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Marketing budgets cut in Q3 2012

19 Oct 2012 10:37 BST Back
Marketing budgets cut in Q3 2012
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UK companies cut marketing budgets again in Q3 2012, according to the latest IPA Bellwether survey published yesterday (18 October). 

Almost a quarter (23%) of companies reported a reduction in marketing budgets, compared to 18% reporting a rise.

The degree to which budgets were cut was sharper, with a net balance* of -5.5% of companies registering reductions in marketing spend, the lowest reading recorded since the end of 2009. The net balance was -1.1% in Q2 and +1% in Q1. 

It’s the second downward revision in 2012 and suggests that total marketing spend for 2012 will not increase as anticipated earlier in the year. 

Only digital marketing budgets – including online and search – have been revised upwards. Direct marketing spend was down 6.2%, below the line 16.1% and sales promotion 2.9%, while internet was up 7.1% and search 5.2%.

Difficult trading conditions and efforts to control costs have impacted budgets according to anecdotal evidence from panellists. 

Confidence among marketers with regards to financial prospects for their companies has weakened compared to three months ago. Around 31% having grown more pessimistic about their own company, compared to 28% that are more optimistic. 

The net balance dropped from 2% to -3% and was the first negative result of 2012 so far. In Q1 2012, the net balance recorded a two-year high of +19.1%. 

IPA President and executive chairman and partner at Karmarama, Nicola Mendelsohn said: “Although this is disappointing it is by no means terrible. The outlook for UK economic growth in 2013 is looking better than this year so consequently we are expecting a relative improvement in marketing spend. We shall see what Q4 and the year ahead brings but the advertising and marketing industry is certainly not a market in decline.”

*The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.

Posted by

Smarayda Christoforou

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