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Bellwether report reveals signs of advertising recovery

This article is more than 13 years old
For first time since 2007 more UK companies have raised marketing budgets than made cutbacks, according to survey

For the first time in two and a half years more UK companies have raised their marketing budgets than made cutbacks, according to the latest Bellwether survey.

The survey, which is considered a key measure of the health of the ad industry, found that 21% of companies reported that they had raised their budgets in the first quarter of 2010. This compared with 16% that said they cut back spending.

This is the first time since the Bellwether report from the third quarter in 2007 that a higher percentage of companies have reported an increase in marketing budgets than a decrease.

"It is good to see that businesses are now increasing their investment in marketing as a route to growth, a welcome change in sentiment compared to this time last year," said Rory Sutherland, president of the Institute of Practitioners in Advertising, publisher of the Bellwether report. "The findings [also] show that conventional advertising has now also turned the corner."

There was good news for marketing spend across traditional media such as TV, press and radio, which has taken a battering in the downturn as companies have tightened spending.

Again, for the first time since the third quarter of 2007 the proportion of marketers increasing their spend across these media sectors surpassed those cutting back.

"This should not be seen as a return to the good old days," said Andy Viner, head of media at BDO LLP. "Spend on the marketing mix is changing."

Internet-related marketing spend grew for the third quarter in a row. The proportion of companies increasing digital marketing spend was the largest in two years.

However, the good news did not extend to sales promotion and direct marketing budgets, which remained unchanged. The "all other" category, which includes PR and events, was the only sector to see a downward revision in marketing spend in the first quarter of the year.

There was also renewed confidence in the economic stability of UK businesses with 42% of marketing executives saying they were more optimistic about the financial prospects for their company than they were in the last quarter of 2009. Almost a third were more optimistic about the prospects for their industry as a whole.

"The last three quarters saw an increase in optimism without an increase in spending," said Viner. "These results are a clear sign that renewed business confidence is translating into real budget increases and tangible economic recovery."

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