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Tue, Jul 13, 2010 - Page 10 News List

UK firms cut ad spending in Q2: survey


British companies cut their marketing budgets in the second quarter and sentiment dropped to its lowest level for a year, a survey showed yesterday, suggesting the rebound in economic activity is waning.

The survey of around 300 British companies for the IPA/BDO Bellwether report found that advertising budgets for nearly all categories were revised down.

“The downward revision to marketing budgets in the second quarter is disappointing as it fails to build on the return to growth seen earlier in the year and highlights the fragility of the UK economic recovery,” said Chris Williamson, chief economist at Markit and author of the report. “Companies are exercising increased caution in their expenditure in the face of likely slower economic growth in the second half of the year.”

“However, it is encouraging to see that marketing spend is still set to increase for the year as a whole compared to 2009, albeit to a lesser extent than signaled in the first quarter,” Williamson added.

The report also said the rate that companies cut their budgets was much slower than that seen at the height of the economic downturn.

Almost 20 percent of the companies reported a cut to their spending, compared with 15 percent that increased the rate.

Some 25 percent of marketing executives described themselves as pessimistic about the financial prospects for their company, compared with 20 percent in the first quarter.

Of the different categories, main media spend was revised down in the quarter following a modest upgrade in the previous quarter. Spending on the Internet increased slightly however the rate of growth was the slowest for three quarters.

“The second quarter BDO/IPA Bellwether report reveals a cautious and uncertain picture,” Andy Viner, the head of media at BDO said. “After a strong rebound in Q1, optimism and confidence appear to be waning.”

“It is clear that there are increasing signs that uncertainty over economic prospects continue and that corporates remain focused on cost control against a backdrop of the risk of a double dip,” Viner said.

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