a wide margin, impacting on main media budgets which were revised up at the most marked rate in three years. Direct marketing spend was also revised up at the fastest rate in four years.  In contrast, ‘all other’ (below-the-line such as PR, events) and sales promotion budgets were revised down though rates of budget trimming have eased since Q2. 

Says Andy Viner, Head of Media, BDO LLP: "The upwards revision to marketing budgets, albeit marginal, is a welcome sign of optimism and we expect to see marketing expenditure as a whole rise in 2010. Internet advertising continues to exhibit the fastest rate of growth, as firms recognise the importance of a greater on-line presence and look for increasing return on investment through technology-led marketing solutions, while maintaining a flexible business model.

"However, the overall outlook is one of caution with companies having to respond operationally to the changing commercial landscape. We are seeing them take a tentative approach to the commitment of non-essential expenditure against a continued backdrop of looming public sector cuts and general economic uncertainty."                                                                                        

Says Rory Sutherland, IPA President, Vice-Chairman, Ogilvy Group UK: “Though these latest figures suggest hesitancy they don’t indicate absolute pessimism. 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.”

Note to editors:

The Institute of Practitioners in Advertising (IPA) is the trade body and professional institute for UK advertising, media and marketing communications agencies. It was established in 1917 as a servicing body and to negotiate on behalf of its members with media bodies, government departments and unions. Its 274 corporate members handle over 80% of the UK’s advertising agency business which has an estimated value (excluding press and TV production) of £17.7 billion. 

BDO LLP is a UK member firm of BDO International, the world’s fifth largest accountancy network, with 1,138 offices in 115 countries. The firm offers a range of advisory services to its clients which include accounting and audit, corporate finance, turnaround and business restructuring services, forensic accounting and tax services. Clients span all sectors but the firm has specialisms in retail, real estate & construction, public sector, manufacturing, financial services and technology, media and telecoms.