Firms cautiously spend more on marketing

Freelance marketers should notice a small but significant surplus in the pot for new projects, as advertising budgets are being approved at a higher level than a year ago, albeit with more caution.

Having quizzed 200 UK marketing professionals, industry body IPA found that 22 per cent of firms reported healthier spending on advertising, against 21 per cent that reported a drop.

The growth, seen in this year’s first quarter, is only small (1%) but was welcomed for representing the third quarter in a row where budgets for marketing and advertising improved.

The upward revision reflects new product launches, alongside companies’ expectations of better economic conditions and higher rates of return on investment, the IPA Bellwether report says.

It also mirrors more optimism among marketing executives – their business confidence is at a two-year high, having climbed from minus 12.4% (at the end of 2011) to a net balance of positive 19.1%.

They appear to agree with IPA President Nicola Mendelsohn, who says the UK’s hosting of the Olympic Games this summer is exerting more upward pressure on marketing spend.

“Key events such as the London 2012 Games, [the Euro 2012 and] the Queen’s Diamond Jubilee will do much to ensure that marketing spend continues to rise,” she said.

By sector, internet advertising budgets were revised up to the greatest extent of all categories (net balance of 7.8%), and were the main contributor to the overall spending upgrade. Online search/SEO spend was also revised up though to a lesser extent (net balance of 4.7%).

Sales promotion was unchanged while main media was revised down, as was direct marketing and ‘all other,’ below-the-line activities.

The IPA reflected: “In spite of the rise in confidence companies are still displaying caution though, planning to increase their budgets for the new accounting year (2012-13) to the smallest extent in three years.”

Report author Chris Williamson added: “Companies' views on their financial prospects have risen to the highest for two years, but the brighter outlook has yet to be fully reflected in plans for marketing spend.”

 

22nd April 2012

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