UK marketing spend 'likely to fall for fifth year running'

Fervent hopes earlier this year that the UK’s summer of sport would result in the nation’s total spending on marketing for 2012 increasing have all but been dashed.

Having quizzed about 300 UK practitioners, a respected pollster found that marketing budgets between July and September were cut for the second quarter in a row.

Only in April, after the start of the new financial year, hopes were voiced that Euro 2012, the London Olympics and the Queen’s Jubilee would all help drive marketing budgets upwards.

But due to the depth of somewhat unanticipated budget cuts in the last quarter, the findings indicate that it now seems likely that UK marketing spend will have fallen in 2012 for the fifth year running.

The slowing global economy, especially the failure to resolve the eurozone crisis, is largely to blame for the cuts, alongside the knock-on effect that a weak economy has had on business confidence.

Spelling out this grim backdrop in its report on the findings, industry body IPA pointed to marketers’ take on their own firms’ prospects - it is negative for the first time in 2012. That represents the worst outlook in nearly a year.

“We had hoped when the year started that things were picking up but as time has gone on the economy has stuttered and confidence isn’t particularly strong,” said IPA president Nicola Mendelsohn, reflecting on the Bellwether survey.

Economists at Markit, report-co-author, said that the modest increase in marketing budgets seen at the beginning of 2012 had recently abated, on the back of disappointing corporate sales and revenues.

The internet is alone in defying how companies responded – paring back their marketing budgets, as online advertising, including Search and SEO, was the only area in the latest quarter to be revised upwards.

Below-the-line activities took the greatest hit, says the report, with associated budgets being cut back to the sharpest degree in three years, followed by downward revisions to campaigns relating to main media, direct marketing and sales promotions.

“Although this is disappointing it is by no means terrible,” argued Ms Mendelsohn. “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 [in Q4].”

But Markit’s Chris Williamson believes it is “likely” that marketing spending will have fallen in 2012 for the fifth year in a row, once the final quarter’s figures come in.

He explained: “With business confidence falling further in the third quarter, prospects also look rather subdued for the rest of the year.”

 

23rd October 2012

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