Firms eek out a slight rise in marketing budgets

Budgets for marketing projects climbing only fractionally in this year’s first quarter might not inspire too much cheer among freelance marketers, despite some auspicious signs for the rest of their 2013.

In its latest snapshot of the marketing landscape, the Bellwether survey revealed “little change” in the stock of companies reporting spending rises and cuts between January and March.

However the companies have grown more positive about their own performance compared with three months ago, in a reading that represents the best in a year, said the Institute of Practitioners in Advertising.

Moreover, the IPA found that more than a third of marketing bosses expected to raise 2013 budgets relative to last year which, when compared to 23% anticipating a fall, signals the best level for two years.

“Marketing spend has been revised up again, albeit marginally, and plans for the 2013 budget period are also more positive as companies expect to raise their budgets relative to last year,” said IPA director-general Paul Bainsfair.

“[Also,] advertisers’ confidence about their own financial prospects has grown markedly and to the highest rate in twelve months.”

But Mr Bainsfair tempered any optimism, saying it was a case of “wait and see” given that concern about the UK’s economic outlook persists.

In line with his caution, the survey found that the planned rise in 2013 budgets was only “modest” compared to pre-financial crisis levels and that, overall, 2012-13 marked the fifth year in a row when marketing budgets declined.

Meanwhile, when asked about the prospects of the marketing and advertising sector in 2013, the bosses remained pessimistic, albeit the least for a year.

“An upturn in business confidence and corresponding increase in budgeted marketing spend for 2013 augurs well for the wider economy. However, while the Bellwether is suggesting the economy is recovering, it looks set to be another challenging year for businesses and the pace of economic expansion is likely to be modest,” said the survey’s author Chris Williamson.

Turning to marketing platforms, the institute said the internet continued to lead the way and was revised up to the fastest rate since 2011 (Q4). Within internet advertising, online search/SEO spend was also revised up (+1.8%) but to the lowest margin since 2009 (Q2).

Budget growth was also seen in PR and Market Research, in contrast to Direct Marketing, which declined sharply and less so than the other sectors, including events, sales and main media promotions.

Mr Williamson reflected: “The hope among many companies is that increased sales and marketing activity will drive business growth, but firms will need to see convincing signs that demand and profits are improving in the coming months to prevent business confidence falling again and marketing budgets from being revised down as the year proceeds.”

 

16th April 2013

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